AMD's Market Share Gains Shows Deeper Problems

The latest numbers from Mercury Research confirms AMD gaining back 4% of the overall PC market share. The report shows AMD at 22.9% in Q2 2007, up from 18.7% from the previous quarter. Intel moved down to 76.3% from a high of 80.5% last quarter. All 3 segments (mobile, desktop and server) showed double digit growth from the previous quarters for not so clear reasons:

"The market demand in general was pretty strong and to be honest, no one understands why this particular second quarter was this strong," said Dean McCarron, founder and principal analyst for Mercury Research. "All the indications were for a low forecast and this quarter just blew those forecasts away."

McCarron continued to explain AMD’s inventory in Q1 and the unusually lows market share figures:

"Basically, AMD had an overstated share in the fourth quarter and an understated share of the market in the first quarter," McCarron said.

I hope this ends the discussion. AMD initially admitted to the problem and now Mercury Research corroborates with my theory. Between AMD and Mercury, I don’t think there is anyone who is more credible so we’ll leave it at that. (Those who were in vehement opposition need not worry because I promise I will not say “I told you so!” ;)

Going back to the market share report where it proves that AMD did maintain some of its previous gains, on the surface this represent good news for AMD. AMD wanted to increase mindshare and market penetration and this somewhat proves that taking back share is never going to be easy for Intel. But there is a fundamental problem that the 4% gain amplifies. If AMD was shipping at record volumes and at a market share of 22.9% on an exceptional quarter, then what would it take for AMD to return to profitability? 30% market share on a miraculous quarter? This is as good as a quarter gets. The loss of $600M at full capacity only points to a bigger problem and one that cannot be solved by simply producing more. But I seriously think AMD is on a “scorched earth” strategy with complete a disregard for creating investor value. Still, there is no announcement of a business restructure and because of that we can only expect AMD to lose at least half a $Billion every quarter. As for Intel, the amount of market share that AMD continues to hold is very frightening especially if you own shares. It must be very frustrating for Intel to maintain investor interest while at the same time fighting a rival on a destructive kamikaze mission.

AMD's Massive Drop in Graphics Share

The sinking ship seems to have more holes to plug than AMD can poke fingers at. The former ATI division not wanting to be outdone managed to show an equally depressing performance of lower revenue, lower ASPs and now a significantly smaller market share. I was always puzzled with the terrible results the Graphics and Consumer Electronics (CE) division showed during the last conference call. It's easy to expect that 3 quarters after the merger, a consolidated organisation should be allowing this division to turn a profit. I suppose I have once again underestimated AMD's ability to exceed even my gloomiest expectations.

AMD’s Q2 numbers are now explained by the latest market report from the John Peddie Research.

AMD's Q2' Earning Report:
Graphics -------------------------Jun 07------- Mar 07
Net revenue -------------------------195---------- 197
Operating income (loss) ---------(50)---------- (35)

Consumer Electronics
Net revenue --------------------------85 ----------118
Operating income (loss) ----------(22) --------- (4)

From TGDaily:
According to a report released by Jon Peddie Research (JPR) today, ATI is estimated to have reached a market share of 19.5% in the second quarter of this year, down from 21.9% in Q1 and down from 26.7% one year ago. Nvidia, on the other hand, is listed by JPR with 32.6%, up from 28.5% in Q1 and up from 19.7% last year.

Characteristically, AMD shows us the art of selling less and losing more money. They promised last December that the graphics side of the business would follow market trends and bring the merger into accretion. But then again, they also predicted that they will be growing the CPU business at 2X the growth levels. We all know how that turned out.

Of course, the biggest challenge for the Graphics & CE division is that it is operating at very low margins with 100% of its production already outsourced. With an almost consolidated SG&A, there isn't a lot more AMD can do unless it wants to touch the division's R&D budget which is always a bad idea. AMD is relying on foundries to improve cost by moving to smaller process nodes but these are short term gains. Everybody moves to smaller nodes. NVIDIA is just too nimble now for AMD to compete while Intel is quite happy with maintaining enough IGP’s/chipsets to enable its platforms. AMD needs a re-think of the graphics side of computing, but it seems this is hoping too much for the struggling company. My only advice after their abysmal performance last quarter is similar to their own asset-lite strategy. I think its time for the Board of Directors to start considering outsourcing the entire management team.

AMD's Analyst Meeting

AMD trying to be the next VIA? At least this is the impression I got. AMD seemed to be trying its best to convey the message that performance no longer matters. Sure, they showed a couple of slides and a demo of an enthusiast system that throws off everyone to think that they care about the insignificant niche of gamers and overclockers. But their primary message of focusing on efficiency rather than performance rings louder and nauseatingly repetitive. They keep talking about giving customers choice. How about they start giving their customers something that competes in the high-end segment. Having only "value" products doesn't sound like choice to me.

I can truthfully say that AMD is doing a good job of trying to fool itself into thinking that the desire of the market shifted to performance-per-watt the exact moment they lost the performance crown to Intel. The moment you can tell when the spin logic falls apart is when AMD tried to answer the question about "returning to profitability" in Q4'07. According to AMD, in order to return to profitability they need to improved their top-line (revenue). They keep trumpeting about how unimportant performance is for their customers while at the same time they seem to have forgotten that their company was making healthy profits right when they had the performance crown.

AMD showed some Barcelona benchmarks only to prove once and for all that the game of leapfrogging which they mentioned just a few quarters ago no longer exist. This supposedly next generation Barcelona core is only as good as Intel's 2.66Ghz Xeon. AMD also showed a "demo" of a 3Ghz Phenom with 3 graphics card. But is it really Phenom because I bet you can make that same demo using a 3Ghz Athlon? The lack of a complete suite of benchmarks only strengthens the concerns about the readiness and availability of these parts.

Also presented are AMD's future products segmented into the Fusion, Bulldozer and Bobcat platforms. While it was interesting to see what AMD is planning not only on the PC space but only on the Consumer Electronics segment, I think I can speak for many that we really would like to see Barcelona successfully ramp first. We'd also like to see how AMD survives for the next few quarters before they could talk about things further down the road. Unfortunately, no details were provided about asset-lite. I'm beginning to wonder if it's more like a strategy-lite problem.

Overall, a lot of self-serving and back-patting hype with nothing substantial to address the current problems both in terms of product competitiveness and financial performance. There was a lot of talk about the successes in the past and intriguing products in the future all the while ignoring the big white elephant in the room - $600M losses per quarter. Now with a very boring corporate agenda that is seemingly similar to VIA in terms of offering mostly "value" products, I can only imagine how abandoned AMD's fanatics feel. I haven't seen a single VIA fan out there because there was no reason to be one. What is the point of supporting AMD and its "value propositions"?

AMD's Credit Rating - Is This The Beginning Of The End?

“A major corporate credit evaluation firm today reaffirmed its B-negative rating on Advanced Micro Devices Inc. and warned that the company's debt-rating could be lowered early in 2008 if the semiconductor manufacturer failed to reverse the challenges it currently faces and improve upon its cash flow. A negative credit rating means AMD would have to pay a premium to attract buyers of its corporate bond and further sink the company into debt.“

The banks are getting impatient. There is significance in the timing of this announcement just two days before AMD’s analyst meeting and should be considered a shot across AMD’s bow. AMD needs to announce concrete plans to return to profitability. The statement from S&P’s Rating Services further confirms what we have been talking about in this blog. The first one is about the early signs of impending bankruptcy discussed in this post, which is the erosion of support from the investment community. This is the first clear sign that AMD will soon begin to have difficulties raising cash with reasonable terms.

The second one is about how AMD’s failed expansion led to its current financial deficit. At the heart of this problem are two Fab’s which were initially planned to generate revenues of up to $1500M per quarter to stay afloat. At the moment the shortfall just for the Computing Solutions Group is $321M/qtr. The ATI business is costing AMD another $40M/qtr. There is nothing on the horizon that can allow AMD to generate enough revenue and this is what is making everyone nervous.

"Standard & Poor's Rating Services said in a statement today that it believed AMD's management had not effectively executed the company's turnaround plans and that the company continues to face strong competitive pressures from market leader Intel Corp. even as its cash position remains challenged.

AMD's recently disclosed plan to reduce capital expenditure, explore manufacturing as well as technology process development partnerships and sell some assets could help improve its cash position, according to S&P analyst Bruce Hyman. Even these plans cannot guarantee the company's successful turnabout in a weakening and competitive market, the analyst warned.

"The negative outlook reflects the significant challenges AMD faces in restoring profitability from currently depressed levels, and stabilizing cash flows despite a continued technology lag," Hyman said in the report. "A positive outlook would require reversal of current trends and demonstration that recovery could be sustained.'

S&P said it cut AMD's credit rating on the company's 7.75 percent senior notes due 2012 to B-minus from BB following the release of the "collateral securing" the debt.
The ratings agency noted that AMD's ability to cope with its financial position was eroded partly by its purchase last year of ATI Technologies, an acquisition the company funded in part by paying cash.

AMD "generated about $600 million negative free cash flows in the June quarter, and over $2 billion negative free cash flows in the past four quarters," according to Hyman. "Cash balances stood at $1.6 billion on June 30, 2007. Debt was $5.8 billion. Leverage will rise very substantially in September."

Definitely a very grim assessment of AMD’s position. A negative cash flow of $2B a year is massive and very alarming considering that in 6 months time AMD needs to start purchasing 45nm tools. The rumours about the use of TSMC for 45nm CPU manufacturing doesn’t really sound implausible considering the lack of options AMD has when it comes to spending for the next process transition.

AMD may have gotten away last quarter by throwing around the “asset-lite” buzzword just to ward off investor jitters. But after another quarter of abysmal performance, the time for talk is over. They better have something substantial to announce tomorrow or they’ll find Loan Sharks Inc., to be the only willing creditor in town. I heard that their debt collecting process is known for its ruthless efficiency.

Did AMD Really Improve Last Quarter?

I may have given the wrong impression in my last post. The mixed reception of AMD’s last conference points to a well crafted report from the company’s top dogs with stories of small gains and promises yet come. It if wasn’t for AMD’s analyst meeting just around the corner, I’m quite sure the “asset-lite” teaser wouldn’t go down well for the investors who are anxious for to hear about that major shake up.

AMD’s Qtr-Qtr gain also played a big role in creating a sense of recover. Nobody (except for a few anonymous posters here) seems to be realising that Q1’07 numbers were irregular. Q1’06 numbers were so artificially deflated that any kind of performance from AMD, however poor it may be, is guaranteed to show some kind of improvement. AMD's earnings report from Q4’06 until Q1’07 cannot be used as a meaningful comparison for assessing trends in revenue growth or market share. The numbers from the two quarters are completely muddled up that it is impossible to determine the true run-rate on a quarterly basis. How AMD truly performed is anybody’s guess. And since I’m anybody, I would like to make a first guess.

I think AMD had a very strong motive to make Q4’06 pretty along with the rest of 2006. AMD was applying for a loan around the same time they were feeling the heat from Intel’s Core2. Seeing sharp decline in customer demand is the quite easy to hide within a quarter. It’s possible to imagine that AMD stuffed its customers with around $200M worth of sales with a loose return policy just to hide the ugly truth from potential creditors. Now if we try an normalise the true decline of AMD’s revenue and move the $200M revenue over to Q1’07, here's how AMD’s numbers would look like:

If you look at the alternative numbers, it shows how AMD's Q2'07 gains turn into another decline by moving revenue to where it should be. The point is not whether the alternative numbers are correct, but to illustrate how AMD’s small improvement last quarter is completely meaningless by comparing it to an excessively deflated Q1'07.

AMD Post Q2 Loss

From AMD:
SUNNYVALE, Calif.--(BUSINESS WIRE)--AMD (NYSE:AMD - News) today reported financial results for the quarter ended June 30, 2007(1). AMD reported second quarter 2007 revenue of $1.378 billion, an operating loss of $457 million, and a net loss of $600 million, or $1.09 per share... continue here.

AMD's results shows a good rebound from the previous quarter. None of this comes as a surprise as I've mentioned several times how AMD played with its Q4-Q1 numbers. Stuffed channel, bad product mix and cancelled ordered often gives you such awful results that going back in line with seasonality can appear like significant gains. Only when you compare the numbers to Q2 2006 will you have a better perspective and see the cracks in AMD's business model.

But the good news indeed is that AMD is back within seasonal trends. The desktop market did rebound this quarter but the big gain for AMD is in the mobile market. Design wins in the mobile commercial space is a positive sign for AMD. AMD's strategy going forward is to increase mobile mix and scale down desktop shipment (and not a single word about DTX, imagine that). This furher clarifies why Intel plans to focus all marketing efforts towards the mobile segment. As AMD is looking at this segment as fertile ground to increase margins, Intel is definitely not happy with this development.

As AMD recommits itself to gaining unit share focusing on the mobile segment, this should send shivers down the spine of the margin-oriented investors out there. The good news for Intel is that AMD seemed to be focused on the value segment. I can't imagine how many times Hector mentioned the word VALUE in his mini speech. AMD suggests that nobody cares about the size of the die, the process node nor the raw performance of the processor. The customers only care about choice, how the product will respond to their needs and whether it is a "native quad core" or not. And since AMD said that they are in the "forefront" of this shift in consumer attitude, this should allow Intel to maintain the useless performance leadership throughout the remainder of the year.

While I find it facinating that there was no mention of the word MONOPOLY during this earnings report, AMD did say that the litigation againts Intel is going very well. Subpoenaed customers who lost all their rebates from Intel are delighted about how free the market has become. Maybe they meant "free" literally.

With regards to Barcelona, AMD mentioned that it wasn't the yield that was causing the low speeds but instead it was the complexity of the design and are working on fixing the problem soon. For a Q3 product shipment, saying such things this late is alarming. I definitely prefer to have yield problems over design problems when you're this close to launch. But this shouldn't be a problem as AMD is planning a scaled introduction of Barcelona. Luckily they're expecting a scaled acceptance of its eco-friendly processors anyway. AMD confirms that their non-performance focused customers like SUN and CRAY who are planning to build supercomputers are quite happy with what they see.

When asked about its asset-lite strategy, AMD declined to comment on future plans which hints to a big announcement sometime in the future. Looking at the scaling down of CAPEX for the Fab30 upgrade, I am inclined to think that Fab38 may skip a process node or two as AMD will try to minimize expense while increasing reliance on foundries. AMD's major cash problems continues with a negative flow in the region of $900M for the last quarter. It is obvious how this is limiting AMD's choices in expanding capacity and other long term investments.

Other notable items include how AMD was forced to write-off $30M worth of inventory simply because the CPU's are with DDR1 integrated memory controllers. For the 32nm node, AMD is considering using BULK silicon instead of SOI. That should be the final word in that silicon wafer argument.

Overall, a bit of a good news as AMD shows signs that its business is back in line with seasonality. That should create stability in its financials and improve guidance. But at the same time, AMD's problems are starting to show some degree of permanency. AMD cannot continue to do the same things and expect different results. So while its insistence on gaining unit share is making some investors a bit nervous, its silence on the asset-lite strategy, coupled with a solid line up of consumer OEMs, are giving the impression that there is hope after all. And since AMD and Intel are measured with a different set of standards, sometimes for AMD, doing bad can sometimes be good enough.

Intel Beats Market with an AMD Stick

Directly from Intel:
SANTA CLARA, Calif., July 17, 2007 – Intel Corporation today announced second-quarter revenue of $8.7 billion, operating income of $1.35 billion, net income of $1.3 billion and earnings per share (EPS) of 22 cents.

Among the notables is the net profit increase of 44% from the pre-Core2 year ago results. While demand for the quarter was strong, pricing competition in the AMD segment, also known as "the low end", remains competitive. For this reason, along with the softer demand in the Flash business, Intel's margins were significantly below expectations at 46.9%.

The server business continues to be robust with doubling of unit shipment of Xeons, exceeded the milestone of 1 million Quad Core shipped resulting in double digit percentage increase in revenue for this segment alone. The market continues to shift to DP while Intel takes advantage completely unchallenged.

The channel was unusually healthy during the quarter with significant increase in volume shipments. While this positive news affects both companies, the substantial impact of the lower revenue and ASPs on Intel's margins doesn't bode very well for AMD. I'm beginning to second guess any upside on AMD's results this quarter as Intel painted a bleak picture of the low end segment where AMD currently is allowed to do business.

The outlook for the 2nd half looks even more promising for Intel. With the 45nm Capex hit behind them, margins are expected to go back up to the 50's. Caneland is expected to arrive next quarter which should disrupts AMD's remaining hold on decent margins. Expect Intel to shift all marketing focus in the coming months to its Centrino brand hopefully to limit AMD's assault on the mobile retail segment. As 45nm will start production in Q3 and shipment in Q4, Intel expects its advantage in cost and product performance to increase even further.

It appears as though Intel will launch Penryn with significant volume as it admitted to taking 1-2% margin points for unqualified parts in Q3. This is a large number for a pre-production inventory and only points to the confidence Intel has on its 45nm process. As soon as Intel gets factory certification on the pre-qual build sometime in Q4, we should see good availability on the parts. Intel is so certain about 45nm that it even leaked the prices earlier today.

Intel Leap's Further Ahead - New Announcements

Intel's PR department is in full swing this week with multiple announcements, product launches and "authorised leaks". AMD's sudden price cuts last week looks pretty dull in comparison especially when you're talking about improvements on the top performing CPUs that you can buy today and assuredly, tomorrow (45nm leaks).

Announced today is probably the final revision of 65nm Core 2 Duo's before its 45nm counterparts arrive. While the increase of the FSB to 1333Mhz is one of the major highlights of the new release, it fails to significantly improve overall performance. This is yet another testament that proves the sufficient capabilities of current memory bandwidths without the extra cost of on-die memory controllers. If anything the release of the CPU's with the new memory timings should prepare the industry for the rapid switch over to 45nm which will be at 1333Mhz. This is a clever move from Intel as it pro-actively entices its partners to adapt and ramp early and hopefully reduce prices just when Penryn arrives.

As expected the benchmark results for the QX6850 is not good for AMD's offering. AMD's top CPU's including the FX drops 2-3 levels, further down the comparison graphs. The longer and longer graphs are starting to annoy a lot of benchmarking sites as they struggle to make sure AMD's processors are included in the comparison. Soon, one chart would have to occupy an entire web page before you start to see an AMD bar right at the bottom. See recent example below (courtesy of the Intel-pumper Anand):

AMD's 2.0Ghz Barrier

More than year ago everyone was talking about Barcelona's from AMD that would clock to 2.3 and even 2.66Ghz in 2007. However, these speeds have never been released. And, rather than asking why, not a single review site has mentioned it. The common pretense today seems to be that AMD never claimed that it would top 2.66Ghz in 2007 which, of course, it did.

It isn't hard at all to find evidence of AMD's intention to have K10's clocked as high as 2 or 2.6Ghz in 2007.

AMD promises 2.6Ghz Barcelona
Clearly, everyone (including AMD) expected Barcelona's faster than 2.66Ghz to be released in 2007 yet these were never released. The common excuse given by AMD proponents is that AMD didn't release faster chips as originally planned because, “It didn't have to.” However, there is good evidence that the reason had more to do with temperature and overheating than a warm and fuzzy feeling of being safely in the lead.

It is very rare to get proper numbers for thermal testing of AMD cpu's. Typically, overclocking is done with premium cooling and testing with the stock HSF never thermally stresses the CPU. For example, when Anandtech originally reviewed X6800, they used a massive Tuniq Tower. This is, of course, nothing at all like what is shipped in the vast majority of computer systems. A term that often gets tossed around is "on air". However the truth is that high end air coolers today are as good as liquid coolers used to be four or five years ago. Thus the term "on air" now means very little. Cooling your CPU "on air" with something the size of a transmission cooler is not much an accomplishment. But, if you could overclock "on air" with the stock HSF, that would be an accomplishment indeed. Unfortunately, review sites seem to want to do thermal testing with a stock HSF about as much as they would like to feed a tank full of hungry piranhas by hand.

It appears that we only got some halfway informative numbers from Anandtech by accident when they were reviewing a cooler instead of the processor itself. I've talked about this information in an earlier article but I'm going to revisit it along with other information since people still seem confused about Barcelona's thermal limitations.

In Anandtech's Case cooling in the second chart: CPU Temperature Under Load, we have some data. Notice that at the stock clock speed of 2.93Ghz with the stock HSF, X6800 is reading 56 C. Now, the article says, "The stress test simulates running a demanding contemporary game. The Far Cry River demo is looped for 30 minutes and the CPU temperature is captured at 4 second intervals". Unfortunately, Anandtech's assumption is a bit off since Far Cry does not really thermally stress the core. According to the Barcelona Temperature Guide:

AMD provides a test program, Thermal Analysis Tool (TAT), to simulate 100% Load. Some users may not be aware that Prime95, Orthos, Everest and assorted others, may simulate loads which are intermittent, or less than TAT. These are ideal for stress testing CPU, memory and system stability over time, but aren't designed for testing the limits of CPU cooling efficiency.

Orthos Priority 9 Small FFT’s simulates 88% of TAT ~ 5c lower.

So, if FFT is 5C lower then Far Cry would be less than that. The Guide also clearly states Tcase Load should not exceed ~ 60c with TAT, and 55c with Orthos.

But, at 56 C we have already exceeded 55 C. And, that would be if we were running FFT. Since we are only running Far Cry the real temperature is probably closer to 60 C at full load. Now, someone will probably claim that that is okay because you would never hit full thermal load under normal circumstances. Unfortunately, that is already figured in. As stated in the guide: 50c is safe. 50c Tcase is a safe and sustainable temperature. 55 or 60 C are not safe or sustainable temperatures. Even though the maximum spec is 60 C, 60c is hot.

I have seen others claim that 60 C was fine because it didn't exceed the maximum rating. However, this is not the way the rating works. 60 C is the maximum for TAT only because no other program will ever reach this stress level. So, it is clear that X6800 with stock HSF will indeed exceed the factory cooling specs at stock speed. This is why AMD has not released a 2Ghz quad core.

But . . . what about dual core? Even if the quad core processor is running too hot with stock HSF maybe the dual core isn't. As I've already mentioned, these types of tests seem to be avoided like the plague by regular review sites. So, we need something obscure. However, as luck would have it, we do have something out of the ordinary at Digit Life where X6800 (2.93 Ghz) dual core is reviewed. These conditions are very unusual because he tests in his un-air conditioned apartment. In Moscow apartments, unconditioned for several days, the standard daytime temperature was within +25—+30°C. In this case the environment temperature was +28°C. 28 C is 82 F. This would not be unusual for Indiana in the Summer either. But, he uses the stock HSF. And, let's see what happens:

it didn't even occur to us that new AMD Barcelona processors could spring such a surprise with throttling...) Yes! It was throttling!

The chart is excellent because it compares the stock HSF to a better cooling solution. We can see that none of the common benchmarks really thermally stress the cpu. The one that stressed it the most was the Solidworks CAD & CAE benchmark. The chart only shows an 11% drop because it is a total score. However, The results of the overheated processor are very low in two applications out of three: SolidWorks 2005 and Pro/ENGINEER Wildfire 2.0. This is proof positive that even with a regular application that dual core C2D is busting the thermal limits when running at 82 F ambient. The author says that there was no thermal throttling at 72 F ambient.

Now, let's look at that chart again. Notice that with the 3D Shooter Games (F.E.A.R, Half Life 2, Quake 4, Unreal Tournament 2004) the drop is only 3% versus the 11% we saw with CAD. This again casts doubt that Anandtech was doing anything thermally stressful with Far Cry.

So, AMD did not release a 2Ghz processor in 2007 because they couldn't. Such a processor would have exceeded the factory's own limits when running routine applications at ambient temperatures common in the Summer. However, we also know that AMD has steadily improved the thermal properties of its C2D chips with each revision. It is possible that one of the newer revisions of C2D would be capable of going over 2.66Ghz without busting the factory's thermal limits. After all, one would assume that simply lowering the TDP would help and we know that TDP has come down. However, I'm not entirely sure that 65nm is actually an improvement. For example, if a given 65nm chip has the same TDP as a given 90nm chip then logically the 65nm chip would concentrate the heat into about half the die area. This would seem to be more likely to create hot spots rather than less.

I'm quite certain that AMD will indeed get chips out that exceed 2.66Ghz. And, I'm pretty certain that if AMD doesn't do it in Q4 of this year that Q1 08 should be reasonable. It might happen with 65nm as many expect but I can't see any reason why it couldn't happen with 90nm in another revision or two if 65nm wasn't up to at first. In other words, AMD would move to 65nm anyway to reduce die size even if it didn't make any major strides in power draw at first. However, the talk has been that 65nm at AMD is much better with power draw than 90nm. I guess we need to take that with a grain of salt since it was claimed in January 2007 that AMD had K10 samples hitting 2.0Ghz. It would be nice to have some up to date comparison information with newer C2D's to see if the thermal limits have been improving over time (which they likely have). But, since the information we do have about stock cooling is nearly accidental that seems very unlikely. We may just have to wait until Q4 and see if any 2 or 2.0Ghz 65nm chips appear.

VMWare Investment - Wise Move?

VMware sets IPO price range; lands Intel Capital as investor by ZDNet's Larry Dignan -- Intel Capital said it will invest $218.5 million in VMware and ultimately own 2.5 percent of the virtualization company’s outstanding common stock as it goes public. Separately, VMware said in a regulatory filing that it will offer 33 million shares priced between $23 and $25 a share. VMware, which will trade under the ticker “VMW,” [...]

It is a bit difficult to know for sure what's Intel's ulterior motive when we know for a fact that VMWare success means fewer CPU demand for both Intel and AMD. The significant amount leaves little doubt how much Intel is taking virtualization seriously. $218M was large enough to get a seat at the board and influence the direction of the company bearing in mind that AMD and Intel have competing virtualization technologies. The virtualization market is about to explode with the proliferation of multi-core processors and under utilized servers. And if Intel can get a leg up by collaborating closely with VMWare (research and marketing) and at the same time marginalize AMD's technologies, it is easy to makes sense of the investment.

Transmeta Investment - Wise Move?

As reported last Friday, AMD invested $7.5M in Transmeta in exchange for preferred stocks. We all know that AMD isn't exactly swimming in a pool of money and although it may not be a substantial amount, I'm quite sure AMD won't find it difficult to find good use for it. So is the investment a good use of AMD's limited cash? If you try and read the reasons put forward by both companies, you won't find anything other than corporate double-speak.

Transmeta:
"We are very pleased that AMD has made a strategic investment in the future of Transmeta," said Les Crudele, President and Chief Executive Officer of Transmeta. "AMD has long been a leader in the development and delivery of energy-efficient, high-performance computing technologies, standards and initiatives. Transmeta has been proud to endorse and contribute to those industry-leading activities, and we look forward to continuing our collaboration with AMD on technology initiatives in the future."

AMD:
"Transmeta has been an innovative force in the industry for more than a decade," said Dirk Meyer, President and Chief Operating Officer of AMD. "Transmeta was a key ally in helping to bring our highly-successful AMD64 technology to market and has supported the widespread industry adoption of both AMD64 and AMD's HyperTransport technology. Our investment will support Transmeta's technology development work and AMD's efforts to leverage Transmeta's innovative energy-efficient technologies to the benefit of AMD's customers."

Again, it's mostly back patting and pretending to say something when it fact both are struggling for exactly the opposite reasons. If I were to guess what this move is about, I would bet that it is noting but securing some of Transmeta's intellectual property. Nobody buys preferred stocks on a dying company except when they wish to secure a particular asset when the company files chapter11. Transmeta is fabless company and it doesn't require too much deductive reasoning skills to understand what AMD really wants. It could be a good move but to a lesser extent as the ATI purchase and I meant that in terms of both the good and the bad aspects of the merger.

Bummer... Now I Have To Remove The Sticky!

Just when AMD admits to the misleading benchmarks, Scientia coincidentally owns up to his mistakes. He reckons the list isn’t long enough and he humbly insists that there’s more if only we start looking further back. But the notorious ‘list” was less about the number of mistakes but more about the attitude of infallibility which incidentally annoyed the hell out of his readers.

Scientia’s controversial claims and statements cleverly crafted into an argument are the things that bring readers into his blog. Often when you thread the fine line of controversy and deep opinion, you get a lot of things wrong. But does it really matter? Mike McGee believes that one should never let the truth get in the way of a good story. Awful as it sounds, it is a good maxim to live by if you wish to write publicly. Compared to reading another person’s varying opinion, plain truth can be very dull. In a world where everyone is vying for attention, I’d rather be wrong and make people think than give people the facts and put them to sleep. We have the News to do that for us. But again, there is a world of a difference between getting things wrong and insisting that you never get things wrong. The recent incident in his blog was about the latter.

But unexpectedly, Scientia owns up to all his mistakes. Personally, I find it disappointing simply because my arsenal of “I told you so’s” have now been completely wiped clean quickly taking away my right to gloat! I personally believe that there is no value nor esteem in bringing up past mistakes in an argument when your opponent has admitted to them. This most certainly takes away the fun of arguing with him now. But to his credit, it takes a lot of humility and courage to be able to do what he just did. We all have to give him that.

As for his personal tragedy, I believe I can speak for everyone on both sides when I say that the kind of heated arguments that we throw at each other should be kept within the arena of discussion and separate from our personal lives. On a personal level, I can only wish everyone, above all Scientia, well. I can understand how terrible it must have been to be in such a difficult situation. One can easily imagine how futile it must have felt, even if it provided a brief respite from the sorrow, to distract oneself through online forums. I can only hope that such tragic circumstance never happen to anyone else, especially everyone here who participate in the discussions.

AMD's Performance Promises - Theo's Source

Theo posted an article in the Inquirer that detailed AMD's promise of a superior Barcelona performance at 2.3GHz. I thought this was old news and was the primary reason why I never bothered posting it. But before you accuse Theo of pulling out numbers from his excretory opening, let me be the first to say that he isn't. You could probably accuse him of recycling news because first of all his numbers comes from a predated AMD slide and secondly, they include a slide title that says "Performance Projections".

If you wish to know what the number means, you can go ahead and compare them with Intel's benchmarks here: Intel® Xeon® Processor. On paper, Barcelona holds up very well against Intel's Clovertown exceeding it in most cases. But the big story now is when will we see Barcelona with speeds of 2.3Ghz and above.

I seriously caution against getting too excited about the NDA slides. Barcelona has gone through so many iterations that projections made before them can easily go either way.

Of course, Thank You's go to the anonymous gutter rats for the tip.

!-- Update: DailyTech has started joining in the fray and AMD's "simulated benchmark" mess has snowballed. It looks like Kristopher Kubicki agrees with George Ou. Another bummer for Scientia since his long list of Intel pumpers is about to get longer. Come to think of it, Phil Hughes should be included in the list since he appears to be contradicting Scientia. "We are working to remove that stuff from our website now. It isn't an accurate reflection of the highest performance [Intel processors]," Hughes acknowledged.

The key point isn't whether the slides were done in April before AMD's 2Ghz announcement, but that they were distributed last week to journalist. After losing the performance crown and large sums of money, it appears like losing face is something AMD is willing to depart from.

The Posts Scientia Doesn't Want You To See

--! Update: I decided to set this post as a kind of a STICKY right next to Scientia's link. Feel free to dump any false claims or predictions made. Hopefully it encourages Scientia to be more prudent the next time. !--

Aside from getting a lot of things wrong this year, Scientia may have also misjudged the resolve of his readers in pointing out his mistakes after he proclaimed he never got anything wrong and challenged his readers to make a list. But as soon as the list was posted by some of his staunch critics, Scientia quickly deleted the posts. Unfortunately for him, his predictability in response to strong criticism made me realise that I needed to copy the entire thing before the censorship arrive. Anyway, here they are, the deleted posts Scientia doesn’t want you to read!

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core2dude said...

Scientia: This speed could also roughly match Clovertown. However, 2.5Ghz for dual core K10 would lag behind 2.93Ghz Conroe.

On what benchmark? specfp_rate? It is amazing how you pass on such blatently baseless statements in abscence of any benchmarks. And spare me the rant about architectural improvements in Barcelona. I will believe it when I see it.

The bottom line is, the only benchmarks on which Barcelona has publically been evaluated are pov_ray and cinebench. And in both of these benchmarks, Kentsfield/Clovertown owns barcelona, clock-for-clock.

In abscence of any other demonstrations, all we can say is, Clovertown leads Barcelona 2-0.

Would my credibility be higher if I cherry picked the news and allowed all the gutter rats to do troll and flame posts like 180 and roborat do?

What makes you think you have any credibility? Case in point, you keep on claiming that Barcelona yields are great. While AMD's partners say that the yields suck. Either prove to us that you work for AMD, or just accept the possibility that the yields suck.
July 03, 2007 1:08 AM

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Pop Catalin Sever said...

"Either prove to us that you work for AMD, or just accept the possibility that the yields suck."

Scientia works from AMD wheter payed or voluntary. Having and AMD centric (not biased) blog kind of makes you work for them. The bias problem is questionable even if you work or are just a fan. So no point in aguing about this. Actually Scientia's otpinions whould hold much more value if he was indeed AMD insider.

Anyway the yield statement is very odd, no one can possibly gues yields :) (especially whout any meaninfull data) there are the best keept secret, so either Scientia knows them or this is simply a trace of bias.
July 03, 2007 1:29 AM

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core2dude said...

Anyway the yield statement is very odd, no one can possibly gues yields :) (especially whout any meaninfull data) there are the best keept secret, so either Scientia knows them or this is simply a trace of bias.

Very true! And for a good reason. If your yields suck, you do not want your investors to know about it. If they are great, you do not want your haggling customers to know about it :).
July 03, 2007 1:58 AM

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Mo said...

You know what, I'm not gonna sit here and quote everything you said and reply to every little thing because I don't have the time for it. I will wait till Barcelona is fully here and then we'll see who's right and who's wrong.

But I'll do a quick search because the Great Sci believes he's never wrong. You gotta admit, you gotta pretty cocky to admit you're never wrong.
here's a quick run through of your blunders.

1) "AMD never does a launch without chips available." Scroll up to see this blunder. you obviously retract that statement now.

2) "AMD could do a release today at 2.2Ghz without any problem if the errata were fixed. Errata do not reduce chip speed and the last I heard AMD was hitting 2.4Ghz internally." Posted June 20th on AMDZone. I guess 2.2 and 2.4 are currently out of the question even if errata were fixed. Opps.

lets go back to 2006

3)"That tends to add weight to the idea that K8L will appear Q2 07." ERRR WRONG!

4)"I would say that K8L might hit 3.0Ghz at launch. 3.4Ghz by Q4 07 would be a reasonable ramp in clock. " hahahha

5)According to the supercomputer schedules for which contracts have already been given, AMD will have to supply Barcelona chips in the 2nd quarter of 2007.

Of course, someone could say that these are special chips and AMD won't have volume until 3rd quarter. This notion is extremely unlikely.

It has been AMD's policy for quite some time to have processor reviews and release on the same day. It wouldn't make any sense for AMD to be delivering somewhere around 20,000 processors and yet delay release for another month or two. Realistically, if you put 20,000 processors out in the wild some are bound to end up being previewed if the regular chips haven't been released yet.

Also, there is no reall reason why AMD cannot begin making Barcelona's about mid November. What a lot of people don't understand is that mid November is the cutoff; any chips started after then will not arrive until 2007. In fact, some of the 4th quarter chips were made in the 3rd quarter. I don't think it is any coincidence that Intel will release Kentsfield mid November. Intel too is aware that no new chips can be started after then that will effect Q4 sales. When mid November hits, Intel as well will start looking to Q1 07.

If AMD begins making Barcelona mid November then the first chips would roll off the line January 2007. These should be the first test batches. This would still give enough time for two or three more batches before mid May. At a reasonable rate of 4% this would be something like 750,000 chips. So, I would assume that the official release would come somewhere between the beginning and end of the 2nd quarter. The only way I could see that this could be moved up any further would be if Barcelona has already been fully checked out and the batch started in mid November would be available for sale. If this actually happened it would move the release date up to about mid February.

That was posted Oct. 2006. You didn't get a single thing right in your "guess" or what ever you wanna call it.

6)The critical thing is the date for the first supercomputer that uses Barcelona. It is my understanding that this machine will be live at the end of the 2nd quarter. This would imply that the Barcelona chips will be delivered several weeks prior to that. I'm certain that the hardware is being system tested in small scale with X2's and the hardware itself with some preproduction Barcelona's. It is reasonable to assume that if AMD feels that it can deliver the Barcelona's in Q2 07 that they must feel that the design is either complete or very nearly complete.

Errrrrrrrr wrong again.

Thats half a dozen I scooped up in just 1 1/2 thread in about 5 minutes. I could sit here and will probably find 2 dozen easily. There's nothing wrong with admitting that sometime you're just plain wrong in your guesstimates.

July 03, 2007 2:15 AM

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13ringinheat said...

Add to the list his famous wait till 4x4 is displayed on numa aware OS and turns out it was still a dud......

And his constant crying about how core 2 duo benchmarks are unfair but the same benchmarks used to compare athlons and p4s were completely fair.....

That was a great read Mo though i am afraid it will get deleted as scientia doesnt like view points contrary to his own in this blog.....ask roborat..

Scientia if you "guesstimate" "speculate" and give out ridiculous opinions based on your bias expect to be laughed at when you are wrong almost brings you pretty much in sharikou territory actually.
July 03, 2007 2:42 AM

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Ho Ho said...

scientia
"Curiously, bumping the clock speed down a grade to allow for the shift from dual to quad core we get 2.25Ghz which is about what the unofficial roadmaps showed at 2.3Ghz."

AMD seems to have new speedgrades now with only a measily 100MHz differences. Way too little difference in my oppinion. Intel has 266 MHz differences for 1066MHz FSB and 200MHz differences for 800MHz FSB models.

"This would be the first time AMD has made both standard and low power parts immediately available as part of a new processor launch.

Yes, it is. Though has anyone any information about the TDP of the CPUs? Inquirer reported those having 95W, were they correct?

"They did say higher frequencies in Q4 but this could mean just a single bump from 2.0Ghz to 2.2Ghz.

Again, that would be two speedbumps because of having only 100Mhz difference between models.

"This would mean 8 cores total but I wonder if there are any games at this point that can use that many cores."

No, there are none yet. There might be some in a few months, though. If desktop versions are indeed released as late as Q1 then by then we should have at least a few games that can use >4 cores.

"The 65nm version of R600 (R650) is also due in Q3 along with the finished drivers."

No it is not. There is no such thing as 65nm R650 and also no 670. It was just a planted rumor to catch the one who leaked information.

As for drivers I still have huge doubts in them. I don't remember seeing too big gains in performance in the last couple of updates. Sure, there were some speed gains in specific games but not an overall speedboost.

"If the launch is actually August (which is the way I read it) they would have to be shipping processors at least 3 weeks prior because AMD never does a launch without chips available."

I read "AMD expects that the processors will begin shipping for revenue in August 2007, with systems from AMD platform partners beginning to ship in September 2007". If partners would be getting chips three weeks before launch they would be selling systems based on Barcelona at the same time AMD releases them, not in September.

"So, why is the situation today worse than it was in 2003?"

How much money had AMD loaned in 2003?

In Q4 last year majority of the 500M loss was because of ATI. Suddenly in Q1 this year they made a huge loss of 600M and ATI is not to blame in that.

How can they turn that loss into less loss that fast? Sure, you have said that they have DTX coming and also K10 finally shows up but this is not in Q2. What makes them loose less money in Q2 with all those price reductions? Would it be impossible for AMD to post even greater losses in Q2 than they did in Q1?

Also those quoted loss numbers are a bit off in my opinion. With 100M steps from Q1 this year the table looks something like this:

Q2 500M
Q3 400M
Q4 300M
Q1 200M
Q2 100M
Total: 1.5B in five quarters

13ringinheat
"That was a great read Mo though i am afraid it will get deleted as scientia doesnt like view points contrary to his own in this blog.....ask roborat.."

He also doesn't like too long and detailed posts. Several of mine were cut shorter some time ago since supposedly they didn't contain any meaningful information.
July 03, 2007 3:27 AM

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gdp77 said...

Scientia: Some have even insisted that AMD should price its X2's below the lowest priced C2D, the E4200 but this has not happened. I still see the arguments popping up, groundless though they may be. It seems that some just cannot understand that the fact that E6700 is faster than FX-62 doesn't mean that all C2D's are faster than all X2's. The AMD X2's priced similarly to E6300, E6400, and E6600 have similar peformance for most tasks.

Well AMD finally understood what the pricing of their chips should be, didn't they?

The best situation for Intel would be that the market expands rapidly which would allow Intel to grow faster than AMD since AMD will be capacity limited through most of 2007. With normal expansion, Intel is likely to continue to slowly lose share to AMD. This may seem unfair however AMD has cultivated better relationships with customers than Intel has in the past. By the time Intel has demonstrated any change AMD will have K8L

no comment

They will introduce K8L Barcelona in Q2 which should make 2007 K8L's year in the same way that 2006 was for C2D.

This would put the Q2 08 speed of 2.6Ghz ahead of the current fastest K8.

In terms of single socket in 2007, AMD's competitiveness is somewhat split. For dual core, this would be a 2.9Ghz Kuma versus a 2.93Ghz Conroe. This is a trivial 1% difference in clock, so probably even. However, for quad core this would be a 2.5Ghz Agena versus a 3.0Ghz Kentsfield. This is a not so trivial 20% difference in clock. I'm guessing Intel will stay ahead on this one although I suppose being competitive with the second fastest clock (2.6Ghz) is a lot better than having no quad cores at all.

I don't want to continue. U asked for a listing of your mistakes / misspredictions. Here it is.

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Apologies for the very long post, I didn't realize how much Scientia deleted.

Warning! Eating Too Much Crow Can Cause Mental Health Problems

And so the back pedaling and the shrinking of expectations are in full swing now that AMD officially confirms that it has decided to sell half-working processors.

I can remember recent blogs from Scientia that cheerfully declared:
“There are some pretty good indications that AMD could launch 100Mhz higher with 2.4Ghz instead of 2.3 and then go to 2.6Ghz in Q4”.
Or even this:
… “(in Q3) Barcelona should begin to take back at least the top end server sales (which are now going to Clovertown) and re-establish AMD's server chip ASP's”.

But when AMD announced that Barcelona will only ship with speeds no greater than 2Ghz, Scientia said in his recent blog: “I would have to say that the news is mixed”. I had to stop reading his blog as I was beginning to find it difficult to continue while I was rolling on the floor...

As usual we can always expect Scientia to find the good in every bad thing that comes AMD’s way. Here is a man who thinks that adding to the truth is analogous to impartiality. The bad news of course is the anemic launch speeds but then he expects everyone to think that there is good in meeting schedules with unready parts. While the launch announcement says a lot about AMD’s desperation and lack of financial discipline in trying to ramp a broken process, it says a lot more about Scientia’s willingness to accept AMD’s excuses and adjust his outlook accordingly.

And as you would expect, not everyone can take Scientia's blog in a cheery manner. One poster on his blog wrote which I find hilarious:
Mo posted: I have read your views and posts, You sci are a sugar coating machine. Everything that comes out of your mouth about AMD is thoroughly sugarcoated and you have been proven wrong numerous times. Yet you keep making such false claims and AMD does not do launch without products. Yet AMD has been doing that since end last year… 2.0Ghz max for k10 is disappointing indeed no matter how much you sugar coat it.

Gee, I wonder what drove Mo to say such a thing.

Another AMD Partner Warns - Soitec

AMD's major SOI wafer supplier issued a warning today:
Bernin, France, 2nd July 2007 – Soitec, leader in SOI (Silicon on Insulator) wafer material today announced that as expected the supply chain continued to absorb excess inventories held by its main customers throughout the first quarter… New products launched by main customers come on stream in the second half of the year but given the current uncertainty with regard to the timing of the ramp up in volume of these products, the Group cannot exclude that full year sales may be below the prior year. “

Mark Osbourne insists that this is due to AMD.
"The key is volume ramp. AMD is the only Soitec customer that has major new products coming on-stream in that time. These products can equate to real volume ramp and could, in turn, impact the company's revenues by such a degree.So, in conclusion, the Barcelona volume ramp is delayed. Of more concern, though, is Soitec's unclear view as to when such a ramp will actually happen. That's the big new problem for both AMD and Soitec."

This isn't hard to believe. Nobody ramps a process when it is yielding less than 20%, let alone a very expensive die. It gets scary to think that AMD's partners don't have an idea when Barcelona will ramp. Put it this way, it takes months for SOITEC to prepare for Barcelona's volume ramp and if SOITEC hasn't received any orders and has no visibility for 2007, don't hold your breath for any miracles this year.

ATI, Chartered, Sun, Dell, Cray, and now SOITEC. From business units to customers and now suppliers. The downward spiral to bancruptcy begins with the collapse of the business ecosystem. This isn't very encouraging news by any measure and probably has greater implications to the SOI wafer industry. All of a sudden the SOI business becomes less attractive and may impact further cost improvements down the road to make it competetive against bulk.