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Hurray! AMD vows to compete in the high-end PC market again, from CPUs to GPUs

Mark Hachman | May 8, 2015
AMD has been forced to pick its battles, wary of going toe-to-toe with Intel and its mighty manufacturing machine. But AMD chief executive Lisa Su said Wednesday that it's time for AMD to re-enter the ring and again commit to high-end, premium products.

AMD has been forced to pick its battles, wary of going toe-to-toe with Intel and its mighty manufacturing machine. But AMD chief executive Lisa Su said Wednesday that it's time for AMD to re-enter the ring and again commit to high-end, premium products.

Su said that AMD plans to launch a new high-performance "Zen" core next year that will be marketed as the AMD FX CPU — AMD's traditional brand for the high-end gaming market. AMD also plans to add cutting-edge high-bandwidth memory to its forthcoming Radeon graphics products, and address new, emerging markets such as the virtual reality space. Su also said she aggressively plans to go after the data center — not a space consumers may care about, but a high-margin business that Intel has used as a profit center for decades.

The challenge AMD faces is a complex one; it must compete with a much larger competitor, Intel, whose manufacturing technology gives it an implicit advantage. AMD has been forced to either out-design Intel or sell its products on the cheap, which has drained AMD's already low cash reserves. AMD's also been forced to cut prices on its Radeon products in recent months to compete with Nvidia's new 900-series graphics cards.

Su, then, has a simple goal. "What is the most important thing for us? Gaining profitable market share," she said at AMD's financial analyst day on Wednesday.

Why this matters:  Any consumer with a passing interest in the PC space must understand that Intel dominates the PC CPU space — with over 80 percent of the market, historically. That means Intel is almost a monopoly. But with AMD holding on, Intel is forced to lower prices and compete more aggressively than it would otherwise be forced to. The same goes with Nvidia when it comes to graphics cards. If AMD can aggressively compete at the high end of the market, we as consumers win.

Funding the bottom line

Su said that while PCs will continue to make up roughly half of the company's revenue going forward, markets such as gaming, immersive platforms like VR, and the datacenter will grow and drive profits over time.

AMD's goal is to return to profitability in the second half of the year, Su said, and return the company's cash reserves from about $800 million to as high as $1 billion. That cash reserve is something that's been closely watched by Wall Street. But Devinder Kumar, AMD's chief financial officer, said that AMD has reevaluated several different possible scenarios, and "that's the way it's come out every time we've run it."

AMD's plans to move to 14nm FinFET chip technology in 2016 via its foundry, GlobalFoundries, chief technical officer Mark Papermaster said. That will be used in the Zen core, high-end graphics products, and elsewhere. "We are fully confident with the technology," he said.

 

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