Is the worst over for AMD?

AMD's processor business has been in the dumps for well over a year. But a resumption of quad-core shipments and a reduction in its workforce, though painful, may signal a turnaround.

AMD quad-core Opteron finally on its way to computer makers

(Credit: AMD)

Before we get to the good news, let's first consider a draconian scenario for Advanced Micro Devices. As the chipmaker was announcing Monday that it would lay off 1,650 employees later this year, the stock was hovering just above $6, down from the mid-$20s a year ago and about $40 two years ago. If things do not improve, the company may split in two, according to Ashok Kumar, an analyst at CRT Capital Group.

Kumar sees one scenario in which AMD bifurcates into a manufacturing concern and a design company. If earnings don't trend up by the second half, this is a real possibility according to Kumar. "They don't have too many options with the debt overhang (from the ATI acquisition)," he said. The soft economy may not help matters either.

Kumar listed the well-known reasons for AMD's profit shortfalls: Lack of competitive offerings, blended ASPs (average selling prices) well below Intel's, and the delayed ramp of the high-end quad-core Opteron.

But these negatives--so the upbeat narrative on AMD goes--are the chipmaker's past, not its future. After a very long delay (about one year), AMD's quad-core Barcelona for servers is just about set to ship to the largest computer companies in the world: IBM, Hewlett-Packard, Sun Microsystems, and Dell, among others. "Barcelona ASPs are 300 (dollars) plus. That historically has been the profit pool of the company," Kumar said. Once AMD ramps Barcelona and the desktop quad-core Phenom, things should "dramatically improve," he said.

And AMD's mobile offerings are getting better too. "They were probably at their weakest point in 2007," said Dean McCarron, founder and principal of Mercury Research. "The next design cycle for notebooks is happening right now. You can safely say that they are more competitive than they were last year" vis-a-vis Nvidia, he said.

Along these lines, AMD is slated to bring out the "Puma" mobile platform this quarter. Puma is based on the RS780M chipset and AMD's dual-core Griffin processor--now called the Turion Ultra. The new Turion is all about power consumption (to reduce power, each core can run at different frequencies) while the RS780M, AMD claims, is up to five times faster than Intel's current X3100 integrated graphics silicon.

Partnerships may also be helping AMD in the mobile market. "They've been partnering with some of the most aggressive OEMs out there. That plays to their favor," said Jim McGregor, an analyst at In-Stat. "Companies like Acer and Toshiba have been extremely aggressive worldwide, especially in North America, at gaining market share," he said.

The desktop is looking better too, with the triple-core and quad-core Phenom processors just beginning to ship in volume.

All this optimism is cautious, of course. "The competitive environment that they're in now is a little bit different than the one that they were in before. Intel is much stronger," said McCarron. "We have Nehalem (the next-generation Intel microarchitecture) coming at the tail end of the year and the Penryn products are very competitive," he added.

AMD also said Monday that it expects to post first-quarter revenue of $1.5 billion, about 15 percent lower than the fourth quarter. This is well below seasonal declines. So upcoming earnings could be ugly in some respects. "Plus the pullback in consumer and business spending. Q2 tends to be a little bit low in terms of revenues," McGregor warned, referring to factors that affect both Intel and AMD. "They're facing a little bit of headwind in terms of economic and spending conditions."

And all of the positives cited above may happen slowly for AMD. "Things don't swing overnight. They take time," McGregor said.

[apmastersite 5000]

Hah, I knew this would happen. They got too confident with their X2, and FX chips beating out Intel' Pentium D. Now the tide has turned and about 70% of PC enthusiasts are turning to Intel processors. I can't believe that the Core 2 Duo chips that Intel released in 06 are beating all of AMD's newer chips. It's unreal. AMD's focus has never been on cache and clockspeed, it has always been the system bus and now they are paying the price.

[ivorycruncher]

Um, try reading some current benchmarks, pal. The Phenom 9850 BE is giving the Intel Q6600 quad-core a good run for its money, and is easily outperforming most if not all C2D chips. Plus it's a little cheaper than the Q6600, making it the perfect price vs. performance combination. AMD may be a bit under the weather, but they're not finished yet. In reality, most people don't need a giant quad-core processor anyway. For low-end and even midrange PCs, AMD definitely gives you more bang for your buck.

Call me an AMD fanboy if you want, but without AMD, we will suffer greatly in the monopolistic kingdom of Intel. I've been needing to build a new system for a while now, and was close to finally switching from AMD to Intel. But then I read that the new Phenoms were coming out, so I waited and just ordered parts for a new system the other night, which includes a 9850 BE chip. I expect it to be quite an upgrade from my old X2 4200+ socket 939 system. Sure, I could have spent just a bit more and gotten a Q6600 with a little more power, but you can ALWAYS spend a little more and get a little more power. My philosophy is to get the best price/performance ratio, and for the moment AMD has come through for me once again.

[brianfellow]

Techreport has Q6600 beating 9850BE in a small majority of benchmarks. Why not comparing it to the current Intel quads like the Q9300, Q9450, and Q9650?

Also, try buying a 9850BE and sticking it into an AMD 780G chipset motherboard and watch your motherboard MOSFETs become toast.

[jaycee0408]

To be honest, I would always choose Intel over AMD because any pre-configured high end pc would have Intel instead of AMD. I haven't use AMD before but I do wonder why manufacturers of PC would choose Intel over AMD.

[Zaxxxon]

The only time I personally bought and built an AMD for myself was during the time I was cash strap and AMD was on its peak when it release the 64bit processors. (I've been in the computer industry 15years now). But I have to give that machine away gladly to my sis who direly needed one. It was not because it did not work but I didnt seem to have some attachment to it unlike my intel builds. I have Pentium I notebook that I just can't seem to give away. I had built AMDs for my friends mainly because it's cheaper. When I asked them about it, they were generally happy. My relatives/friends ask me all the time what computer is good to buy, I say AMD is just fine if you do normal computer work and few low-end games because it's cheaper and more powerful than an intel of the same price. Of course, since i'm their trusted computer guy, they go for it. I like to see AMD really acquire greater market share so that it brings intel prices down, then I can afford it. :->

[Mam00th]

The tide has turned pretty hard with the core2duo but as Brooke said, the worst is probably over, their new chip will sell altough not as much as their previous chip but still they will have some revenue..

[i_made_this]

The worst is indeed over for AMD. Yes, they're still carrying the debt of their brilliant and strategic purchase of ATI - just as Intel would be doing if they bought Nvidia, a firm Intel's lusted after for years now.

AMD's Quad Core 9500+ Phenom series performs fully competitively with Intel's Quad Core 6600+ series. Forget AMD's ATI Crossfire Graphics trump card for a moment and put the same Nvidia set-up in an equivalent pair of Phenom Quads and Intel Quads. The Phenom does not overheat, runs smooth as silk - unintrusively and effectively - and is up to the most demanding computer graphic arts experts, architects CAD or extreme gamer's requirements . The AMD is on every HP, Dell, et al system being produced nowadays and is running +/- $200 cheaper than the precise equivalent Intel set-up. Ask yourself this - which of the two systems is the typical American consumer (individual and enterprise) going to buy? Right.

Thanks to the OEM's decision to promote the new AMD Phenom Quad Core CPU (as well as the high-end Athlon Dual Cores), Americans are finally learning that there's another game in town aside from Intel.

And extreme graphics noobs (gamers - architects and 3D animation designers have known this for a decade) are learning quickly that after a certain point, all the highest-end graphics goodies Nvidia makes like their 9000 series GPU's do not make one stitch of a difference. Why? Because at such extreme graphics capability, the benefits cannot be seen on even "the world's best" 24" monitor at its highest resolution; there is a point of diminishing return on newer and better and more expensive Nvidia graphics GPU's and Nvidia has just about reached it with their beta 9800 GTS which produces a brilliant graphic which that the human eye cannot differentiate from the 8800 GTS / Ultra unless one is watching a high-res 45"+ monitor/screen. AMD's shrewd management of their ATI division knows this and they're planning to capitalize on it even more than they have with the OEM's in the coming few years.

AMD is a great value strock now in a cyclical industry. Intel "won" the last round but AMD has already rebounded forcefully on the technological side. AMD wins the next round on Wall Street and the USA (if not the world) benefits from having an oligopoly industry and not a monopoly. The way things stand now, there's only one company on earth who can and does regularly bully Microsoft and Intel's overdue for a fall. AMD has already put a major dent in their market share with the OEM's thanks to Phenom, Turion, high-end Athlon and ATI. The next step is a simple refinancing / restructuring of their ATI debt to make it more manageable .

[pablouk1]

Are you taking he ****, do you know anything about ATI/AMD and Intels /Nvidia.

[brianfellow]

Nvidia 9600GT has best price/performance at $125-150 compared to ATI's 3870 at $180. 9800GX2 is faster than 3870X2.


How long till the B3 steppings of Phenom arrive since its "launch?" How about all AMD Phenoms don't compare to Intel's Q6700, Q9450, and QX9650?

[pablouk1]

QUOTE Um, try reading some current benchmarks, pal. The Phenom 9850 BE is giving the Intel Q6600 quad-core a good run for its money, and is easily outperforming most if not all C2D chips. Plus it's a little cheaper than the Q6600, making it the perfect price vs. performance combination UNQUOTE

Benchmarks tell you nothing, the new Intels are still better than the AMD and they run cooler which makes them better for overclocking.

[ajithkgs]

well.. i've been watching the new stuff coming outta both Intel and AMD.. and the way i see.. its just like a loop.. Wen Pentium 4 came out.. it was the BIG THING !!.. but wen AMD kicked in to the 64-bit architechture.. Pentium4 werent any good.. and same can be said for dual core.. and wen Intel came out with C2D, AMD was quite stunned.. but they are recovering and getting ready for the counter attack.. personally, i think AMD cud have foreseen Intel's Core architechture and worked on a new arch much earlier.. but they didnt WASTE the time.. they spent it creating partnerships and increasing market Share..

yea, AMD is in a tough spot rt now.. but i believe they can turn the tables in the coming quarters.. their roadmaps looks promising and they are on track for the 45nm Transition, wich wud put AMD at a better position compared to the Intel's Latest and greatest..

[iamstubb]

I guess I am an AMD Fanboy. I run a laboratory and, to save bucks, we exclusively use AMD-based systems for workstations and servers. I could never justify intel-based systems based on performance:cost ratio. So no, we are not a manufacturer, but there is a clear value to AMD products and they are desireable in a cost-conscious environment. We are supported by federal grants, so the taxpayer should be glad we do this. I've been building systems since K6 days and some are still running (for nostaglic reasons only). Qulaity is not an issue with AMD (we've had a few store-bought Intel sytems self-destruct, but I think that is poor manufacuring quality of components). Performance edges are so incremental and only make a difference in the scale of many months to years. Software is often the performance bottleneck culprit anyway. So for reliabiliity, return on investment, pick your slogan, AMD is a great alternative to Intel.

[AppleSuxLeo]

AMD=AlMostDead ? JK

[pratkal]

well i believe the bad time of AMD/Ati is over as amd x4 940 touch the performance of intel core i7 940 also ati new range 5XXX series is coming out soon which will outperform crazly prized GTX 295 and 48XX series is doing gr8 against GTX 280 and below cards