12.20.2007

Sometimes an Intel delay can be bad news for AMD

A report or a rumour, whatever you wish to call it, comes from Digitimes suggesting Intel could be delaying the release of its 45nm desktop CPUs. Intel’s reason, according to the site is due to lack of competition in light of AMD’s current problem shipping Phenoms. This statement is highly controversial and I am sure everyone has read the wide ranging opinions from all over the net. What I find frustrating is the over zealous analysis based from a CPU performance stand point. It is ridiculous to think that Intel’s production planning decisions are based on the competition missteps rather than pure market demand. If we assume that the rumour is correct, I can assure you that Intel (likewise any sensible company) will only delay a certain product because such an action creates the maximum return, either immediate or long term.

As a manufacturing company, volume is vital for Intel. The more volume it can produce on a set of tools (i.e., new 45nm tools), the lower the unit cost becomes. Also bear in mind that 45nm depreciation begins the moment the tool is used for revenue products. Intel doesn’t have a choice but to feed their new 45nm production lines as close to 100% capacity as possible. With the volume fixed at maximum, the real question is not what product Intel is trying to delay, but instead, try and figure out what Intel is trying to produce in volume as a replacement.

Think mobile. For the past two quarters Intel has shifted its focus and has thrown all its marketing resources in this space. Nonetheless, AMD continues to remain successful in this segment taking more market share while at the same time driving ASPs significantly downward. If Intel wants to fight back using every competitive advantage it can get with 45nm, I don’t see why not. So again, if the rumour is indeed true, just try and imagine what AMD’s mobile offering will be up against in the coming months. Armed with a lower cost-per-unit, there should be fewer businesses where Intel will be “walking away from”.

12.19.2007

AMD ATI sucks according to one angry man

It looks like AMD managed to piss off someone who seem to have a habit of creating hate websites. His anger stems from the fact that AMD sold him a Radeon X1950Pro which was advertised as Vista Certified but turns out not to be the case.

http://www.amd-ati-sucks.com/

This is, of course, only one side of the story and I'm sure returning a product requires less effort than paying for a URL and creating an entire website. I'm simply posting this because I know some of you like to fan the flame. Enjoy.

12.12.2007

AMD's Financial Analyst Meeting

AMD is holding its annual Financial Analyst Meeting on Dec 13, 2007. Like many analysts, I am beginning to wonder what benefit would anyone get attending this PR exercise. There was a time when AMD held similar events and anyone participating would only get straight answers. Today it’s all about vague promises, secrecy and if you’re lucky enough to get a definite answer it’s always a million miles off target. Take for instance last years Analyst Day (Dec 14, 2006). Everyone clearly remember this as the last rosy presentation from AMD. Despite the dark Core2-cloud looming overhead, business was good and the company was in a position to take control of 30% of the overall market. As we all later found out, the rosy outlook was quickly followed by an earnings warning; the first of the series of massive half a billion dollar losses.

If we were to consider the added value of AMD holding another financial analyst day, we should first look at the track record of the last one held. In summary, here is what AMD projected for 2007:
K10 quad-core ramp: 2H’07; actual result: pushed out possible mid Q1'08
Barcelona performance: 40% better; actual result: ~40% worse (non-compliant SPEC benchmarks)
CAPEX: $2.5B; actual result: 2007 estimate will be at $1.7B (Fab38 delayed)
Revenue (long term target): ~$7.6B; actual result: $6.02B (average analyst estimates)
Gross Margins: 50+/-2%; actual result: 35% (last 3 qtrs)
2007 growth: 10% above industry (16%); actual result: -455%

As you can see, you’re probably better off using monkeys throwing darts at targets than rely on AMD to assess its own outlook. That's also because we know that monkeys have no intention to look good in order to keep their jobs. On a positive note for AMD, since they got last years outlook absolutely wrong, getting at least one prediction right would put them infinitely better in assessing their own future.

12.05.2007

All AMD needs is some TLB

TLB – translation look-aside buffer. Sounds techie and yet doesn’t sound so disastrous. Bear in mind that TLB is a microcircuit within the CPU and what AMD wants you to know is where the problem occurs while not necessarily telling anyone what went wrong and what changes are required to fix it. Or maybe I’m just the type that wants more detail. As a consolation they did say what could happen and I suppose the worst is a “system hang” with a very low occurrence rate. It’s not really the worst problem but you can scratch servers that might be used for critical missions off your customer list. Above anything else, this should be the reason why no OEM is shipping Barcelona servers at the moment. The seriousness of this bug makes even the poor performance just an after thought.

The fact that the problem is across the K10 platform (Opteron and Phemon) makes it possible that this is a micro-architectural problem and should have been identified at the Functional Validation stage. There are several other validation screens in place to catch problems like this but because it managed to slip out makes this more of a symptom of how AMD operates these days. A rushed and under resourced design process can lead to disasters like this. But to be fair to AMD no amount of pre-silicon validation can successfully screen the complexity of today’s microprocessors. Running a full chip simulation on an almost infinite amount of combinations of dyadic instructions is impossible especially when time is crucial.

Validation Primer:
There are two levels of validation and they are done at pre-silicon and post-silicon levels. At pre-silicon, Functional Validation and Logic testing are done.
Functional Validation is a simulation done to test different micro-architecture features such as Barcelona’s TLB. This is time consuming and compute-intensive, typically running assembly language in low single digit Hz speeds completing billions of cycles per week. The test is feature-focused and localised.
The other pre-silicon validation is logic testing and the purpose is to validate circuit behaviour using logic sequence and combinations.

Post-silicon validation involves Performance Verification, Design Validation and ultimately Manufacturing Validation.
At Performance verification the chip is tested against physical specifications such as leakage, voltage, temperature and more importantly speed and timing. Being slow and leaky, anyone can imagine how AMD would have felt when K10 reached this stage. Timing analysis is done here and if Barcelona had critical path problems at the L3 TLB like GURU suggested, they should have detected the problem at this stage.
The next step is Design Validation where a complete system level check is done. At this stage the CPU is attached to normal peripherals (i.e., BIOS, chipsets, Operating System) and all features of the chip are tested.
The last step is Manufacturing Validation where yield becomes the major metric which is essentially driving overall cost to manufacture. Unfortunately for AMD their problem with design is compounded by 65nm process issues.

Due to lack of information, it’s hard to say if AMD is applying a circuit/architectural design change or a process design change on the B3 stepping. A circuit design change points to a poor pre-silicon validation process while a process design change (i.e., change in CD’s) points to post-silicon validation mistakes. To be honest, with the amount of problems K10 is having only God knows how many modifications AMD plans to include in their next stepping. We hope they get it right this time around because I can only feel sorry for the guy who buys a tri-core Phenom with a microcode patch disabling the TLB. Surely there is a line in the sand that says when a product in broken and cannot be sold.


Update: In relation to my blog post on the 27th Nov wondering where the AMD stock would settle, well today the stock closed at $8.91 as it continues to slide downward. It appears like institutional investors are finally bailing out so no bottoming out just yet.

12.03.2007

One!

It is exactly a year ago when this blog started. Once intended as satire for an infamous blog site, I suppose today we can say that we have outperformed Scierikou in terms of accuracy and usefulness in predicting the future and providing analysis on current events. It is indeed facinating that what we have been discussing collectively for the past several months only ends up lately on someone else's blog. Throughout the year we've been accused of painting AMD in a bad light but we managed to prove that it's only because there's a thick dark cloud hanging over it. We've been brutal and honest but so is the truth.

I would just like to mention that this site never really kicked off until our friend Sharikou180 provided a link to this site. Site activity wouldn't have picked up if it wasn't for the people that come here and contribute. Many thanks everyone.

Looking ahead, I'm considering the option of opening up this blog for additional contributors. I can see that some put considerable effort in their post which are at times quite noteworthy and insightful enough of being an article by itself. The two options for contributing are adding authorised authors (requires blogger account), and as for our friends in the "industry" that requires anonymity, you can send your article through e-mail (I will post the article under your chosen pen-name).

What do you think?

11.27.2007

AMD's Stock Reaches New Lows


In an alarming trend, AMD's stock seems to be on a free fall since last week. Today the stock reached a new 52-week low dipping below $10 no thanks to the downgrade by analyst Doug Freeman. It's nice to see that the investment community is finally catching up with our own sentiments about AMD's future.

"We do not expect sentiment to improve anytime soon and believe even improved execution will not be enough to show true operating leverage in the near-term," he wrote in a research note...While we remain bullish on PC demand in general, we don't see a material catalyst for upside emerging in the next 3-4 months and suspect investors will view any announcements on the company's fab-lite strategy with skepticism, regardless of this view's merits."

What I find interesting about this downgrade is the suggestion that even if AMD improves on its execution, the outcome still won't be enough. Even if AMD proceed with its yet to be announced asset-lite strategy the outcome will still be immaterial. And even if the PC demand remains strong AMD will continue to lose money. So what that means is if AMD becomes lucky enough to get a "perfect weather" of good execution, strategy and excellent market conditions, still, there is no hope for the struggling company, not now or anytime soon. "Investor skepticism" has finally caught up with AMD and it will be interesting to see where the stock settles after hovering around the $13-14 region for a year.

Now if only some of the missing bloggers return and put up the usual face of hope, maybe the AMD stock can rally back up.

11.19.2007

The QuadFX Disaster Part Two

AMD today released its much awaited quad core desktop, the Phenom. After reading the reviews I just felt a sense of deja vu. Almost a year ago when AMD released the QuadFX to compete against Intel's newly released quad-cores, here is what some had to say:

Ars Technica (2006):
"Today, AMD officially launched their much-anticipated 4x4 enthusiast platform under the name QuadFX. The results of the rash of QuadFX reviews that just came out are uniformly disappointing; Intel's quad-core offering, the QX6800, outperforms AMD's much hotter, more power-hungry offering in almost every benchmark".

Anandtech (2006):
"When only running one or two CPU intensive threads, Quad FX ends up being slower than an identically clocked dual core system, and when running more threads it's no faster than Intel's Core 2 Extreme QX6700. But it's more expensive than the alternatives and consumes as much power as both, combined... Until then, there's always Quad FX but you're better off with Kentsfield".

Then again a year later while trying to take another stab at the "enthusiast" market:

Ars Technica (2007)
"Current benchmark results from Anandtech, HardOCP, and Hexus indicate that the Phenom, while notably more efficient than Athlon 64 X2 in certain scenarios, still lags the Q6600 clock-for-clock. Phenom may have finally given AMD the ability to offer a quad-core processor to compete with Q6600, but Intel's chip still holds a better price/performance ratio".

Anandtech (2007)
Phenom is, clock for clock, slower than Core 2 and the chips aren't yet yielding well enough to boost clock speeds above what Intel is capable of... today's launch confirms that Intel is still the king of the quad-core market.

Hexus (2007)
We can debate all day whether the majority of consumer software is threaded enough to take advantage of four execution cores, but the immutable fact remains that AMD's fastest quad-core offering is slower than Intel's slowest. Compounding this depressing statement for AMD is the January 2008 launch of Penryn-based Core 2 Quads, furthering Intel's performance dominance.

In order to grasp the magnitude of how much AMD messed up on execution, it's important to realise that even after a year of humiliating itself with the QuadFX disaster it has yet to beat it's old nemesis the QX6700. Intel was kind enough to lower it's quad-core offering to QX6600 but it seems AMD's Phenom can't beat that either. Never mind taking back the performance crown or beating the opposition on some important benchmark, but failing to beat a year old processor is simply inexcusable. This is indeed a wake up call and should desensitise anyone who's heard far too many excuses from AMD.

11.13.2007

All Your Fabs Are Belong To Us - TSMC

There is a report that AMD is in talks with TSMC to sell Fab30. As AMD struggles to bring the company back to profitability this particular “rumour” doesn’t sound so outrageous, especially when we’ve already entertained the possibility of such a strategy. The “idle-race-car-in-a-pit-stop” description mentioned by Mr Ruiz on the current situation of Fab30 is probably not the best metaphor for an empty Fab. A Fab with a ready capacity is the real “idle race car”, but then again this cost $millions to sustain. An empty Fab without cash for the necessary upgrade sounds more like an empty pit stop - no race car! And if such is the case then its just a wasted asset. There is also the other problem of excess manpower that AMD isn’t allowed to release lest they lose their grant. Anyone familiar with wafer manufacturing knows that an idle Fab however less costly is just as bad as an underutilized one.

If there is one reason why anyone should believe the rumour it has to be based on this simple fact. Nobody builds or upgrades a Fab without expecting enough volume to sustain the added operating cost, let alone a return on investment. The initial assumptions made to support an AMD with two Fabs did not materialise and the result of which is just one idle Fab that it cannot afford to keep. Even if AMD did have the money to upgrade Fab30 to 300mm/(Fab38), there won’t be enough volume to support such a massive increase in operating cost. Clearly AMD finds no use for Fab38 at the moment and if AMD plans to keep Fab30 idle then that simply goes against any asset-lite approach. An unutilized asset which incurs cost doesn’t make any sense. What makes more sense is a foundry like TSMC with enough customers to fill a Fab jumping in and taking over. This even coincides with the other rumour that TSMC will ramp AMD’s 45nm in 2009.

11.07.2007

Barcelona Benchmarks Are Non-Compliant - SPEC

As if the initial Barcelona benchmarks submitted eons ago wasn't bad enough, SPEC.org appears to have labelled them as non-compliant. IBM having problems securing enough Barcelonas failed to meet the requirements of shipping systems 90 days after submitting results.

What I find really surprising is the fact that even a Tier1 vendor like IBM can't seem to get hold of AMD's latest quad-core. If an important customer can't even ship a lower bin 1.9Ghz Barcelona months after product launch one has to wonder how many has AMD really managed get out of the door. I was joking around when I said AMD most likely shipped 20,003 Barcelona's because it's the lowest end of the statement "shipped tens of thousands". With the news spreading and the gathering noise about K10's lack of availability, it appears my tongue in cheek comment may be a bit more accurate than first thought.

IBM fails to ship even the most meager four-core Opteron box - The Reg
"In the meantime, IBM has to look the sucker with NON COMPLIANT stamped all over its benchmarks."

If you're one of those that ever wondered what is the worst kind of evidence when caught doing a paper launch,... well, now you know!

11.05.2007

What's In A Price?

In basic economic terms, 'price' is the monetary equivalent of 'value' at a particular point in time. But 'value' is such an abstract concept that it varies from person to person, from time to time and depends very much on circumstance. One such circumstance is of course availability. We know the more scarce an object is the more valuable it becomes. The second is the benefit it provides. If Phenom is the best processor at any meaningful measure, naturally it should also be the most valuable processor in the market.

Then why is Phenom being rumoured to launch at a priced only equivalent to Intel's mainstream quad processor, the QX6600 at $288? For a consumer, the bottom line is value for money and usually that means the most performance per dollar spent. Processors are typically priced based on how they will perform and AMD and Intel follows this accordingly. So at the end of the day, it doesn't matter what the benchmarks says or what some crazy blogger thinks. If AMD has priced its next generation processor right around the bottom of Intel's old generation products, there isn't much anyone can say about how badly K10 turned out to be.

How much is Phenom valued? (as per Newegg 5th Nov 2007):
Intel Core2 Extreme QX6850 3.0GHz at $1029.99
Intel Core2 Extreme QX6800 2.93GHz at $1015.00
Intel Core2 Extreme QX6700 2.66GHz at $949.99
Intel Core2 Quad QX6700 2.66GHz at $534.99
Intel Core2 Duo EX6700 2.66GHz at $319.99
AMD Athlon64 FX-74 at 3.0GHz at $299.99
<-- Phenom launches here -->
Intel Core2 Quad QX6600 2.4GHz at $284.99
Intel Core2 Duo E6850 at 3.0GHz at $279.99

Phemon performance sits where it is priced. End of discussion? Not really because we can still discuss how launch prices are typically overvalued due to the anticipated initial demand. But that's just beating a dead horse.

10.29.2007

The Game of Leapfrogging Needs At Least 2 Frogs

Do you recall the numerous times when disillusioned AMD die-hards repetitively say “well if it wasn’t for AMD, there won’t be any competition… ”. With the release of Penryn, Intel's 45nm QX9650 ahead of Phenom whilst adding another level of gap in performance, I really think it's time for the "fanatics" to stop talking such nonsense.

The moment we see Intel sand bagging its “Extreme Edition” to levels just enough to keep a noticeable distance from competition that is the point when we can say that real competition is dead. AMD has stopped pushing Intel to release what’s at the edge of what it can offer and it appears that things won't change much on this front. As AMD tries to squeeze water from a rock with it's soon to be released Spider platform, Intel on the other hand launches a product that beats everything in the market without even trying. The sheer amount of interest in overclocking Yorkfield only points to the untapped capability of Intel's newest 45nm CPUs, ready and waiting when real competition do come around.

Benchmark results on Intel's next generation CPU family is all over the Internet and it continues to look bad for AMD:

These are just sample benchmark results randomly taken from the TechReport.

I think the key message that Intel wants to come across with the Penryn launch is the noticeable improvement in power efficiency. Performance is only secondary since it is obvious by now that Intel has a tight grip on this crown. Launching the new processors at the existing speed grade of 3.0Ghz is only meant to ensure that everyone takes notice of what 45nm brings to the table. The power efficiency improvements are quite impressive and any performance gains achieved while transitioning to an industry leading process node is just icing on the cake.

As if things couldn't get any worse for AMD, There is another Phenom benchmark review using Crysis that shows exactly what it means for AMD. It's indeed a crisis when you're soon to be released processor is already beaten before it even gets out the door. In the last earnings call when AMD said that Phenom will allow them to enter markets where they couldn’t normally participate, by looking at these latest benchmark they would be lying if they meant the performance market.

10.23.2007

Ah Yes! That DTX Again

Once hailed by some blogger to be a potential source of revenue, AMD's DTX surfaces yet again to remind everyone that it's still alive. In fact this time around it has a complete set of specifications. I've already given my verdict on the outcome of this AMD endeavour and it appears that theInquirer completely agrees with my opinion.

by Wily Ferret: "The DTX spec appears to bring nothing new to the table, bar some compatibility with ATX which, to us, seems contradictory in purpose if not actual physical reality. Chalk this one up for another veto by the Taiwanese board-making mafia, then."

Like I said in the past, DTX is facing an uphill battle. The fact that the dominant player in the industry isn't supporting the standard already creates enough doubt for mobo makers not to waste time on such a risky platform. The second and also the biggest problem is the fact that SFF's already exist in proprietary formats . Large OEMs already have them in their own unique way and it is that differentiation that generate healthy margins in an already saturated desktop market. An open standard means open competition and clearly DTX only means low margins to OEMs. To illustrate further, this is just like AMD coming in and creating an open standard on Mac PC's. Clearly if everyone can now make Mac's, guess what that does to Apple's business?

As to the future of DTX? The TechReport spells it out even better:
"Nearly every motherboard and chassis maker we contacted for this story had a similar position on DTX. Publicly, they have all announced support for the standard, usually in the form of a single product or project, in conjunction with AMD's efforts. Privately, they are hedging their bets, waiting to see whether DTX gains any momentum in the market before committing to producing anything in volume".

Other than to remind someone that we told him so, I must admit to not really having any substantial reason to write about this topic -- and continue beating this already dead horse. Apologies.

10.18.2007

AMD's Q3 2007 Report - How Deep Is The Hole?

In a market that saw Intel make $1.9B in profit, AMD continued to post another $400M loss. But everyting isn't gloomy for the Sunnyvale company. If anything can be said about AMD's luck, it appears that the market seem to be trying its very best to save it from dissolution. Exceptionally higher demand in Q3 helped provide significant gains in AMD's topline. The consistent gross margin increases from AMD and Intel shows that there is indeed a shortage of processors to go around. There seem to be an armistice in the price war at the moment which limits it only on the consumer mobile space. This allowed both companies to significantly increase revenue and ASPs sequentially.

AMD’s Q3 2007 numbers:
Revenue at $1.63B up $300M from last quarter
Operating loss cut in half to $226M from $457M in Q2
Gross margin is up at 41% from 33% last quarter.

Some key notes from the conference call include:

AMD planning to “ramp” 45nm in the 1st half of 2008. This means we could probably see AMD’s first 45nm mid Q3’08 the very least. This contradicts the rumour that came from fabtech that suggests a delay. AMD did mention a 6% increase in CAPEX to support the ramp.

AMD shipped “tens of thousands” of Barcelona CPUs in Q3. If I were to guess exactly how many while basing on how AMD plays around with words while never making understatements, I would say they managed to ship about 20,003 units. This is because you need at least two 10,000’s to be able to at least say “tens of thousands”. The 3 extra units were the ones sent out free to the 3 reviews sites.

AMD plans to ship “hundreds of thousands” of Opteron and Phenom Quad-cores in Q4. If you guessed that to be about 200,003, then you should look into becoming a physicist.

When asked to explain the abysmal Barcelona speeds and poor 65nm yields, AMD said that Barcelona’s problems have nothing to do with manufacturing or their 65nm process. I'm not sure how good their trouble shooting skills are, but either what they said is true or they really haven’t figured out that that is indeed the problem. AMD said that Barcelona’s yield is in-line with 65nm yields (There you go. A clue!). Instead, they suggested that K10 has an issue with "tuning the design to the technology". From an engineering point of view, that doesn’t really sound less frightening than "manufacturing issues".

Overall, AMD did beat the market estimates and is truly heading towards the right direction. Serious. If the trend holds and this market conditions remains, there is a very slim possibility of AMD breaking even (which i personally doubt). But again, the dynamics of a market with healthy demand is considerably different from one where they have to fight tooth and nail for a sale. It remains to be seen how much of the gains AMD made this quarter are bottom line improvements rather than gains acquired by simply riding out the current upside in the market.

10.16.2007

Intel's Q3 2007 Report

Intel today announced very strong financial results for the 3rd Qtr of 2007:
• Revenue $10.1 Billion, up 15 Percent Year-over-Year
• Operating Income $2.2 Billion, up 64 Percent Year-over-Year
• Record Microprocessor, Chipset and Flash Unit Shipments
• Net Income $1.9 Billion, up 43% from last year, 46% from last Qtr
• EPS 31 Cents (expected: 30 cents)• Gross margin: 52 percent

Even more impressive is the Q4 2007 guidance:
• Revenue: Between $10.5 billion and $11.1 billion. (expected: $10.4B)
• Gross margin: 57 percent plus or minus a couple of points.

The atmosphere at the conference call sounded like it was 1995 once again. Record revenues, healthy margins, incredible growth, laughter and congratulations were in order. Not a word about the competition as if it wasn't even worth mentioning. The closest thing that would remind you of AMD is the comment made by Intel about how they walked away from some of the low-end businesses and having the unique ability to cherry pick markets due to its strong product portfolio.

The global demand for CPUs was healthy and we can expect AMD benefit similarly. To paint a complete picture of the battle for market share between AMD and Intel, we need to watch AMD's margins closely. Market share gains in servers and higher ASP in desktops for Intel means AMD is under pressure from all 3 platforms especially in mobile where Intel's ASPs were also down. We'll just have to wait and see if it's significant enough to cancel the upside in the market.

10.15.2007

The Fundamental Law of Progess: NEW > OLD

We once claimed that major OEMs are ignoring Barcelona and the report today from ZDNET confirms this to be true:
"AMD may have a bigger problem since you can’t even order these systems from any of the major server makers and none of them can tell you when their Barcelona servers will be available."

None of the major OEMs seemed to be rushing out with their new K10 systems. The fact that the Big 5 cannot commit on server availability can mean several things mostly which can only be bad for AMD. Normally when you have a ground breaking product every OEM wants to be the first to market. But when AMD's new product violates the fundamental law of progress that demands all NEW PRODUCTS MUST BE BETTER THAN OLD PRODUCTS, it’s no surprise many are willing to wait, if not too afraid to try.

It is increasingly alarming how AMD seemed to be moving backwards. We've already given up hope that AMD would once again beat the competition (Intel, Nvidia) but at the very least we expect them to beat their older generation products. The introduction of slower 65nm CPUs and now K10's inferior performance to K8 are just some of the bad habits AMD seemed to be developing.

The article also tackles the question about Tigerton’s availability. The result of George's investigation showed that anyone can order Intel’s new server MP but with a product shipment of within a month or so. Whereas compared to Barcelona, orders are not allowed without even a promise when one can order. In the business world there is a big difference between an order taken and an order declined. Guess which one involves making money.

10.10.2007

Phenom Problem

The good news is that Phenom is confirmed to launch next month (probably Nov 30 2007). The bad news is 2.4Ghz is the best AMD can come up with while it gets beaten to market by Intel's 45nm SKUs. Setting it up against Intel's QX6850 at 3Ghz, anyone would think it's a bit inhumane and sadistic to run a side by side comparison when AMD is in a big and embarrasing disadvantage.

2.6GHz is expected to ship on the last working day of this year (Dec 2007) while anything higher including the FX chips will arrive sometime in spring. In a manner typical of AMD, its Desktop parts appears to be delayed and expected to be underwhelming even before launch. We can only expect another round of horrible benchmark comparisons for AMD, in most cases left trying to compete with its own Athlon FX CPUs, never mind trying to beat Intel's Core2. Phenom's poor showing should stifle the hope anyone may yet have, thinking that K10 will retake any kind of meaningful leadership.

Based on our experience with the Barcelona launch and the relatively low speed of Phenom, we can expect this to be another paper launch, only meant to save face due to competitive reasons. If you're one of those loyal enough to buy inferior products to support the underdog, don't expect to get hold of these until next year.

Phenom 9 Series
9500 - 2.2Ghz - 89W - Nov 2007
9600 - 2.4Ghz - 89W - Nov 2007
9700 - 2.6Ghz - 125W - Dec 2007
9xxx - >2.6Ghz - Q2 2008 <- performance wall?

Phenom FX
FX82 - 2.6Ghz - Q1 2008
FX8X - Q2 2008

10.08.2007

AMD Finally Admits K10's Inferiority

AMD submitted scores to SPEC.org that finally puts an end to the debate. AMD’s K10 is inferior to Intel’s Core2 microarchitechture. At it’s current state Barcelona cannot even compare with its own higher clocked K8. Even if K10's clock speed is successfully improved to 3GHz, it still wouldn't be enough to overtake Intel.

We've warned on this blog how K10 will be dead on arrival and discussed how in its current broken state creates a conundrum of competing with its own product line at the low end of the performance scale. It seems that a lot of you who agreed are correct. The scores are worrying for AMD.

SPECint2006 (base/peak) - 2P system
AMD 1.9GHz - 9.97/11.3 (K10)
AMD 3.2GHz - 14.1/15.2 (K8)
Intel 2GHz - 14.2/15.6
Intel 3GHz - 18.9/20.8

SPECfp2006 (base/peak) - 2P system
AMD 1.9GHz - 10.7/11.2 (K10)
AMD 3.2GHz - 14.2/14.5 (K8)
Intel 2GHz - 14.5/16.9
Intel 3GHz - 18.4/21.4

You can make quite a lot extrapolation and analysis from the scores but you will ultimately arrive at the same conclusion. That the capability of AMD's new processor falls short and flat on its face. They may be single threaded benchmarks but they highlight the core potential of the design in terms of per-core unit processing ability. When Intel's 45nm processors arrive, Penryn next month and Nehalem less than a year from now, we can only expect the gap to increase.

Thanks to axel for raising the awareness.
RTW discussion here.

10.05.2007

RIAA Wins Landmark Case

From Ars Technica:

Side stepping a bit from the usual subject and focusing instead on the landmark case Capitol Records v. Jammie Thomas. I certainly don't want to inflate the implications of this case although it is precedent setting and affects the future behaviour of the RIAA against the 'pirates'. The rest of the world seemed to be polarised on this issue as if it is black and white, Record labels versus music fans, them against us. This isn't always the case.

In fact there is something unique about this legal battle that may not necessarily be applicable to most piracy cases. The evidence against Jammie Thomas is overwhelming. The problem was that she's quite tech savvy enough to work herself around the Internet but at the same time tech stupid to have used the same username wherever she went. Even when using Kazaa! (In fact using Kazaa speaks volume on what kind of Internet user she is). The question of willful file sharing is pretty much evident in this case. The big problem for the RIAA is that everyone is not as blatant as Ms Thomas. Gathering evidence that corroborates wouldn't be as easy.

For the RIAA, its always the case of bad publicity whenever it comes out as sues its customers. In fact I blame the RIAA and the MPAA for making everyone like Jammie Thomas aware of the possibility of getting music or movies online for free. They're the biggest piracy advertising movement on this planet locking in anti-piracy ads on everything they touch showing people that it can be done.

The record labels are corporations made up of people like you and me. The tactics they're employing annoys the hell out of everyone including music fans. We need to send the message to the record labels that we own MP3 players not CD players. We stopped buying CD's 5 years ago and they have yet to wake up and align their business to our needs. I don't care if you get your music illegally or not, but I do believe that blatant actions by the defendant in this particular case is quite over the top. Again, it's not always black and white.

10.03.2007

The Story Behind Intel's Breakthrough Transistor

Here's an interesting article about the development of the halfnium based high-k plus metal gate transistor that will debut next month on Intel's 45nm processors. Written by those deeply involved with the research, it shows a glimpse of how Intel's R&D diligently work on finding solutions to problems that are predicted to arrive only in a decade or so. The research for the replacement of the SiO2 gate oxide started ten years ago and was completed in 2004. The decision to implement the technology for 45nm in 2005 is a testament to Intel's lead with the rest of the world. Leading the 45nm transition is a feat by itself. But doing so with a key technology advancement makes it even more frightening.

The High-K Solution

The article may also leave you with a conclusion that without this new high-k technology, AMD's 45nm processors will be disadvantaged in terms of power efficiency and performance customisation. As Nehalem arrives at a time when 45nm matures, a strong microarchitechture standing on top of a highly advanced transistor technology is probably the last thing AMD needs.

"The invention of high-k plus metal gate transistors was an important breakthrough. Although we could have continued to shrink transistors to fit the dimensions needed for the 45-nm generation without this breakthrough, those transistors would not have worked much better than their predecessors, and they certainly would have expended more watts. We're confident this new transistor can be scaled further, and development is already well under way on our next-generation 32-nm transistors using an improved version of high-k plus metal gate technology". - MARK T. BOHR

10.01.2007

Intel's WiMAX Push

Intel demonstrated during its recent Developer Forum a WiMAX enabled laptop. The laptop based on the Montevina platform which is scheduled to be released next year contains within it "Echo Peak", a WiFi and a WiMAX compliant chipset. These next generation Centrino notebooks will enable seamless Internet connection - assuming of course that there is a WiMAX Internet service provider close by. The problem at this point in time there's not so many of them around.

Being the founding member of the WiMAX Forum, Intel is trying to accelerate implementation of this open, IP based standard by driving end user availability by integrating WiMax with Centrino. 2007 is coming to a close and while the list of spectrum licenses and infrastructure deployment are growing, still it may not be enough to guarantee universal adoption. The struggles and the financial burden inflicted by 3G are all too fresh to make anyone less skeptical with new communication standards. Especially ones that promises the all-too-familiar "increased bandwidth for media rich content".

None the less, Intel is forging ahead and will do its part to ensure that end-to-end implementation goes according to plan (i.e., Nokia). 2008 should be the year the WiMAX user base starts to trickle, increase and hopefully create enough demand for telecoms to take notice. Intel understands that it won't be its Network & Communications Group that will ultimately benefit from the initial SoC sales (comms silicon on an open standard = low gross margins). Instead it believes that an anywhere, anytime Internet connectivity will ignite more demand for mobile computing. Intel's roadmap for mobile and UMPC products clearly align with its WiMAX strategy and along with it its predicted market growth - a clear emphasis on its pro-active business approach.

In contrast, if anyone wishes to know what AMD is doing to promote ubiquitous Internet connection, they created this brochure to make perfectly clear what their products are. So far all they have is this brochure! Naturally AMD will be benefiting from the increased mobile demand, but Intel once again will be associating Centrino with WiMAX in the coming years like what it did with WiFi. Intel's marketing approach appeals to end user needs and again this will be very successful. AMD's brochure talks about AMD Connect (TM) but I need someone to explain to me what exactly is AMD selling.

Sharikou's Journal Loses the Argument

This doesn't mean Sharikou had a case for argument in the beginning. Anyone claiming Intel's bankruptcy any time soon (Q2'08) or AMD's 30% market share "run-rate" only attracts ridicule followed by the immediate loss of credibility.

After the controversial existence in the blogosphere we can finally conclude once and for all that Sharikou has lost the argument. Godwin's law states that whoever mentions Nazi's or Hitler in a discussion loses the debate.

Sharikou said: "I once concluded that Intel's exclusionism has its roots in NAZIsm."

End of discussion.

9.27.2007

Leaked Toliman Die Image

Lately I have been receiving leaks from inside AMD and Intel from anonymous readers. Some of them I cannot reveal since it could put the person in a lot of trouble due to the sensitivity of the subject matter and their obvious involvement. But some do advise to reveal the secret. Like for instance this leaked image of the soon to be released Tri-Core K10 (code named Toliman). Since this leak was passed on to me by GutterRat from someone else, I cannot guarantee the authenticity of this image.


9.21.2007

Reading Graphs 101

It should be obvious by now that a lot of folks in the semiconductor industry visit this blog and any wild speculative comments about chip production never gets a free pass. I get quite a few myself but I am always grateful for the learning experience. But for some people, it's like banging your head against the wall.

Take for instance making a claim about things beyond ones expertise. There's a big difference between making claims and stating an assumption. The 1st mistake is making claims about a company's future process. Nobody on this planet except an Intel or AMD approved spokesperson will disclose or make a statement about future yields. You get fired for breaking that rule and if someone does, normally you won't get proof anyway. So if you hear an outsider making claims about future yields, save the grain of salt and dismiss the claim outright. The 2nd mistake is presenting it as facts and using it for one's argument. The 3rd mistake is to keep on insisting even when provided with counter evidence.

Take for example when Scientia said:
"Intel's yields, in contrast, on its brand new 45nm process will take a couple of quarters to reach maturity... Intel will improve its 45nm process and this should pay off by Q2. The process will be mature when Nehalem launches in Q4 08. ".

InTheKnow countered with this evidence (from Mike Bohr, Intel senior fellow). But if you thought the discussion should have ended there, you're wrong.

Scientia's comments about this graph:
"No. You are reading the graph wrong. What it actually shows is that 90nm had worse initial defect density than 130nm but about the same improvement rate. The chart further shows that there was no improvement in initial defect density with 65nm but the rate of improvement got worse. It further shows that 45nm is close to 65nm and worse than 90nm. Again, this matches with what I said."

I'm not sure if Scientia is deliberately misreading this graph but this is the worst graph interpretation I've come across. The way I see it, and if I were to stick to the main point, 45nm matures before 2008 as each node reaches maturity quicker. This is right smack into the 45nm early ramp.

Here's InTheKnow's more detailed and accurate interpretation.
1) Intel required ~24 months to reach the same level on 130 nm that they eventually reached on 90 nm.
2) Intel reached the flat portion of the plot in ~22 months at 90 nm. This despite several flat spots on the graph that showed significant yield hurdles had been encountered. I would expect this since the 90nm transition also overlapped with the 12 inch transition somewhat.
3) On 65 nm Intel matched 90nm yields in ~19 months. Yields continued to improve from beyond the 90 nm levels.
4) 90nm launched around the end of December '04. Intel had reached the flat part of the graph ~2 months prior to this.
5) 65nm launched in Jan '06. Intel matched the 90nm yield levels ~3-4 months prior to this.
6) 45nm is now at about the 18 month point on the plot. If they are matching 65nm yields then they should be very close to the 90nm yield level now. The launch is believed to to be 2 months away and they should be well into the mature portion of the yield graph by then.

9.20.2007

Intel Ticks On November 12

It defines Intel's cadence of process and design execution, but for AMD, "Tick - Tock" is beginning to sound like the countdown to its own dissolution. Every time Intel makes an announcement or a demo much like this week's IDF, AMD by comparison just looks more and more pitiful. It can't be said that AMD didn't bring this upon themselves. For the life of me I cannot comprehend why would AMD think that announcing plans to ship 3-core defects can be considered as stealing thunder while Intel talks about 4, 8 and 16 core CPUs.

Of course, the misery doesn't end there, while still trying to recover from its abysmal product launch, AMD is left with no choice but to look at their fluke 2.5Ghz Barcelona beaten to death by Harpertown, Intel’s soon to be launched, 45nm Xeons. The big difference is that the new Xeons with the 1600MHz bus has an official launch date and will be shipping in volume real soon.

The benchmarks confirms Intel's claim to floating point superiority, further increasing the performance gap with AMD. The only thing worse than stumbling is doing so while the competition executes efficiently.

From the TechReport:
Those new Opterons will certainly have their hands full with Intel's 45nm Xeons, though. The Xeon E5472 extends Intel's performance lead over the fastest quad-core Opteron we've seen yet, the 2.5GHz model 2360 SE. ...it looks like Intel will continue to lead in the server and workstation markets. The same may be true in other markets served by these same basic CPU designs, but only time will tell for sure.


9.16.2007

Raising the Dead

There is a rumour floating around that AMD is planning to ship triple core K10’s. Quality and Reliability engineers at AMD are scratching their heads while Intel’s Yield engineers are probably rolling on the floor laughing at this obvious desperate attempt to salvage revenue from traditionally defective products. If indeed true, I can make a guess that this is a marketing idea because no sane product engineer would want to be associated with such travesty.

Some may already be calling this a clever move since according to some, a gap exist in the market between dual and quad core CPUs. And on top of that, Intel’s MCM approach prevents it from creating their own backward stepping 3-core CPU. Let me just say that is a silly assumption. First of all, what’s stopping Intel (besides good yields and common sense) from disabling one core from the 2nd chip to create a triple-core? Secondly, while there may be a gap between the numbers of cores, you won’t find any gap in pricing. There is no niche segment to take advantage.

There is a known relationship between yield and reliability which is why most semiconductor companies do not ship products from a bad production lot even if some dies do past the test. To illustrate the real concern, medical (i,e., heart pacers) and automotive companies are very strict when it comes to yield and how maverick lots are handled. While microprocessors built for PCs and Servers do not require similar tight controls, consumer level quality requirements aren't that far off. What is alarming is AMD's willingness to sacrifice quality over revenue.

When a CPU is designed to run at 2.6GHz and the output maxes out only at 2.0GHz, there is clearly something wrong with the process and the product's physical make up. The farther the products are from the design target the greater the uncertainty is with the reliability. Salvaging the CPU by disabling one of the cores does not remove the risk that the product would perform normally over time or is free from time dependent defects. No matter how anyone would want to spin this, AMD's compromise with quality says a lot about how poor their yields are and how desperate they have become.

Update: 18th Sept 2007
Intel's official response to AMD's tri-core:
Asked in a press conference following his Intel Developer Forum keynote how Intel might respond to AMD's recent announcement of a planned three-core processor for early 2008, Otellini offered a brief but savage response: "We see a distinct advantage in having all the cores on our die work."

9.14.2007

AMD’s Orwellian Product Launch

The controlling of the media, the use of strange words to confuse people, the manipulation of results to cast themselves in a better light and the propaganda about the cause they are fighting and how it is supposed to be for the good of all. No, I’m not talking about an authoritarian regime. I’m talking about a public corporation that is in a terrible crisis and that trying to manipulate reality seems to be its last resort. AMD’s spin and propaganda machine is running at a level that even a fully secured dictator would learn a thing or two. But journalists are taking note and are starting speak out. Well, at least those that were brave enough not to sign a Non-disclosure Agreement (NDA) in the first place.

The latest story, one which is related to AMD's NDA scandal comes from the INQ as the chip company once again tries to force journalist to sign away their integrity. Mike has a point in asking the real purpose of the NDA when in fact no secret is ever disclosed. The terms of the NDA including the one the Thai journalist “walked out” on seem to suggest that the underlying purpose is really to sanitise and control the stories. AMD’s desperate need for such tactics only magnifies the obvious fact that AMD has plenty to hide.

…Hiding not so pleasant details like Barcelona's performance and how it was indeed a paper launch with delayed and very limited samples sent out for benchmarking. The latest charge from AMD’s arch-nemesis George Ou, is the omission of Intel’s best scores while never disclosing the reason why the scores were lower (auto-parallelization=off). To be lying and cheating while comparing to the slower of Intel's offering is just reaching deeper levels of sleaze for AMD.

9.10.2007

Time Of Death: 0:00 am September 10 2007

AMD’s new micro-architecture was officially launched today and at no surprise to anyone who contributes to this blog, Barcelona is dead on arrival. Doubters like ourselves were told to wait for this day. Sept 10, 2007 was supposed to be the day AMD takes back the performance crown to the rejoicing of its followers. But yet again, AMD disappoints. The promise of a 40% performance lead at the beginning of the year was cunningly and gradually reduced to a trivial performance-per-watt advantage. An advantage that current K8’s probably already had but nonetheless insignificant to prevent AMD’s market share erosion.

To AMD's credit, the improved IPC that Barcelona brings with it is quite noticeable. Whereas in the past the K8’s were severely lagging both in clock speed and in IPC. But with Barcelona the gap narrows down to raw clock speed. Like we mentioned several months ago, GHz is once again King and AMD’s clock frequency problems aren’t quite easy to overcome. Anyone speculating that AMD can ramp its 65nm SOI to 3GHz by Q1’08 is only preparing for another public humiliation. For a number of reasons; Barcelona’s already high thermal dissipation at 2GHz, its poor 65nm SOI process and the very large die, all create an insurmountable barrier that AMD can never overcome. You should notice how Barcelona is debuting with a very low clock frequency with an already high 2.6Ghz original power draw.

From the TechReport:

Note: Sample benchmark from TechReport and may not be representative of the entire comparison.

“Nonetheless, AMD now faces some harsh realities. For one, it is not going to capture the overall performance lead from Intel soon, not even in "Q4," which is when higher-clocked parts like the Opteron 2360 SE are expected to arrive… On top of that, Intel is preparing new 45nm "Harpertown" Xeons for launch some time soon, complete with a 6MB L2 cache, 1.6GHz front-side bus, clock speeds over 3GHz, and expected improvements in per-clock performance and power efficiency. These new Xeons could make life difficult for Barcelona… this CPU architecture may not translate well to the desktop, where it has to compete with a Core 2 processor freed from the power and memory latency penalties of FB-DIMMs…”

From Anandtech:
“When you are looking for the highest performance however, Intel has still a solid advantage with it's 3 GHz Xeon x5365”

Note: Sample benchmark from Anandtech and may not be representative of the entire comparison.

Anyone thinking this is a good start for K10 is fooling themselves. This is a terrible start for any new product, never mind one that is desperately needed to be better than the competition. When Core2 came out and trounced everything AMD had, even Hector Ruiz was forced to admit that a new generation processor is always expected to "leap-frog" the competition. Clearly things are different this time around. Barcelona's problems and delays when combined with Core2's massive performance improvements over previous generations created a gap too wide for AMD close. For the first time in several processor iterations between Intel and AMD, the latter's new processor falls short. While AMD will be stuck with an already beaten K10 design for the next 3-4 years, in a few months Intel will move to 45nm that will allow it to clock even higher, reduce the cost even further while drawing less power. Expect the gap on any meaningful metric to continue to increase as AMD's K10 is simply not good enough.

9.08.2007

The Leaked Barcelona Numbers

Leaked Barcelona launch slides have reached George Ou. Obviously the numbers doesn't look very good for AMD. But if you've been in this blog before, then you shouldn't be surprised.

Instead, I am quite intrigued by the nature of the leak. It looks to me that if Barcelona's numbers are weak, AMD has much to gain by leaking the numbers and slowly deflating everyone expectations before the launch. These sort of tactics never really amount to anything in the long run as we've already seen how Core2 was benchmarked to death when it was launched. Thanks to the internet and the growing numbers of benchmarking sites, AMD's PR Department, specifically the Damage Control Team will be very busy for the next few years.

Barcelona's Entry Level Dilemma

Even George Ou agrees with the dangers of launching a next generation product that isn't quite ready and worst, in small quantities.

From ZDNET:

Barcelona at 2 GHz will only threaten high-margin AMD CPUs but it will not threaten high-margin Intel CPUs because the clock speed isn’t high enough yet. When a $250 Barcelona DP quad-core kills a $750 Opteron DP dual-core processor on performance, who will buy that $750 part? When a $700 Barcelona MP quad-core kills a $1600 Opteron MP dual-core processor, who will buy the $1600 part? Barcelona will effectively erase all of the high-margin CPUs in their line-up next week when it launches.

Like I mentioned in my previous blog, AMD's decision to go ahead with the launch renders its entire Opteron line obsolete. AMD even make it worse for themselves by making Barcelona socket compatible therefore giving its customers the ability to quickly switch to the the new platform. This is very risky from a business point of view. The much needed revenue that the original Opteron line provides AMD can never be replaced by the new but lower volume Barcelona as it slowly ramps. It would be interesting to watch AMD's server inventory levels in the next few quarters.

9.06.2007

Value Gaming - game.amd.com

AMD recently launched a new gaming website. This is an excellent idea from a company that can deliver a complete gaming platform. There is just one tiny problem, it's 2 years too late. Where was this wise guy who came up with the gaming website idea two years ago when AthlonFX was king? The gaming crowd has moved on and AMD is just embarrassing itself by pretending to offer anything attractive which is at the moment quite impossible with a $300 quad core from Intel.

This 'gaming' site gives the same feel as the 'break free' website. It feels rushed, half baked and hollow. Browsing through only gave me a feeling of sadness for the smaller company that once had the right product for this very demanding and unfaithful market. The target audience for gaming sites are smart and knowledgeable. They read reviews, benchmarks and are constantly aware of what is the best and the latest. In a very obvious way this website hides information a gamer needs to create the best system. Understandably the site only offers AMD and ATI products. The problem is every gamer already knows they're not the best nor is it the cheapest. Which really leads to the question whether this was a useful exercise for AMD.

All in all, this is yet another poor marketing attempt with an advertising gimmick that is off timing and completely useless for its indented audience. If you think you have a different opinion then ask yourself the question, do you find the need to return to AMD's gaming website? I didn't think so.

9.03.2007

AMD and NIVIO

AMD recently announced a partnership with NIVIO along with an offer of an undisclosed amount of investment. NIVIO is a web based virtual desktop service allowing individual users the right to own virtual PC's for a monthly fee. As for AMD's motives for the investment, Giuseppe Amato, AMD's European technical sales and marketing director, said that this was part of the company's 50/15 initiative (50% population with Internet access by 2015). That is of course if you think Pinocchio's step father isn't lying.

If NIVIO becomes successful we're not talking about third world revenues. From a business point of view, AMD knows it has much to gain as this company can become a driver for demand. The potential to use thin clients to access a more powerful virtual PC is the concept behind NIVIO. AMD's Geode has the ability to expand in this space as the basic CPU for web access. Opteron can power both web servers at the front-end and the farm of virtual machines at the back-end. If this company is dead on about the trend in virtual computing, the decline in desktop PC revenue will be compensated by the pickup in server CPUs and AMD wants to be there.

But it is all a big IF whether the business does pick up. Currently there are quite a few "remote access" PCs being offered as a free service for basic features. This is for people with their own PCs at home which they can access remotely from anywhere. This somehow encroaches into NIVIO's remote PC concept. But, the significant part of the NIVIO's service is providing its users their very own "virtual PC". For a fee of $12.99, you can get your own virtual PC which you can turn on and access anywhere in the world if you have Internet access. The PC is a virtual machine in a shared resource environment.

Again the price is $12.99/mo for a virtual PC. Unfortunately, here's a real, non-virtual Dell PC selling for $11.00 a month. I'm not quite sure how well AMD thought this investment through because it only gets worst. The $11/mo PC from Dell is Sempron based. Talk about shooting yourself in the foot while stabbing your customers.

8.29.2007

AMD’s Last Options

What can be more useless than a stock downgrade after the significant drop? The rating of "Speculative Risk” from Citigroup’s Glen Young is the last of a series of downgrade given to AMD. And the reasons this time around are:

“… reflects recent product delays, the continued challenging landscape for microprocessor and graphics processor pricing and the increased volatility of AMD’s shares versus its peers [Intel, NVIDIA]… we see little prospect for [market] share momentum in coming quarters, and expect poor financial performance as a result,” he wrote in a research note this morning. “We look for management to provide a viable restructuring solution as a means to revisit our rating on the shares...”

We’ve discussed AMD’s need to restructure several times since the beginning of the year and the pressure only builds up as AMD continues to delay any announcements. But to be fair, restructuring is easier said than done which is probably why AMD hasn’t fully come forward with any plans. Invariably this is due to the lengthy discussions with legal and creditors about which course of action to take. While some companies restructure voluntarily like IBM or HP others go for bankruptcy which allows protection from creditors and gives the new administration more power to make drastic changes. For AMD and just about any semiconductor company with short product lifecycle, bankruptcy is not a favourable option.

Normally I would say that AMD doesn’t have a lot of options but if I was forced to give a few examples, this is what they would be:

  1. Keep the status quo, ride out the bad weather and hope for a miracle that the business picks up at least until they break even. Microprocessor volume demand grows ~15% YoY so AMD can sit around with two Fabs and wait for demand to outstrip supply. The only problem with this strategy is that it may take forever all the while being at the mercy of Intel's ability to manipulate pricing.
  2. Shut down Fab30 at the end of 90nm. If AMD wishes to return to profitability, this is a quick and effective move. Running 2 Fabs was made on an assumption that margins would be at least >45%. Clearly the environment has changed and AMD needs to face this reality. While this also helps AMD avoid the cost of upgrading the Fab to become cost competitive, this reduces AMD’s fixed cost, limiting the day to day cash haemorrhage. The challenge with this option and any other plan to sell or reduce headcount is the covenant they have with the German/EU government.
  3. Sell ATI. They already have the technology they need. They don’t need the additional quarterly loses. ATI will only continue to wither away if it continues to be under AMD. Not being able to deal and cooperate with Intel with equal footing as NVIDIA is a major disadvantage ATI doesn’t need right now. Separating the two companies can only be good for both.
  4. Go 100% Fabless. AMD’s margins are now close to ATI’s that this may only be the only viable solution. They can only blame themselves for rapidly commoditizing the industry. Of course we’re not talking about something immediate but rather in steps similar to #2 – shutting down the Fab once the process node becomes obsolete. We’re talking at the end of 65nm.
  5. Aggressive outsourcing. This is the mostly likely option AMD could take with a massive production offload to Chartered or TSMC, mostly for low ASP volume runners. Capital avoidance at 45nm makes this extremely attractive next year.
  6. Focus on niche. This requires a massive u-turn in its philosophy of “breaking the monopoly”. AMD definitely has the technology and roadmap to exit commoditized segments while delivering only on key markets. This will require a massive reduction in production capacity and headcount but if executed perfectly will protect AMD from Intel’s pricing pressure.
  7. Any combination with varying degrees of items 1-6 above.

AMD can still find a way out of bankruptcy. It’s just a matter of leadership adopting a different mantra and understanding that they don’t need to continue to knock heads with Intel in order to survive. In fact it is when they started deviating from Intel’s design approach and went ahead with their own ideas that they created their best product. Maybe it’s time for AMD to do the same with their business strategy.

8.23.2007

Walked The Plank Or Rat Jumping Ship?

Henri Richards departs from AMD:
"...AMD said Richard is resigning on "his own accord and on completely amicable terms."..."

Of course those are typical nice words use whenever a top level executive leaves a company. Whether he truly decided to leave or was pressured to do so, there's a slim chance that we'll ever find out what really happened. (Unless of course an AMD executive later on decides to write a book entitled "Barcelonagate"). But one thing's for sure and for whatever reason Henri left, it doesn't bode very well for AMD.

If Henri was pressured to leave, then the problem only points to AMD's abysmal marketing record which can only get worst with severely handicapped next-gen products. Or if Henri did decide to leave, it only suggests a bitter and irreconcilable disagreement. A product launch is the busiest time for marketing and leaving before such an event means a withdrawal of support or unwillingness to be responsible for its outcome. Changing heads before a war suggest there's internal confusion and conflict. Or maybe it's a simple case of integrity on the part of Henri against AMD's increasingly shady claims of leadership.

Meanwhile on the Intel front, the Centrino advertising blitz has begun (Intel Ads). Intel plans to halt AMD's gains in the mobile segment with an estimated $50M advertising budget. This is in contrast to AMD's overall budget of $20 for making this YouTube video. (And no, there isn't a missing 'M' in the $20 figure).

8.20.2007

AMD CEO Confirms Barcelona is DOA

This should remove any doubt about what to expect when Barcelona launches. When asked whether Barcelona will change the competitive landscape, Hector replied: "I expect us to regain position in the server market because Barcelona is a very strong product. It won't have the huge impact Opteron had. If you remember at the time Intel had no new product (to compete against it). So it will be more challenging.

If you want to know what he just said, it means "NO" in corporate double speak. If you try and turn his answer around, you'll find the true message: Intel currently has a product that we cannot beat and we expect Barcelona to regain the unspecified position in the server market - that same awful position we are at the moment.

When asked what was (is) the problem with Barcelona, Hector replies by saying that "the problem with Barcelona is that it is late". Trying to control themselves from uttering the word "DUH!", Mercury News continued and asked what specifically caused the delay. Hector responds by saying that they keep running into "gotchas". That's "technical glitches" according to Mercury News just in case you got lost in the technical jargon. Personally, companies that keeps bumping into 'gotchas' while calling them 'gotchas' doesn't last very long in my portfolio.

Of course Hector bragged about how they were the first to try the complicated native quad core approach. Not even with Intel's vast resources did they consider doing such a monumental task, according to Hector. I'm surprised he never thought that it was probably the same reason why jet packs or that solar powered flashlight never really took off. Maybe because it's a stupid idea. After clearly demonstrating such a failed strategy, I'm not sure it's pretty clever to criticize your competition who'd already shipped 1.2 million quad-cores and completely destroyed your business.

Surprisingly, Hector also claimed how Intel continued its illegal practices in Japan even after the JFTC settlement. He went on and said "When a customer tells you they have this plan with you and says, "I like it, I love it, we're going to do it," and 90 days later they change their minds...". I find AMD's claim to be very odd not only because they are assuming that people don't change their minds for a better deal but also because I do the same thing to annoying sales people just to get them off my back while trying to sell me something useless. Is AMD arrogant enough to think that their competition doesn't have anything better to offer and can actually change peoples minds?

You can read more here: Mercury News

8.19.2007

The AMD Yard Sale

From the INQ.

By now, everyone is aware how deep AMD’s financial troubles are. I don't think anybody with a sane mind is willing to contest this important fact. However, the debate continues on the idea of an AMD comeback. History is peppered with examples of how AMD survived through obscurity and difficulty and managed to come out of the red every once in a while. Some repeatedly use the argument that AMD have been in this situation before and are used to operating in such environment. Well, not really.

Never has AMD in its entire history come to an embarrassing situation where they’re forced to put up a yard sale just to keep the business going. This itself is unique and draws no parallel to what AMD experienced in the past. To add to that, the game of leap frogging is over while AMD is losing half a billion dollars on a supposedly very healthy market. Barcelona is broken and AMD normally makes a profit when demand picks up. Things are very different this time around. Once a company starts selling one-off, non-operating assets it's just a matter of time.


Zoomed photo of the sign:

8.16.2007

OEMs Ignoring Barcelona

OEMs have finally validated Barcelona and they don't like it. The rumours have been spreading and now it seems like the cat is out of the bag.


Advanced Micro Devices Inc. (nyse: AMD - news - people ), meanwhile, lost more than 5 percent to hit a 52-week low. Credit Suisse analyst John W. Pitzer, who took over coverage of AMD from another analyst, kept an "Underweight" rating on the stock.

AMD, Pitzer said, is receiving limited initial support for its new processors from large original equipment manufacturers, "due in part to lower than expected performance metrics and the delayed ramp of high-end chips."


If Barcelona's performance appears "lower than expected", it should be pointed out that half of the inflated expectations came from AMD's excessively exuberant Executives while the other half is due to unrealistic goals and poor execution.

The implications of having limited OEM support are massive and will be damaging to AMD in so many levels. The most critical of all is the scaling back of AMD offerings in the server space due to the impending decline of AMD-based server demand. OEMs aren't quite keen on introducing a new CPU with minute volume and sub par performance and yet is capable of "Osbourning" their existing K8-based SKUs.

Moore's law states that the number of transistors in a semiconductor doubles every 18 months. The economic equivalent means that the price of performance is also halved every 18 months. Barcelona's performance at 2.0Ghz severely lags behind Moore's law which is why it shouldn't really surprised anybody when OEMs are finding no value in it.

8.14.2007

Intel Ticks Off Another AMD Advantage

Intel's usual ruthless efficiency in ensuring AMD's speedy demise is once again demonstrated with the release of their newest quad-core Xeon processors. As if being massively ahead in performance isn't enough, pulling in the release of 3.0Ghz X5365 and the power efficient L5335 will ensure that all the barn doors are closed before the Barcelona horse can even bolt. AMD's last remaining selling point was power efficiency and with this release, it is going to be difficult to position Barcelona at any meaningful price point.

The new Xeon's are made with the latest rev.G silicon stepping which allows very significant reduction in idle power - AMD's last remaining "value" proposition. With the conspicuous L5355 identically running at Barcelona's peak speeds of 2.0Ghz yet with a TDP of only 50W (24W at idle!), Intel is essentially spoiling Barcelona's launch party.

"Intel innovation continues to enable us to be the multi-core trailblazer providing a choice of quad-core products for those craving the highest performance, lowest power and all points in between," said Kirk Skaugen, vice president of Intel's Digital Enterprise Group.

8.10.2007

The AMD Pyramid Scheme

According to Wikipedia, over 90% of the people who get involved in a pyramid scheme never recover their investment. Fitch, a leading credit rating agency have rated AMD’s latest offer of convertible senior notes as “Poor recovery prospects given default” with a chance of recovering investments below 10%. As an issuer, AMD is rated as a ‘B’, which we can only assume means ‘Bad’ if you look at the rate this company keeps recruiting unsuspecting creditors as the base of this hollow pyramid gets bigger and bigger.

Wikipedia lists the identifying features of a pyramid scheme:

  • Products being sold having no intrinsic value or being sold out of line with its fair market value – QuadFX, R600
  • Highly excited sales pitch (sometimes including props and/or promos). – PowerPoint slides, Best Premier of 2007
  • Little to no information offered about the company unless an investor purchases the products and becomes a participant. AMD mum about company plans
  • No product or a product being sold at a price ridiculously in excess of its real market value. As with the company, the product is vaguely described. – AMD ramps PPT slide manufacturing while real products gets pushed out.
  • An income stream that chiefly depends on the commissions earned by enrolling new members (creditors, investors) or the purchase by members of products for their own use rather than sales to customers who are not participants in the scheme. – AMD borrows money, again, and again
  • A tendency for only the early investors/joiners to make any real income. Hector Ruiz’ Ginormous Payslip in the midst of AMD’s massive losses.
  • Assurances that it is perfectly legal to participate. – http://www.breakfree.amd.com/

Just like any pyramid scheme, the collapse of AMD's business is inevitable if it doesn't choose to re-adjust its strategy. Of course AMD isn't an illegal money making scam, but the parallels are astounding if not hilarious. It's very obvious AMD is approaching the limit of its ability to raise cash while everyone estimates the company to return to profitability sometime in 2009, which is really too long and without guarantee. After trying to borrow $3.7B within less than 6 months in order to survive, I'm beginning to doubt AMD will be around very long.

As a consolation for those that continue to follow this company, Fitch believes that in a case of bankruptcy, AMD will be re-organised rather than liquidated simply because it believes this company isn't worth much if sold piece by piece. Like I said in my previous article. If Ruiz and his posse doesn't restructure, someone else will do it for them.

8.08.2007

Countdown To Disaster?

Having reached the top of PowerPoint leadership in creativity and innovation, AMD has decided to expand its new core business into Web publishing. Very recently launched is AMD's new website that is purely devoted to its struggle against the evil monopolist - Intel.

Here you will find a website that tries to look busy and comprehensive but after spending a few minutes clicking several different links to the same limited content, you'll find that there isn't a lot to see and learn. AMD simply created a site that should act as a central repository of Intel’s bad business practices before we all start forgetting. I have to admit, the idea is clever considering how short everyone attention span is these days. Bear in mind that the trials for the anti-trust lawsuit against Intel will only begin sometime in 2009. This website is an important reminder why AMD is struggling to survive today.

Or maybe that is what AMD would want us to think? The timing and the intensity of this new anti-Intel media blitz by AMD gives me an eerie feeling that there is something serious going on that is about to blow up. Although the timing is coincidental to the European Commission’s announcement, AMD will see no benefit no matter how the verdict goes. As it stands today, the market is already as free as it can possibly be. AMD has more than enough customers while the disastrous margins from both companies prove that competition is healthy. Pouring money into advertising and dubious studies won’t improve the market environment today, nor generate more revenue for AMD.

So you need to ask yourself the question why so much money and effort is spent TODAY. What is it that AMD wants us to think or feel? When Microsoft was labelled as a Monopoly by the Justice Department, Netscape’s significance as an internet browser has diminished. The significance of AMD’s PR stunt today will mean nothing when the verdict of the lawsuit is given many years from now. AMD knows this so again, why all this noise?

Think "scapegoat". We’ve seen Penryn engineering samples out in the wild while Barcelona should be announced later this month. But where are AMD's samples? Critically, where is AMD’s restructuring plan? AMD’s massive debt and fixed costs are crippling the company while investment commitments are prohibiting the company from making any meaningful adjustments. Scapegoats and pointing fingers are the visible symptoms of difficult and trying times.

It’s easy to see how AMD managed to paint itself into a corner. With the recent credit downgrade followed by the alarming credit crunch in the financial markets, there won’t be anyone bailing AMD out this time around. The possibility of an AMD collapse is stronger than ever and I just have the strange feeling that AMD has started giving us answers to questions that we may be asking sometime in the future. So one day if you find yourself asking the question,“Why did AMD collapsed?” Don't forget that AMD already made this website: BREAKFREE.

8.02.2007

Intel's Monopoly Profits

What do you do when your marketing department doesn’t have any appealing product to promote? One option is to spend your advertising money attacking the competition. At least for AMD, they believe this is a wise thing to do. It's hard to blame them when the slogan "best value" doesn't really appeal to anyone. The latest “Intel is a monopoly” assault from AMD came in the form of a report from one of its financial consulting firm cleverly disguised as an independent economic report. The bottom line is that AMD paid Dr. Michael Williams to make a supposedly damning case against Intel so it is hard to put weight on this study. But it makes for an interesting read if you're the kind that likes to read stories you already know how it ends.

To sum up the report, it says that Intel has profited ($60B) from its dominant position since 1996. AMD and ERS prefer to describe Intel's profit during the intense growth years as "monopoly profits". Nevermind the fact that Intel was trying to supply a rapidly expanding internet while AMD was busy reverse engineering Pentiums. The free market economy has a built in system that rewards ingenuity and leadership. Is AMD and ERS trying to convince us that making healthy profits from a technological or financial advantage is illegal? The idea that dominant companies should be stifled and disadvantaged sounds exactly the opposite of what free and open competition should be.

The ERS report continues to say that consumers and computer manufacturers will save $81B over the next decade if the gates of free competition are opened. The report appears straightforward enough and makes an awful lot of sense from an economic theory point of view. Free market competition does benefit the consumers. But that theory does not address the simple fact that AMD and Intel is a duopoly in the PC microprocessor market and that there are economic and technological barriers that prohibit anyone from competing. The quick entrance and exit of Transmeta can only demonstrate the likelihood that there won’t be more than 2 (significant) players in this industry.

To some degree it will never be a truly free market as supply creation is limited to a few players. Market forces never really played a primary role in the last several years to determine processor pricing. It was in fact the level of supply Intel was willing to commit capital into and how quickly the PC vendors and suppliers can build systems. The only time the forces of supply and demand kicked in is when AMD built its 2nd Fab where supply outpaced demand. Notice how margins quickly dropped as both companies had no choice but to keep lowering their prices .

But anyone hoping for a free and open competition can only expect disappointment. When Intel stopped offering rebates, AMD started struggling with massive loses and execution problems as it is quite obvious they miscalculated Intel’s response by a long shot. AMD would be an interesting economic case study of how a free and open market destroys a company engaged in business that requires high margins and quick capital turnovers. One can argue that when Intel was making "monopoly" profits, keeping higher margins, it was allowing a poorly managed AMD to survive.

Overall the study is nothing but another attempt by AMD to throw attention at its competitor and away from its failures and missteps. The irony of it all is in fact what AMD was wishing for; a free and open market, is the very thing that is causing them $2Billion in annual loses.


New Economic Study Finds Intel Extracted Monopoly Profits of $60 Billion Since 1996

Also Finds Consumers and Computer Manufacturers Could Gain Over $80Billion from Full Competition in Microprocessor Market

SUNNYVALE, CALIF., August 2 /CNW/ - A new economic study issued today by Dr. Michael A. Williams, Director, ERS Group, found that Intel has extracted monopoly profits from microprocessor sales of more than $60 billion in theperiod 1996-2006. Dr. Williams' analysis explains why pro-competitive justifications for Intel's monopoly profits are implausible. Williams also found that consumers and computer manufacturers could gainover $80 billion over the next decade if the microprocessor market were open to competition. The analysis noted that consumers would save at least $61billion over the period, with computer manufacturers projected to save another $20 billion, enabling them to increase their investment in R&D create improved products and greater product variety; and provide additional innovationb enefits to computer buyers around the world.
The ERS Group is an economic and financial consulting firm retained byAMD's outside counsel, O'Melveny & Myers LLP. - Aha! A Clue.