AMD upends GPU tradition by launching Navi as a lower end part

Lisa Su, AMD
Pictured: AMD CEO Lisa Su. Image: AMD

New GPU paves own way with unusual pricing structure

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2 May 2019 | 0

Although AMD is readying its new Navi graphics procesing unit (GPU) architecture for launch later this year, AMD executives revealed a surprise: The company plans to price it below the upcoming Radeon VII GPU.

AMD executives revealed their decision during AMD’s first-quarter earnings call. The company missed profit estimates, but surpassed analysts’ revenue forecasts. AMD reported net income of $16 million, down 80% year-over-year, on revenue of $1.27 billion, down 23%.

AMD’s graphics business is struggling

What makes AMD’s decision even more surprising is the fact that PC graphics is currently AMD’s Achilles heel. Revenue declined because of lower revenue in AMD’s computing and graphics segment, and that business declined 26% primarily due to lower sales of graphics cards based on AMD’s GPUs. Part of that is due to the cryptocurrency market’s decline. (Demand is rising, however, for AMD’s GPUs in the data centre, helping to raise prices even as volumes fall.)

The implication is that demand for AMD’s current graphics architecture, Vega, has declined. But that’s what makes AMD’s decision slightly puzzling: AMD said in January that the Radeon VII is simply the consumer version of the 7nm variant of Vega. The chip contains 60 compute units, putting it between the Radeon Vega 56 and Vega 64, with 25% more performance at the same power.

But when asked how the next-gen Navi architecture would be positioned, AMD chief executive Lisa Su (pictured) has this to say: “It is 7nm Navi, but it will be positioned below… [where] our Radeon VII is positioned today from a price-point standpoint.”

Navi will launch during the third quarter, Su said. She declined to comment when asked if Navi would include ray-tracing capabilities like Nvidia’s own RTX chips.

AMD’s strategy would appear to upend the way in which new chips are launched. Normally, a chip company ships a new processor or GPU as a premium product, with a high price tag. This helps the manufacturer recoup its investment, and paves the way for cheaper revisions as the product ages out. After a time, the chip company launches a new high-end product, and the cycle repeats.

It’s not clear whether AMD sees its Navi positioning as a case where it’s unwilling to bet heavily on a new architecture designed into a relatively new process technology, or whether it’s giving its existing investment in the Radeon VII, also known as the 7nm Vega technology, a chance to breathe. It could also use the opportunity to refine its 7nm process, bringing a higher performance version of Navi as part of a future generation.

Intel’s CPU business is strong, at least on desktop

Su also confirmed what rival Intel had intimated a few days before: There are CPU shortages, but they’ve largely alleviated. “We see a little bit of that,” she said of the shortages, describing them as “pockets at the lower end of the market”.

Su said that she expects more than a dozen notebooks to be launched this quarter with mobile Ryzen chips inside, from Asus, HP, Lenovo, and more. On the desktop, AMD’s preparing for the third generation of Ryzen chips to launch later this year. Still, CPU prices fell because of a decrease in mobile processor prices, AMD said.

AMD also said that its enterprise, embedded and semi-custom segment revenue was $441 million, down 17% year-on-year. Though AMD said that its revenue was partially bolstered by increased sales of its Epyc server processors, revenue fell due to declining sales in its semi-custom business. In the jargon of AMD’s financial statements, ‘semi-custom’ essentially means the console business: Sony’s PlayStation, Microsoft’s Xbox, and Nintendo’s Switch. Because console sales have declined, so has revenue from the semi-custom business.

That will change in 2020, Su believes. AMD captured the contract for Sony’s PlayStation 5, and Su said – without naming any specific consoles – that she believes semi-custom will return to a growth business then.

IDG News Service

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