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.