AMD expects return to profitability by next year
AMD hasn’t been competitive in the chip market over the last few years thanks to some poor decisions, but the company is simplifying its product lineup for PCs while getting into some new product areas in hopes of reaching consistent profitability by the end of this year.
On Tuesday, CEO Lisa Su provided details on the company’s plan to reverse its sagging fortunes. The company will accelerate its move from PCs in an attempt to be a more diversified company that embraces graphics – where it already has a big presence – and other markets such as the Internet of Things, servers and custom chips.
AMD still wants to make gains in the PC market, but is also hoping to increase market share in the graphics and custom chip market in 2016, Su said.
The PC market is weaker than expected, Su said. The company, however, hopes its upcoming Carrizo chips and demand for Windows 10 will improve PC chip shipments in the second half of the year, Su said.
The company’s expansion into GPUs and custom chips has been most notable so far in products like gaming consoles. Meanwhile, it has lost PC market share to Intel, and it has also failed in the tablet market, where its chips haven been used only in a handful of devices.
For the first quarter this year, AMD revenue dropped 26% year-on-year to $1.03 billion, while its net loss increased to $180 million. The company might continue to struggle in the short term, but there’s a lot of excitement about long-term opportunities, Su said. She reiterated that the company won’t invest in low-cost tablets and has no interest in smartphones.
AMD is simplifying its PC product roadmap to just a few chips for laptops and desktops. The company is focusing on both x86 and ARM-based chips across product lines. AMD chips next year will be driven by a new CPU core called Zen, which will deliver 40% better performance per cycle.
AMD has been inconsistent with its product roadmap over the last four years, scrapping products and coming up with new ones on the fly as it has tried to adapt to a fast-changing PC market. The company mainly supplies laptop chips for Windows PCs, and has no interest in hot products like low-cost Chromebooks. AMD is aiming at higher-price PCs that can deliver bigger profit margins, though meanwhile its chips continue to be used in low-cost Windows PCs.
The company has also lost market share to Intel in servers, where its x86 chips haven’t performed well. AMD has been inconsistent in updating its x86 chips, and has delayed its highly touted ARM-based server chips code-named Seattle.
AMD last month also announced it would exit the SeaMicro server business. AMD acquired SeaMicro in 2012 for $334 million.
Microservers aren’t doing well, and there was no point continuing in the area, Su said.
“We aren’t a systems company,” Su said.
AMD has also moved away from the Project Skybridge, which involved bringing together ARM and Intel x86 chips into a common socket. There is no interest in a common socket for the different architectures, and the company will focus on specific solutions based on customer hardware needs, Su said.
Another area of growth would be Internet of Things, especially with 50 billion devices expected to ship by 2020. AMD’s expertise is uniquely suited to areas of IoT that rely heavily on graphics and data visualisation, she said.
Agam Shah, IDG News Service