Advanced Micro Devices' new graphics chips are taking market share from Nvidia, a report issued Wednesday confirmed.
"AMD has by all accounts exceeded expectations with its Radeon HD 4000 series," according to report issued by market researcher Jon Peddie Research (JPR).
Aggressive pricing by AMD's ATI graphics unit made the difference, bringing down prices on add-in graphics boards. "Priced aggressively yet delivering solid performance, AMD's new line not only took back some market share--jumping up to 40 percent from 35 percent the quarter prior--it forced Nvidia (and partners) to cut prices on its recently released GTX 200 series product," JPR said.
Prices for graphics boards based on Nvidia GTX 260 and 280 graphics chips were slashed back in July. This happened only a few weeks after Nvidia launched the chips.
"Discounts cut into ASPs (average selling prices), taking a toll on revenue for both Nvidia and the market overall, the latter down 27 percent (year-over-year) to $3.8 billion," JPR said.
Graphics add-in board unit shipments were up sequentially but down year-to-year
(Credit: Jon Peddie Research)The sequential growth for add-in boards tracked the growth in the aggregate market for graphics chips (which also includes motherboard-integrated products). The latter saw an increase (sequentially) in unit shipments of 17.8 percent in the third quarter. Unit shipments for add-in boards increased 11 percent to 21.9 million sequentially but fell 15 percent year-to-year.
Advanced Micro Devices has its eye on the ultra-low-cost notebook market. Dirk Meyer--the company's new CEO--and other executives discussed this and ways to make the company profitable during the company's earnings conference call Thursday.
HP 2133 Mini-Note is a low-cost ultramobile notebook--a market AMD is eying.
(Credit: Hewlett-Packard)Meyer--promoted to CEO on Thursday--made it clear that AMD is serious about the so-called Netbook market, where Intel's Atom processor has been the most successful so far. (Though Intel CEO Paul Otellini made a perplexing comment Tuesday about the Atom processor.)
Netbooks have two hallmarks: they are typically under $400 and are extremely small and light. The Asus Eee PC is the most popular Netbook currently.
In response to a question from an analyst, Meyer implied that while AMD is not interested in the mobile Internet device market (think: iPhone), it is serious about low-cost notebooks.
"We're a much smaller company with not nearly the scale that our competitor has," Meyer said. "We don't intend to try to do absolutely everything they do in the marketplace. (But) slightly smaller form factor notebooks and inexpensive notebooks. That is a market segment that we're interested in."
AMD is already taking concrete steps to get into this market.
"It's actually a segment that we're starting to offer products to our customers in support of now," Meyer said. "We actually haven't talked in public about that, but I expect we'll be talking about that roadmap when we get together in November at our analyst conference."
Meyer and other executives also addressed upcoming 45-nanometer processors, new graphics chips, and the so-called "asset-lite" strategy as ways to bring the company back to profitability.
Chief Financial Officer Bob Rivet said upcoming 45-nanometer processors and the eventual outsourcing of more production to companies like Taiwan Semiconductor Manufacturing Company (TSMC) will be the keys to long-term sustained profitability.
"Our strategy to continue to execute on 45 nanometer improves our cost structure," Rivet said. He added that improving profitability also "does incorporate asset-smart (and) execution by Hector (Ruiz) to bring it to conclusion." Analysts refer to the outsourcing strategy as asset-lite, AMD refers to it also as "asset-smart." Outgoing CEO Hector Ruiz will stay on to execute the asset-lite strategy.
Rivet later added that asset-lite "will be a major reformation of the company."
On upcoming 45-nanometer production, Meyer said: "We're well on track with the 45-nanometer plan. We actually started production late last quarter and on track to begin volume shipment early in Q4." AMD currently uses a 65-nanometer manufacturing process for most of its silicon. Intel, on the other hand, has been shipping 45-nanometer processors since last year and its newest Centrino 2 processors are made on a 45-nanometer process.
New graphics chips will also help, according to Rivet. "The new 4800 series will be the best products in the marketplace. (This) will definitely contribute to gross margin," he said. AMD is struggling to get the all-important financial benchmark of gross margin to above 40 percent. It is now at 37 percent. By comparison, Intel's gross margin was just below 56 percent in the second quarter.
About profitability in general, Rivet said: "Since we're so far away from profitability. The first order of magnitude is operating profit at the operating income level not at the net income level. First get to that level then we'll work to get the net," he said. Rivet said AMD will show an operating profit in the second half.
AMD-ATI and Nvidia are preparing for the next graphics chip showdown. And there is already a good deal of information (and rumor) on the two chips due in June.
The names of the two upcoming product families have been widely reported: The ATI line is branded as the Radeon HD 4800, while the Nvidia is dubbed the GeForce GTX 200.
Advanced Micro Devices is expected to launch the HD 4850 (price estimates of graphics boards range between $189 and $219) and then follow with the 4870 (estimates range between $199 and $279). In the fourth quarter, AMD plans to add the dual-chip ATI Radeon 4870 X2.
Nvidia will respond with the high-end GeForce GTX 200 family. Initial products will be the GeForce GTX 260 and GTX 280.
VR-Zone has already gotten its hands on some preliminary performance numbers for the HD 4850 and 4870. German-language site Hardware-Infos has posted a table with specifications of the HD 4850 and 4870.
Tech site tg daily said "that card vendors will start printing their boxes next week, which means that the specifications are final at this time."
Less seems to be known about the Nvidia GTX 260 and 280, though a Turkish site is claiming to have all the specifications.
- prev
- 1
- next
