AMD is placing a lot of faith in its upcoming Zen x86 CPU -- if it fails, it could take the company down with it. But Zen could be equalizer AMD needs to compete with Intel in CPUs, and it could perhaps attract some enthusiasts over from the Intel camp. AMD claims Zen delivers a 40 percent performance improvement per clock cycle, which is higher than the single-digit gains delivered by recent x86 chips. The first Zen chips for enthusiast desktops will ship later this year.
The time is ripe for AMD to grow in the server market, where Intel's superior Xeon chips have destroyed AMD's Opteron processors. AMD once held a double-digit market share, but then came problems with the faulty and poorly constructed Bulldozer architecture. AMD's server strategy is now in shambles, and it is relying on the Zen chips for what it calls a "reentry" into the server market. The company will initially target Zen chips at hyperscale servers, then at other systems.
AMD is chasing the booming Chinese server market by licensing its upcoming x86 chip to THATIC. That frees up cash-strapped AMD from committing resources to selling chips in the country. AMD could also use the licensing strategy to sell more PC chips in China, where the company has a committed following among home PC builders.
AMD had to find a new place to sell its processors with PC shipments falling, so it focused on products like gaming consoles, gambling machines, ATMs, and automobiles, all of which require custom processors. The console makers are already coming back to AMD for more processors. AMD is now taking on only larger custom-chip orders that will bring in considerable revenue.
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