AMD Adopts Optimistic Stance After Tough Q2

Executives at Advanced Micro Devices adopted an upbeat assessment of the second half of the year, despite posting a second quarter revenues fall and a net loss of $74 million (£48.6m).

In a conference call with analyst and journalists 18 July to talk about the second-quarter financial numbers, CEO Rory Read said the company’s efforts to expand into new growth areas were taking hold, and that he expected AMD will return to profitability in the current quarter.

AMD Developments

With the company now past a painful restructuring, officials are focusing on new products and strategies that already are beginning to bear fruit, Read said. AMD in the second quarter rolled out a range of new accelerated processing units (APUs) aimed at the traditional PC market as well as emerging form factors, including ultrathins and tablets. The company’s growing semi-custom chip business grabbed significant wins in the gaming console market, including Microsoft’s upcoming Xbox One and Sony’s PlayStation 4. Last year Nintendo said it would use AMD chips in its Wii U device.

In the data centre, AMD is rolling out x86-based Opterons for traditional servers as well as the burgeoning dense microserver market, where the chip maker also can leverage its SeaMicro technology. In addition, starting in 2014, AMD also will make chips based on designs from ARM, giving OEMs a range of choices.

For AMD, these new growth markets – from dense servers and ultra low-power clients to professional graphics and embedded systems – will account for 40 to 50 percent of the company’s revenue in the next two to three years, according to Read. That will lessen AMD’s reliance on the traditional PC market, which continues to see sales fall worldwide as customers spend more of their money on tablets and smartphones.

PCs will still be important to the company, but it share of AMD’s revenues will shrink. AMD officials expect the custom-chip and embedded businesses to account for 20 percent of the company’s revenues in the fourth quarter.

Looking Forward

“Looking at the second half of the year, we believe we have good opportunities for growth based on the PC market strengthening slightly from first half levels and the ramp of our semi-custom business,” Read said during the conference call. “Longer term, the 300 million-plus-unit traditional PC market remains an important part of our core business, especially as the mainstream $300 (£197) to $600 (£394) dollar system price points that have traditionally been our sweet spot become an even larger portion of the overall market.”

AMD released its second-quarter numbers the day after larger rival Intel did the same. Like AMD, Intel saw its financial numbers hit hard by the rapidly declining global PC market. And like their counterparts at AMD, Intel officials saw better days ahead as the company accelerates into new markets, such as the mobile chip space current dominated by ARM and its partners, including Qualcomm, Samsung and Nvidia.