AIMeD Corporation

Intel's Achronix Strategy

2010-11-03T04:34:00.000Z

There have been several reports recently on Intel's agreement to build FPGA's for Achronix on their upcoming 22nm technology. As far as I know this is a first for Intel. Not only are they building someone else's designs on an Intel process, but they are building those devices on Intel's leading edge technology.

Intel makes the most money off of their leading edge process. In recent presentations Intel has made a big deal out of how quickly they are ramping their newest process technologies. Faster ramps mean earlier crossover from the old technology to the new technology. Driving towards earlier crossover means higher profit margins and shorter time to repay the development and retooling costs associated with moving to a new process node. So I have to ask: Why would Intel sacrifice any of their early leading edge capacity for what is essentially foundry work?

The articles I've seen have suggested 2 reasons. The first is that Intel is looking to offset some of the R&D costs of process development. The second is that Intel wants to get back into the Field Programable Gate Area (FPGA) game.

In my opinion, the idea that Intel is looking to offset R&D costs with this move is absolute rubbish. Anyone that is willing to take an objective look at this would come to the same conclusion. Let me give an example to demonstrate why I don't think this line of speculation is worth the pixels it takes to print it.

Suppose I can sell a product for $100 and it costs me $50 to make. Let's also say the design work costs me $1000 up front. So if I sell 1000 units, I make $50000 minus the $1000 for design work. I net a total of $49000.

In the foundry model, I save the $1000 design cost up front, I still spend $50000 to make the 1000 units, but then I can't sell them to the customer for $49000 because they want to make a profit as well. Recouping their design costs isn't sufficient. So let's say I can sell them for 70% of their market value. That gives me $35000 in profit.

The model here is grossly oversimplified, but it illustrates the point. Building my own designs I make $49000, and building product as a foundry I make $35000. That means I'm making significantly less on the foundry product, and last I checked, making less isn't going to help offset my development costs. Instead of helping me, it reduces my margins and increases the time it is going to take me to recoup my R&D investment. Remember, we are talking about Intel's leading edge technology here, not trying to fill fabs running and old technology and keep them profitable longer.

The second theory is that Intel wants to get back into the FPGA game. Intel once had an FPGA program and sold it. In the EE Times article a spokesman for Achronix was quoted as saying:

"If Intel wanted to be in the FPGA business they would be already. They certainly have the cash."

And he is right. If all Intel wanted was to be in the FPGA business, they would simply buy Achronix or a similar company.

I believe the author of the EE Times article comes close to explaining what Intel is doing when the author says:

The relationship with Achronix could be a precursor to Intel eventually combining programmable logic with its Atom cores on the same die to create a new type of device. Earlier this year both Xilinx and Actel Corp. announced products that combined their programmable logic technology with hard ARM processor cores.

In my opinion the author of the EE Times article isn't looking far enough ahead to see what Intel is really looking to accomplish. While Intel may well want to create a new device that combines Atom and FPGA circuitry, I believe there is a much larger scope to this announcement. This move is really about Intel's Atom SOC strategy, not just FPGA devices.

In order to be a real player in the SOC space (smartphones, autotainment systems, etc.) Intel needs to develop a robust SOC capability they don't currently have. Up to this point the SOC designs that I've seem Intel previewing are all in-house Intel designs. But many of the players in the SOC space have their own proprietary designs they build around the central processing core. To make that happen, Intel needs to learn how to build external designs on the Intel process.

But my reading leads me to believe that Intel's design rules are fairly restrictive when compared to the traditional foundries. Since we are talking SOC's here Intel can't just tweak the process for an individual customer. The external designs have to work well with the same process Intel is using to manufacture Atom. In order to work effectively with customers in this new space, Intel needs to learn how to work in conjunction with external design teams to get the designs laid out in a way that will take advantage of Intel's process capabilities and yield well.

I believe the Achronix move is actually a first step in Intel's SOC strategy. A strategy that will allow Intel's customers to design their unique features around an Atom core to make a truly unique product. If this strategy proves successful, Intel and their partners will be able to offer a distinct product with clear differentiation in the market place. This is how Intel intends to differentiate future Atom products from competing ARM products.

Intel and AMD Report Record 1st Quarter Revenues

2010-04-16T03:19:00.008Z

What a difference a year makes. The start of 2010 ended what can only be considered a disastrous 2009, not just for semi-conductors, but for the market as a whole as we begin to recover from the worst recession in over 80 years. It is clear that Uncle Ben Bernanke's 0% interest rates are fueling the next great bubble to replace the real estate bubble which Greenspan induced as a result of the Dot-com bubble. Where this bubble will go is anyone's guess (My bet is on T-Bills and the Federal Government's record deficits.) Meaning we are experiencing a nominal recovery of increased spending, as opposed to a real recovery on sound fundamentals, but I digress. Regardless of the cause of the increased demand, businesses are doing everything they can to soak up as much of it as they can and Intel and AMD are no exception.

Both companies reported record 1st Quarter revenues. Coming off such a dreadful 2009 makes this even more impressive. Whether this is a result of a strengthening technology sector, the release of new products or the unleashing of pent up demand from consumers and businesses from last year (perhaps a combination of all), this was a great quarter for both companies no matter how you slice it.

INTC

Great numbers and results all around for Intel. Gross margins continue to improve to mind boggling levels. At this rate Intel will post the largest yearly profit in history. A few things that stand out from the report, strong growth in nearly every sector except for Atoms which were down significantly. Despite Intel's assurances that Atoms and Notebooks did not cannibalize each others sales, I can't help but see a correlation with last quarters drop in Atom sales with that of record mobile chip shipments. Whether this was "good" or not is hard to tell since both products are profitable, but it's a great hedge strategy for all market conditions. Outside of normal growth and expansion, the Atom's make for a great value segment in down markets and Notebooks are the perfect product for booms. Either way, Intel can take market share.

We also saw the release of Nehalem-EX for the MP server segment which replaces the much maligned Dunnington platform for a true competitor in this space to take on AMD in this segment in a way that has been lacking for some time. It may not have made a large impact on financials due to its late release in the quarter, but chips were shipped for revenue. In the mobile space, we saw the release of the Westmere family chip Clarkdale which likely drove the strong increase in mobile sales. Also, the conference call noted that OEM inventories were normal but Intel inventories were lean. Indicating the upside of last quarter was above Intel's internal estimations.

AMD

Gross margins are up to a healthy 47%, operational profits are reported at a strong $182M and a net profit of $257M. Considering this was a "seasonally down" Q1 makes this even more impressive. The only caveat is the inclusion of a $325M non-cash assessment due to "deconsolidation" with Global Foundries. Excluding this one-time gain will bring AMD's net profit to a narrow loss for the quarter. Which means they essentially broke even. If the market continues to improve, it's likely that AMD could even report a net profit for the calendar year in spite of one-time accounting tricks. Not only were CPU shipments strong, but GPU shipments increased sequentially due to a strong ATI lineup.

AMD didn't sit idly by with old products going into the new year. We saw the much anticipated release of Magny-Cours, the MCM 12-core server chip (2 x 6 core) to compete in the EP space which Gulftown had taken by storm. We also so a flurry of higher binned Phenom II's giving AMD a strong lineup in the mainstream segment. Overall, a very good quarter with the signs of finally breaking out of the continual slump of heavy losses.

ARM vs Atom: Intel's Newest Challenge

2010-01-12T06:04:00.003Z

The ARM architecture offers several advantages when compared to Atom.

ARM has smaller die sizes than the Atom processors which gives ARM a cost advantage. Having been designed for use in space sensitive environments, the ARM core is smaller than the Atom equivalent. This is the case even though Atom is being manufactured on a more advanced process than most of the current ARM designs.

In addition, ARM is more highly integrated than Atom. Almost all ARM products for use in the mobile space are single chip SOC solutions. This offers a substantial size advantage over the current Atom solution which requires three chips and the upcoming solution (Moorestown) that is still a two chip solution. Atom won't offer a single chip solution prior to the advent of Medfield sometime in 2011. So Atom won't be able to match ARM for solution size or integration until somewhere between 1 and 2 years from now.

But the biggest advantage ARM holds right now is in power efficiency. Qualcom's Snapdragon processor is the poster child for ARMs high performance processors, so I'll use that as a reference point. The Snapdragon processor is reported to use 250-500mW under load at 10mW at idle. Atom's Moorestown, due out later this year, should use ~1000-750mW under load and ~35mW at idle. So ARM offers about a 2-3X power efficiency advantage over the Atom platform.

With all these disadvantages, one wonders what Atom can bring to the table.

First and foremost is sheer processing power. If you look at Intel's marketing around the LG GW990 from CES, you will see an emphasis on multi-tasking. ARM is closing the gap on responsiveness on single apps, but the x86 architecture that Atom is based on still seems to have more horsepower and allows you to do more things at once.

Another big advantage that Atom currently enjoys is the ability to run flash applications. However, Adobe is reportedly working with ARM to enable their processor designs to run flash applications. So this advantage is going to be short lived. It has helped Atom become the dominant netbook processor but it will not continue to drive future growth.

The last advantage that the Atom brings to the table is the ability to run Windows. By being able to run Windows, Atom brings a large software infrastructure to the table for any device it is installed on. But this advantage isn’t quite as big as it might seem at first glance.

The Atom processor was designed to be a “good enough” processor for basic PC tasks like browsing the internet, viewing video, etc. But it lacks the power to run large applications well. So while Atom may be capable of running x86 applications, the experience with many of them is poor. If the software doesn’t run well it is not much better than not running at all.

The use of Atom in small form factors further offsets the advantage of using existing software. Many of the current applications don’t fit these small form factors very well. This can be fixed, but requires that the code be modified to correct the problem. Having to modify the code for this purpose nullifies much of the advantage of being able to use the existing software.

Intel’s marketing along the software lines seems to have matured beyond the idea of basic software compatibility of late. They are placing a greater emphasis on cross platform portability. I believe that this is a more realistic assessment of the x86 advantage than focusing on the software because it focuses on one of the few real weaknesses of the ARM architecture.

ARM doesn’t manufacture chips, it sells licenses to use its architecture. Each licensee is free to modify the basic design to suit the licensee’s needs. This results in an ecosystem where the various implementations from different vendors may not be compatible with each other even though they are based on the same core architecture.

Systems built around the x86 architecture bring the guarantee of cross system compatibility. Not in the sense that you can move the software directly, but rather in the ability to link the systems together and transfer data between them. So by choosing Atom, you know you are choosing a device that will work and play well with your other devices.

In summary, ARM and Atom are rapidly converging to similar levels of computing power and energy efficiency. Within a few years I believe there will only be one key differentiator between the two architectures. The differentiator will be the ease with which you can move data between your various computing applications.

Due to the homogenous nature of the hardware infrastructure Intel is building I believe this gives them a substantial advantage. However, there is still a need for urgency on Intel’s part. If ARM becomes the entrenched incumbent architecture in this new space, it will take far longer for Intel to move Atom down into the smaller devices. I believe the x86 architecture, warts and all, will become the dominant architecture in personal computing devices. But if Intel doesn’t move quickly enough they will miss the initial growth curve and the resulting profits that come from riding that curve.

Edit: Cleaned up the spacing

Intel and AMD bury the hatchet in Anti-Trust case for $1.25B

2009-11-12T16:50:00.003Z

After decades of market wrangling and years of legal complaints, AMD and Intel have settled on their long standing dispute of Intel's alleged anti-competitive practices against AMD. In accordance with the settlement, all patent disputes are resolved and AMD will withdraw all legal complaints worldwide. In addition to this, the cross-license agreement has been extended for another 5 years. In the aftermath of this historic settlement between the two largest chip-makers, there will likely be many who cry foul or vindication and the flames on forum's will reach far and wide.

We don't know the exact reason's why Intel settled now, or what the long term ramifications will be for either company, but suffice it to say, this long and storied chapter is now closed. AMD may have come away with a victory, but what about consumers and OEM's, did they gain anything from this? How about the semi-conductor industry?

The legal battles and anti-trust complaints stem from the notion that Intel is a "monopoly" and has used its position to push AMD out of the market and in the process hurt AMD and consumers. The specific complaints are against the use of discounts or rebates that Intel would pay to OEM's if they agreed to use Intel chips exclusively or at some percentage of volume. The logic goes, that Intel was able to use a dominant position and essentially "pay" companies not to use AMD chips. This is claimed to not only directly hurt AMD, but the entire market. As a result, OEM's and consumer's now have "less choice" and this will ultimately result in less competition.

Not only is this analysis short-sighted, it is missing the bigger picture of the market as a whole and will ultimately result in hurting the semi-conductor market and consumers. Despite the fact that AMD actually sold everything it made during the time Intel was allegedly committing anti-competitive behavior, there is very little evidence that consumers were ever unable to buy AMD chips. The fact that Intel was able to offer rebates and discounts to OEM's and remain incredibly profitable only speak to the efficiencies of Intel's capital structure which resulted in lower prices for OEM's and consumer's. The fact that AMD was unable to offer discounts and under bid Intel for business shows that the problem is not with Intel being Anti-competitive, but AMD being uncompetitive in the market. AMD was unable to undercut Intel's prices because they had a less efficient capital structure and were unable to profitably sell chips at those level's. In a free market, the incentive is for AMD to improve efficiencies and eliminate waste such that they can compete.

Next, Is Intel really a monopoly? It is important that we distinguish between a legal monopoly and an economic monopoly. A legal monopoly is one that is granted by the state which allows a company to be a single supplier of a good at the expense of all others (i.e. utility companies etc.). An economic monopoly occurs when a company emerges as a single source supplier by being the most efficient (poorly run companies went bankrupt) or consumer preference chose a single entity in the market. Is Intel a legal monopoly? Yes and No. The patent system is a de facto monopoly system where a company is granted a legal monopoly over an idea. Intel is technically a legal monopoly on the x86 IP and other things like chipset busses and other misc items. When Nvidia complains about Intel refusing to grant them a bus license for QPI, the argument for anti-competitive behavior has some merit. However, in the case of Intel vs AMD, the government has brokered a cross-licensing agreement for all IP and they are essentially in a quasi-free market situation. So in this respect, Intel is NOT a legal monopoly. However, Intel is arguably an economic monopoly which is why the government steps in.

Ironically, The government has very little problem with anti-competitive behavior when Intel prevents Nvidia from creating Nehalem chipsets because they were complicit in the arrangement of the monopoly and license. However, it appears they do have a problem with Intel becoming an economic monopoly because that was chosen by the market, ergo, the government didn't have any control in the situation, and therefore, must punish everyone involved.

Finally, the least realized aspect of harm is the fact that billions of dollars in capital have essentially been flushed down the toilet. How you may ask? Through a combination of fines from the EU and this settlement, over $2.5B in capital have been moved from wealth generating activities to wealth destroying activities. In a free market that is removed from coercion and government intervention, a profit occurs when you create a product that is worth more than the sum of all resources put into creating it. When this occurs, your reward for using resources effectively is a profit. On the other hand, when you are wasteful and inefficient and create a product that is worth less than the sum of all resources put into it, your punishment is a loss. In this respect, we have moved over $2.5B from one of the largest wealth generating companies in the world and blown it on boondoggles and social programs in the EU and given a handout to AMD which is nothing more than corporate welfare for a company that has a record of destroying wealth to the tune of ($7.2B) in retained earnings over the course of its lifetime.

To sum this post up, has the market benefited from the anti-trust activities against Intel. Most likely not, although AMD could surpise us with a remarkable turn around, but unfortunately that is still speculation. On the other hand, what we do know is that Intel has suffered much harm in all of this at the hand of the legal system so as of now, we can only say that a net harm has occured in the market and it's unknown how that will affect consumer's in the future.

"At heart, we're a reverse engineering design company" - AMD

2009-03-03T21:22:00.003Z

"Advanced Micro Devices Inc closed a deal to spin off its manufacturing operations on Monday, and said it expects the new company to assume responsibility for paying off about $1.1 billion of debt.
The plants which make AMD's chips are now part of a $5 billion joint venture with Advanced Technology Investment Co, of Abu Dhabi, temporarily called The Foundry Co." - Reuters

In a very creative way, AMD has ridden itself of its crippling debt and the massive burden of capital investment going forward. While AMD may sound as if this strategic move brings them closer to their core expertise, it is without a doubt that this back-to-the-corner decision was the only way for AMD to remain viable. This new lease allows AMD, maybe for a few more product lifecycles to continue and remain as the only challenger to Intel.

At the bleeding edge of semiconductor technology, it has yet to be seen whether a fabless company can challenge one with a foundry. In the not so bleeding edge such as memory products companies with their own foundry like Samsung are dominating over the rest of the industry but competition remains vibrant. But in the x86 space where process leadership creates cost and performance advantages, history isn't kind to fabless companies. Starting this week, AMD is effectively what Transmeta was back in 2000. The difference is Transmeta had a lot of hype going for them and probably with a more compelling product offering in the mobile space.

Another wider-than-expected loss for AMD

2009-01-22T22:35:00.003Z

SAN FRANCISCO (Reuters) - PC chipmaker Advanced Micro Devices (AMD.N) posted a wider-than-expected loss in the fourth quarter as worldwide demand for PCs continued to shrink.
AMD reported on Thursday a net loss of $1.42 billion, or $2.34 a share for the quarter ending December 27, compared with a loss of $1.77 billion, or $3.06 a share, a year ago. Excluding certain items, the company posted a loss of 69 cents a share. Analysts, on average, had expected a loss of 56 cents a share, according to Reuters Estimates.
Revenue for the second-largest maker of central processing units for personal computers fell 33 percent to $1.16 billion, compared to analysts' estimates of $1.19 billion, according to Reuters Estimates. AMD said it expected revenue in the first quarter to decrease from the fourth quarter.

If AMD never made money during the best market condition, what hope is there when the economy is at its worst. For the first time the talk of bankruptcy for this company can never be more serious. Looking at the bright side of things, the Zoners could finally get a life.

Wait no more

2009-01-04T19:46:00.003Z

If some of you have some spare money by the end of this month to buy a new computer and have been waiting for some comparison between AMD's 45nm Shanghai against Intel's new Nehalem, well wait no more: Link (Thanks to Axel).

The good news is that PhenomII has shown significant improvement over Phenom. But then this shouldn't be a surprise considering Phenom was a step back from Athlon64. Two years and a process node later, AMD finally defeats Intel's Q6600. If some call this as AMD being back in the game, so be it. All I wish is for some of our friends to return and have something to say. Their silence is deafening.

New Desktop

2008-12-31T13:40:00.004Z

After years of being mobile, I finally decided to get myself a cheap but capable desktop from a custom build site. The system is intended to become a home file server, video editing and casual gaming. The specs follows:

MOTHERBOARD: GigaByte GA-EP45T-DS3R Intel P45 Express CrossFireX Chipset LGA775 FSB1600 DDR3/1600 Mainboard w/GbLAN,USB2.0,IEEE1394a,&7.1Audio
CPU: Intel® Core™ 2 Quad Q8200 @ 2.33GHz 1333FSB 4MB L2 **Overclockable S&S*** Cache 64-bit (Read the reviews and I am already hating this CPU)
MEMORY: 4GB PC12800 DDR3/1600mhz Dual Channel Memory (G.SKILL NQ Series w/Heat Spreader ***Overclockable XXX***)
VIDEO: ATI Radeon HD 4870 PCI-E x16 1GB DDR5 Video Card
OPT DRIVE: SONY DUAL FORMAT 20X DVD±R/±RW + CD-R/RW DRIVE DUAL LAYER
HDD: 1TB SATA-II 3.0Gb/s 32M Cache 7200RPM Hard Drive (I know i should get 2 HDDs each for OS and Data)
Total < $1000

OS: Vista Ultimate (i get free SW from MS)
DISPLAY: Dell 22" 1900x1080p S2209W ($236 from Dell)

The Intel Core i7 platform at the moment is quite expensive and it was one of the main reason why I chose the lamest of all the 45nm Quad core. The CPU / Motherboard will be the next upgrade path I take in a couple of years and choosing one at the bottom of the table should hasten the transition. And since it is the video card that does most of the work these days I had to go with AMD's 4870 - best value for money if you ask me.

Feel free to criticize and show how one can do better without breaking the bank.

AMD Bankcrupt in 2009

2008-12-30T22:10:00.003Z

Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly, and Advanced Micro Devices files bankruptcy. - Doug Kass, "20 Surprises for 2009".

"AMD ends 2008 (until we see fourth-quarter results) with $1.3 billion in cash, four times that amount in debt, and an operating loss of $1.9 billion over the last four quarters. Add to the mix an unprecedented slowdown in global economic demand and AMD's own tenuous market share in servers and PCs, and it becomes increasingly difficult to see the company's failure as an outlying event". - Michael Goodman, The Street.

2008 was supposed to be the year AMD's went bankrupt but was averted by a unique financial agreement with an entity that was enjoying record oil revenues. But the realities on the ground are changing and rapidly getting worse. While Intel continues to spend on 32nm, AMD on the other hand will look at someone else to make the several billion dollar gamble. The bet includes the following: a) that market demand is there to recover the investment, b) AMD will have viable products and c) AMD is still around (with an x86-license) to design chips. Terrible odds if you ask me.

Bad For Intel, Catastrophic for AMD

2008-11-12T22:30:00.002Z

Intel Corp. said late Wednesday that it expects financial results for its current, fourth fiscal quarter to be "below expectations," as the technology bellwether grapples with a flagging economy.
The chip maker said it now expects fourth-quarter revenue to be $9 billion, "plus or minus $300 million," which is lower than the company's previous expectation of between $10.1 billion and $10.9 billion.

Never mind Intel, at targeted gross margins of 55%, it will do just fine. The recuperating AMD will be the worst hit. Yet again, we can expect AMD to break it's promise of returning to profitability in the second half of 2008. We all saw what happened to AMD when Intel's gross margins drops close to 50% and needs to clear inventory. It's safe to assume things won't be different.

For now you can expect AMD to make noise and show its impoverished investors (AMD @ $2.57/share) that it is taking the necessary steps. It already announced laying off 500 employees. Soon they'll be talking about 32nm and reviving Bobcat. It's about being too little too late for AMD these days.

AMD comes out the closet, says no longer a real man

2008-10-08T20:33:00.005Z

"Real men have Fabs" - Jerry Saunders, former AMD CEO.

After all the dodging and lying about not having any plans going fabless, AMD finally admits that it is in fact going to sell its fabs. They intend to remain a minority share holder and team up with a company who haven’t got a single clue about semiconductors. But none of that matters because they have lots of money to spend. And in a time when the usual lenders are looking for a some kind of a bailout themselves, it’s either this arrangement or Chapter 11 for AMD.

"On Oct. 7, 2008, AMD and the Advanced Technology Investment Company announced the intention to create a new global enterprise, The Foundry Company, to address the growing global demand for independent, leading-edge semiconductor manufacturing. There is a strong shift to foundries occurring – particularly to foundries with the capacity to produce devices using leading-edge process technologies. With The Foundry Company, AMD will be able to unlock the value of its world-class manufacturing capability – by making it available to a growing community of fabless semiconductor companies. " - AMD's New Global Foundry page.

There's a lot already said about AMD's move. The best one that highlights the concerns more clearly is from Fabtech:

Another aspect that concerned me was the notion pumped out by AMD that demand for leading-edge foundry capacity was something that was in strong demand. Ask SMIC, Chartered or UMC how much of its capacity is allocated to 65nm-and-below production and you will find it is very small... Also, if demand for foundry capacity was that strong, then why are wafer ASPs in decline and the major foundries cutting CapEx each year?... Even worse is the fact that SMIC has struggled since birth to actually turn a profit, so why should we think that a new foundry start-up in Europe (and the U.S.) will fare any better?

The "growing trend" to go fabless is a decision forced upon companies due to the rising cost of running a Fab. This alarming trend have been identified by Intel in the late 90's. AMD knew this day was coming and set a goal of 30% market share just to avoid ending up where it is now. It's entertaining to see how AMD is making it all appear as if it was an advantageous choice.

How can it be advantageous when AMD will now have to ask another company to spend $Billions every time it wants new equipment for a new process technology. How can it not be disadvantageous when your main competitor do not have such bureaucratic problems. Short term, this move by AMD will buy them time for the next year or two. Long term, I can only see AMD becoming the next Transmeta. When The Foundry Company starts losing large sums of money they will become cost conscious and that's when problems begin. Against Intel's "tick-tock" execution, AMD will only struggle to keep up.

Strong Demand for Intel's Atom

2008-08-07T20:45:00.003Z

Citigroup analyst Glen Yeung reiterates his Buy rating and $29 price target on Intel (INTC), citing channel checks that revealed strong demand for INTC's Atom processor:

"Field checks from Japan suggest Intel has ordered 20M Atom flip-chip packages for 3Q08 and 25M for 4Q08. This is orders of magnitude more than our modeled 2M and 2.5M units in that timeframe. These figures do sound aggressive to us (and some is likely inventory build) and so we believe a substantive haircut is appropriate. Nonetheless, even at half these levels, Atom is running well ahead of our expectations. We conclude that Intel's relatively aggressive 8.8% 3Q08 revenue growth guidance, while still prone to macro factors, looks more achievable in light of Atom strength".

I may have to give anecdotal evidence in support of Glen Yeung’s report. The lead time for ordering Atom processors from distributors have now gone up to 6 weeks! It's beginning to look like last year with Barcelona but only different. Atom demand has just gone through the roof as if every single technology firm has found some clever use for the low power microprocessor. Hopefully, Intel meets demand for the coming Christmas season. The concern about sales cannibalisation should be limited to computers below the performance range of Core 2 Duo, which as it stands today, equates to all of AMD’s SKUs.

AMD Loses another $Billion in Q2'08 while Hector gets the boot

2008-07-17T20:48:00.006Z

Bogged down by biased press and unfair benchmarks, AMD today reported second quarter 2008 revenue from continuing operations of $1.349 billion, a seven percent decrease (-7%)compared to the first quarter of 2008 and a three percent (3%) increase compared to the second quarter of 2007. As part of its previously communicated review of its non-core businesses, AMD decided to divest its Handheld and DTV product businesses, and therefore is classifying them as discontinued operations 1 for financial reporting.

In the second quarter of 2008, AMD reported a net loss of $1.189 billion, or $1.96 per share. For continuing operations, the second quarter loss was $269 million, or $0.44 per share, and the operating loss was $143 million. The results for continuing operations include a net favorable impact of $97 million, or $0.16 per share as described in the table below. Loss from discontinued operations was $920 million, or $1.52 a share, including asset impairment charges of $876 million, or $1.44 a share.

It may appear that AMD has mastered announcing earnings report in the midst of deflated expectations. Surprisingly, nobody seemed to care that AMD lost $270 million in the quarter and wrote off another Billion from its books. That's the AMD we're all familiar with, beating expectations the wrong way round.

But let's focus on the good news! No, Hector leaving can either be good new or bad news depending on which side of the fence you're sitting. His announcement in the midst of the report may have caught a lot of people by surprise, but like he said, it's been planned and talked about before. The real good news for AMD is that their new product line-up are gaining momentum. They never said which direction but still we're assuming it's getting design wins and a bunch of orders. AMD is also confirming together with Intel that the PC market is healthy. In fact it is so healthy that AMD just might lose a lot less in the 3rd quarter and probably break even in the 4th. AMD's promises might not worth much these days but this time the numbers do support it.

As for "SmartAss-et"(c), AMD didn't come out with any announcement but instead gave away a few more clues in the form of an easy riddle. They said, investment in the microprocessor business involves 3 things: process development, factories and chip design. And they said that, implementing smart-asset will take away two of those things. It doesn't take a genius to figure out that the two are investment in process development and factories. If AMD gets the deal then that would leave them to only focus on chip design . It does confirm that AMD is planning to go fabless. We've been discussing this several months ago while at the same time the blogger across the street thought that asset-smart was some kind of process improvement.

No bankruptcy for Intel in Q2’08 - Shocker!

2008-07-15T20:27:00.013Z

In fact they even went out and beat the general consensus by 3 cents. Demand for microprocessors have been very strong for the last 18 months that it's always a wonder why one company can take all the profit while the other member of the duopoly loses $Billions.

Intel Corporation today announced record second-quarter revenue of $9.5 billion, operating income of $2.3 billion, net income of $1.6 billion and earnings per share (EPS) of 28 cents. "Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year," said Paul Otellini, Intel president and CEO. "As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe."

Results for the quarter included significantly lower NOR flash memory
revenue along with restructuring and asset impairment charges of $96
million. Results for the first quarter of 2008 included the effects
of restructuring and asset impairment charges that lowered EPS by 4
cents. Results for last year's second quarter included tax items that
increased EPS by approximately 3 cents along with restructuring
charges of $82 million.

Guidance remains strong and unchanged from previous estimates for the remainder of the year.
-- Q3 Revenue: Between $10.0 billion and $10.6 billion.
-- Gross margin: 58 percent plus or minus a couple of points.
-- 2008 Gross margin: 57 percent plus or minus a couple of points, unchanged.

The desktop - laptop crossover for the consumer space happened in Q2 driving mobile ASPs down. Fortunately for Intel, they have another cross over happening in Q3 and that is the shift to 45nm. They expect unit cost to dramatically decline providing even more pricing advantage over AMD. The moment when Intel begins to recover investment spent on 45nm starts now until peak production volume. Only the company ahead on the process curve enjoys these returns. AMD on the other hand will spend billions on 45nm just so they can catch up. This is why Intel makes all the money.

Then again ,what we've seen since C2D was released is a general shift of financial analysts favouring Intel. These revenue, profit and margin benchmarks clearly favours Intel! All these making money thing doesn't represent real world.

The Atomic Breakthrough

2008-06-03T22:31:00.003Z

Doubts (including my own) about the viability of Intel’s Silverthorne program have been rife. The company’s exit from ARM based microprocessors shows that the business environment in the low-power embedded market is pretty hostile. When you have more than 10 different vendors, led by high-volume manufacturers the likes of Texas Instruments and Samsung, the margins can get very unattractive. Intel’s re-entry however, is a show of confidence and a belief in the ultra-mobile segment as a market with a huge potential for growth. Having learned their lesson, Intel is now differentiating themselves from ARM by sticking with the general purpose, off-the shelf and widely compatible, x86 Intel Architecture.

It’s a great idea until you realise that the Atom processor isn’t really up to par with ARM based processors when it comes to the flexibility of having the ideal performance at the right power draw. x86 is just too rigid in terms of performance, continues to be power hungry and remains too expensive to implement. The foundation of my scepticism on Intel’s Silverthorne strategy is solely based on the fact that the right market for it (high performance, low power, and high margins) truly does not exist. I was wrong.

There is a growing “and very mobile” market where an Atom based PC just happens to slot right in. It is a segment where high performance is required, power draw isn’t much of a factor and price isn’t the primary concern. I am referring to the In-car PC. Bill Gates once envisioned a PC in every home. Now Intel is betting on having a PC in every vehicle – that’s a potential market of ~72 million annually by 2010. I know we’ve heard so much about this in the past but this time around the automotive industry is ready. Expect high-end/super cars to have built-in PCs in 2010 just to establish the concept and expect wider deployment after 2012. This information comes from actual product roadmaps and not just my prediction.

The industry's move to PC’s to be the system that integrates the ever increasing functionality of the modern car is driven by cost. Believe it or not, an in-car PC will be the cheaper alternative real soon once the volume kicks in. A singular system that drives the audio & video, sat nav, phone system, internet, HVAC, telemetry, security and customised vehicle settings is fast becoming cheaper than having all the different parts bought, assembled and wired individually. Simplification goes a long way in high volume automotive manufacturing and the building blocks that can integrate the PC with the automotive networking standard (CAN/LIN) is very mature. The advent of the Atom removed the cost hurdles that existed for a complete integration.

At the moment the competition is between the incongruent ARM-based system and x86 (Intel and VIA's low power CPU's). Intel is currently leading the pack with their fully developed embedded solutions with major vehicle OEMs and system integrators as partners. Even Microsoft has stepped up in pushing the Windows Embedded platform. They are now competing head to head with Linux (automotive grade) which is quickly gaining support to become the automotive standard. Either way, developers are finding it easier to design human-machine interface applications using the widely adopted x86 instruction set. The Atom processor is beginning to shape like the breakthrough product Intel has been looking for.

AMD's Asset-Lite could be something really awful

2008-05-06T20:52:00.007Z

Anyone proficient with public relation strategies would be familiar with the concept of “controlled leaks” and “damage control. AMD’s filing of new charges against Intel and the rumour of an imminent restructuring announcement is just too much of a coincidence. Reading bits and pieces of the lawsuit reveals just how badly AMD’s business has become that anyone can only conclude that insolvency is inevitable. Conveniently, the asset-lite rumour started floating around giving just the needed amount of hope to anyone planning to continue to do business with AMD. The last thing AMD wishes is for its customers to think it is a risky option for future design platforms.

There are several ways of looking into the two AMD related events today. One that everyone should be familiar by now is the direct correlation between AMD’s cries of monopoly and its poor financial performance. Invariably, disastrous news from AMD always seem to follow everytime they talk about Intel's alleged illegal business practices. Anyone following AMD devotedly needs to hold on tight because this complaint is the biggest one yet. If AMD wasn't lying all along and indeed have an asset-lite strategy and were to announce it soon, based on the proximity with the new lawsuit, I can only conclude it’s going to be bad for AMD. Whatever the deal is, it must be something so awful that AMD needed to a file a lawsuit/excuse/scapegoat to justify their decision on asset-lite.

(thanks to enumae for the pdf link)

Cray Dumps AMD

2008-04-28T19:26:00.006Z

As promised from a previous blog entry , it was only a matter of time when Cray makes a deal with Intel and leave AMD out in the cold. Cray's 2007 earnings was drastically affected solely by AMD's product delays and poor performance: "... The decrease in product revenue (16%!!!) was principally due to delays in completing new products in time to recognize revenue in 2007 because of delays in product development and component availability" - Cray 2007 annual report.

WSJ : "Intel Corp. and supercomputer maker Cray Inc. announced an alliance that could add to pressures on Advanced Micro Devices Inc., and aid Cray's battles with much larger hardware vendors".

While the immediate implications are obvious, such as the decline in 4P market share for AMD and the associated drop in healthy margins, there are other far reaching but less obvious things to consider. For one, AMD's foothold on the server spare would completely evaporated once Nehalem ships with the likes of Cray on board. Design wins in HPC space are always critical due to the significantly longer product life cycle (sales and after-sales support). It is never easy to get back in this segment unless there are very compelling reasons to do so because price which seems to be AMD's only forte, plays a lesser role.

The news about the collaboration in R&D could only mean more bad news for AMD. Intel will be willing to pay for a significant portion (read: almost all) of the R&D as long as it involves their CPUs and a bit of pressure to forget about competing platforms. A clever and legal way of locking in your supplier for future products. Cray may be only one HPC vendor making such an announcement, but the shift between the big players have been going on for quite sometime now.

Expect Opteron based systems to disappear one by one from the supercomputer list in 2010.

AMD's Q1 2008 Earnings (or lack of) Report

2008-04-17T20:42:00.004Z

"AMD today reported first quarter 2008 revenue of $1.505 billion, a net loss of $358 million, or $0.59 per share, and an operating loss of $264 million. These results include an impact of $50 million, or $0.08 per share, from ATI acquisition-related charges. First quarter revenue decreased 15 percent compared to the fourth quarter of 2007 and increased 22 percent compared to the (abysmal) first quarter of 2007".

“A seasonally weak first quarter (natural trend therefore beyond AMD's control) was amplified by a challenging economic environment for consumers (people don't have money to buy PCs) and lower than expected (meaning awful) revenues of previous generation products (meaning obsolete), resulting in lower than expected revenues in all business segments. However, we are encouraged (interesting choice of words, why not speak in volumes like "overwhelmed") by the market acceptance of our Quad-Core AMD Opteron™ server processors as well as our new chipset and graphics offerings,” said Robert J. Rivet, AMD’s Chief Financial officer. “We remain committed to achieve operating profitability in the second half of the year, driven by our portfolio of new products and platforms (which NEW product?) and aggressive restructuring programs (meaning layoffs).

It appears as if AMD is back to square one. Not surprisingly, a product line-up of buggy, handicapped and obsolete products guarantees nothing else but massive losses. AMD may pretend all they want that they're giving what the customers want, the latest financial statement says otherwise. It is shocking that they can claim to be having a difficult market environment when their direct competition is thriving. I would like to think that they're lying and know what the hell is going because it sounds as if they're not living in reality.

What is surprising is that AMD admitted to the server share loses and the massive decline in overall unit shipment. Other alarming trends in their numbers include margins going south from 44% last quarter to 42% in Q1'08. While revenue declined $265M compared to last quarter together with unit sales, MG&A increased by $20M! The graphics division which was supposed to have a strong product lineup (at least relative to Computing) also made a loss.

To fix all their problems Hector once again pulled out the old (one year old to be exact) black rocket called "asset-smart". While I could have sworn hearing laughter through the muted telephones, at least one analyst was too pissed to mention that he's getting tired of waiting for the "wait-and-see-if-we-make-it-to-break-even-asset-smart" strategy. Of course, like always Hector said he will make an announcement "soon". With the way AMD puts emphasis on asset-smart whenever they're in trouble and less when they're doing better, it is beginning to look like asset-smart really is filing chapter 11. People who think Hector isn't smart don't know what they're talking about.

INTEL's Q1 2008 Earning's Report

2008-04-15T21:02:00.003Z

Record Server Microprocessor Revenue
Revenue up 9 Percent Year-over-Year
Gross Margin up 4 Points Year-over-Year
Operating Income up 23 Percent Year-over-Year
Net Income $1.4 Billion; EPS 25 Cents

SANTA CLARA, Calif., April 15, 2008 - Intel Corporation today announced record first-quarter revenue of $9.7 billion, operating income of $2.1 billion, net income of $1.4 billion and earnings per share (EPS) of 25 cents.
"Our first quarter results demonstrate a strengthening core business and a solid global market environment," said Paul Otellini, Intel president and CEO. "We saw healthy demand for our leading-edge processors and chipsets across all segments. Looking forward, we remain optimistic about our growth opportunities as we continue to reap the benefits of our 45nm technology leadership."

It appears like business as usual for Intel despite the macro-economic turmoil affecting the financial industry. Strong server sales dominate the earning's call with frequent mention of grabbing market share from AMD (estimate ~$100M lost to Intel). AMD's situation is so awful that one analyst asks if Intel takes into consideration their competitor's "too dire" situation and how any of their actions could adversely affect the competition. However which way you read into that statement, it is like saying, "are you making sure you're not hurting AMD too much to kill it and just apply enough pressure to keep it half-dead on life support?"

Outlook for the second quarter and the rest of the year remains strong with plenty of optimism for Atom and a brief mention that Nehalem is on track. Business as usual for Intel with a strong product line-up means a lot of red ink on Thursday as AMD reports.

AMD's Annual Layoff Exercise

2008-04-08T22:17:00.002Z

"Advanced Micro Devices, reporting a slump in sales, said Monday it will cut 1,680 employees, or about 10 percent of its worldwide workforce, between now and September. An AMD spokesman said the move was part of a cost-cutting plan to help return the company to profitability. He said the company doesn't know how many will be affected at its two Silicon Valley campuses. AMD said that the revenue drop was caused by lower than expected sales across all business segments, which it attributed to an anticipated seasonal decline". -siliconvalley.com

Expect every horrible announcement to be beautifully written and without fail stated in a positive manner. It is amusing that AMD calls a sudden announcement of workforce reduction as a cost-cutting "plan". Intel announced a 10% workforce reduction over the course of several quarters to save $2B annually. Now that is what you call a plan.

It's not surprising that AMD's sales are off by around $100M. AMD's customers are left to choose between an aging Athlon or a Phenom that does not have guaranteed delivery dates. Large OEM planners are having problems booking production plans for Phenom based systems - or so I heard. To most companies with tiny margins, on-time delivery is key:

Citigroup wrote about the issues with Dell this morning, saying: "Our analysis suggests that a source of AMD's shortfall is Dell's decision to reduce their AMD exposure. Consistent with speculation throughout the quarter, AMD's shortcomings in two flagship products (Barcelona and Phenom) was the likely sore spot for Dell. - cnbc

The Task Manager Déjà vu

2008-03-08T09:52:00.004Z

AMD launched a new batch of promises at CeBIT in Hannover. 45nm Deneb was demonstrated running Task Manager. The last time AMD used tskmgr.exe to demonstrate working silicon things didn't quite turn out according to plan. AMD promised to ship 45nm products by the second half of 2008. Nobody seems to disagree that this meant the fourth quarter of 2008. If AMD keeps its promise then that puts them a year behind Intel, which is again a major miscalculation from the blogger next door. Never mind the fact that Intel built up inventory in Q3'07, none of that is as important as the embarrassment for those who thought AMD is closing the gap. As usual, AMD is doing the job of correcting its own disillusioned fan base.

Not to make AMD followers a bit more nervous but this is the first time AMD will be alone implementing a microprocessor architecture on a new process. At the moment all that IBM is offering on 45nm are small ASIC designs on SOI and low power RF CMOS. Not quite a show of confidence on the new process. Clearly there is a sense that AMD is being forced to move on to the unrefined 45nm process. Maybe because it needs to show it is catching up or maybe they’re in a hurry to move away from their disastrous (and also hurried) 65nm process. Either one is valid enough. Meanwhile, the less pressured IBM waits for its alternative metal gate solution before implementing on their Power architecture. IBM has a crucial reason for waiting, and I’ll leave it for the boards to discuss.

But when it comes to announcements you have to give to AMD for cleverly stirring things up a little. It’s hard to get excited about 45nm promises when the competition is shipping them in volumes since last year, but they managed to pull it off. Throwing in technical jargons and masking process weaknesses into an advantage seemed to have worked for the scrappy little company. They got the press to notice so that’s job done for the over worked AMD PR machine. They just need to work more on coordinating their statements:

AMD spokesperson 1: “A common misconception is that being first to a new process technology generation is the fundamental determinant of performance and energy efficiency leadership. AMD has proven this to be false."
AMD spokesperson 2: “AMD's 45nm process generation is engineered to enable greater performance -per-watt capabilities in AMD processors and platforms”.

If you can't beat them, join them

2008-02-28T23:39:00.003Z

I am currently in the middle of a big project and temporarily finding it a quite a challenge to maintain the same level of updates as you may have seen in the past. AMD's lack of response together with the apologetic tone from its followers doesn't make it easy either.

To improve the discussion and level of activity I would like to open up the blog to co-authors. I encourage everyone to nominate who they think should be hitting the front page instead of the comments page. Sort of "voluntelling" them to become authors. Anyone courageous enough can also come forward and anyone wishing to remain anonymous can e-mail me at roborat2000@yahoo.com.

I ask only that we maintain our dedication to "truthiness".

Intel and the European DisUnion

2008-02-12T21:00:00.000Z

I assume everyone is aware that Intel's Munich office along with major computer retailers have been raided.

EU regulators raid Intel offices

BRUSSELS (AFP) — EU antitrust regulators stepped up a probe into microchip giant Intel on Monday by raiding the US company's German offices and computer retailers on suspicions they might have stifled competition.
The European Commission "has reason to believe that the companies concerned may have violated (EU) rules on restrictive business practices and/or abuse of a dominant market position," a statement said. It did not disclose the number or names of companies raided, or divulge where they took place, saying only that "commission officials were accompanied by their counterparts from the relevant national competition authorities."

On the surface there seems to be nothing new here as the EU's obvious distaste for dominant American companies is pretty much well established. It is the behind the scene involvement of the German government that raises a few eyebrows. There is an obvious element of politics involved here and AMD seems to know where and when to pull the strings. One thing anyone needs to know about the European Union is the dis-unity. Behind the curtain, everyone is either fighting for it's own interest, or politicians trying to seek re-election.

Maybe Intel is indeed guilty of violating the EU's competition law and deserve what they got. But then again maybe someone is just trying to save face. Some politician isn't looking good at the moment after granting €262M last year to AMD after promising to run 2 Fabs. Seeing that the AMD bet is a mistake it isn't too hard to imagine why anyone want somebody to blame. In fact it happens more frequently than you think. You have another New York politician who has wasted millions in setting up the infrastructure for an AMD fab that isn't going to happen. Guess what happens next? (Intel gets a subphoena).

The importance of the performance crown

2008-01-25T14:44:00.000Z

Mercury Research published their numbers showing some very interesting facts. Anyone with doubts about the importance of keeping the performance crown needs to look at this graph.
AMD’s drastic decline in overall ASP coincides with the release of Intel’s Core 2 microarchitecture. One thing to note is the increase in ASP gap between the two vendors from ~$35 in 2006 to ~$55 in 2007 simply because one had a better product. It is suffice to say that $20 per CPU is the price to pay for losing the performance crown. That is a third of the average value of an AMD CPU and is quite a lot of money.

Breaking it down further by market segment it becomes apparent what Intel meant by ‘walking away’ from some of the businesses. AMD’s mobile ASP is even lower than Intel’s desktop prices. Another thing to note is the continuous price erosion on Intel’s mobile segment. The gap between mobile and desktop is diminishing due to the tremendous demand for lower priced laptops towards the end of 2007. One can get a sense of how AMD is well entrenched in this space forcing Intel to lower prices if it wants to get back market share. The surge in Q207 server ASP for AMD comes from the Iranian supercomputer purchase which is rumoured to be paid in oil.
One thing that needs to be taken into context when looking at these figures is the fact that AMD lost a lot of money in 2007 while Intel took in healthy profits. Mentioned in an earlier blog, both companies have adjusted their business model to try and meet historic margin levels. And to some degree we have seen results. But as Intel and AMD continue to battle it out, the one without the superior product has no option but to compete on price. The problem is there isn’t a lot of wiggle room starting from $60 per CPU.

A Review of the IDC numbers

2008-01-23T16:31:00.000Z

I can see that someone has done a ‘Sharikou’ on Intel’s recent financial performance. A ‘Sharikou’ is an analysis method popularised by a similarly named blogger, where a desired result is only realised by varying the point of reference. Ignoring the usual method of 'like-for-like' or sequential comparisons, the blogger instructs his readers to compare Intel’s 2007 numbers with 2005 to get a “better understanding”. He doesn’t justify why his method gives a better understanding, but at least you can see that Intel’s revenue and margins are trending down – ‘Sharikou’ method successfully utilised.

IDC numbers (using only conventional methods of comparison) were released showing interesting trends. The total 2007 processor volume went up 12.5% while revenue only improved by 1.7%. IDC says that there was a degree of price erosion that occurred earlier in the year. True enough, but when someone suggests that Intel isn’t lean because it can’t reproduce the same margins as two years ago, I feel sorry for the poor analysis, and quite frankly, it isn’t surprising whenever the “Sharikou” is applied. In a duopoly where the market or revenue share is a zero sum equation (almost), comparing how much AMD and Intel performed using the same frame of reference, makes the most sense.

Intel and AMD did see an overall decrease in ASP mainly because of the larger presence of AMD in the notebook and server space (margins naturally decline as market share in a doupoly approaches 50%%). But it is interesting to see who was hit the hardest:
Global 2007
Volume increase: 12.5%
Revenue: $30.55B
Revenue increase: 1.7%

Intel 2007
Revenue (Digital Enterprise / Mobility CPUs): $25.89B
Revenue increase: 8.7%

AMD 2007
Revenue (Computing): $4.70B
Revenue increase: -12.4% (down from $5.64B)

It is quite evident that AMD has taken the brunt of the ASP erosion considering that market share only shifted by a couple of percentage points while both companies reported record volume shipped. In terms of laptop and server prices it is clear that the business environment has changed and the good news is both companies are taking steps to adapt. AMD has delayed Fab38 and for obvious reasons. At the moment they have the capacity to supply 80 million CPUs for the 70–75 million demand (2008) for AMD based systems. They now seemed to be content to play in the box they were forced to be in. Intel on the other hand plans to improve by divesting non-performing businesses, creating new high margin products and the usual, by outpacing the competition with better products using a better process.

It is premature and erroneous to dismiss the benefits of Intel’s 45m before the ramp is complete. Intel's guidance of flat margins throughout 2008 is likely due to their tendency to be on the cautious side and isn't sufficient to make quick assumptions on the company's cost structure or pricing strategy. Meanwhile AMD can only expect more difficulty as K8 gets even more outdated and K10 is ramped with very poor yields. In 2007 AMD managed to ship 400K QC units. It isn’t such a big number considering this is just 0.6% of their total volume. Barcelona or K10 is considered by many as a disaster in terms of performance. Financially, we have yet to witness how much damage it can do to AMD… assuming of course AMD ramps K10 on 65nm.

The comeback kid? AMD's Q4/2007

2008-01-18T09:08:00.000Z

SUNNYVALE, Calif. — Jan. 17, 2008 — AMD (NYSE: AMD) today reported fourth quarter 2007 revenue of $1.770 billion, an 8 percent increase compared to the third quarter of 2007 and flat compared to the fourth quarter of 2006 2 . In the fourth quarter of 2007, AMD reported a net loss of $1.772 billion, or $3.06 per share, and an operating loss of $1.678 billion. Fourth quarter net loss included charges of $1.675 billion, or $2.89 per share, of which $1.669 billion were operating charges. The non-cash portion of the fourth quarter charges was $1.606 billion.

This is quite a comeback considering so much negative news surrounding the company. The substantial increase in revenue while keeping OpEx flat helped drive the company to almost break even. In fact the computing group reported an operating profit of $21M. Overall AMD beats the overly negative market consensus of $-0.36 per share reporting in a loss of only $0.17 per share. Margins were up 3% to 44% which would lead anyone to wonder what could have happened if Barcelona was executed as planned. While the $1.606B goodwill charge significantly affects the valuation of the company, one can argue that the stock seem to have already taken this into account.

From the company’s business standpoint it appears that AMD is doing all the right things. Key to the improvement is the change in priority. Like Hector said, their number one goal is profitability while the second is serving the customers. Essentially that means AMD is optimising product mix to generate the most revenue as opposed to running both their Fabs at peak volume just to grab market share. It seems like Hector has indeed humbly learned his lesson and breaking the monopoly is off the agenda.

From a product execution standpoint AMD says that B3 is ready. The conference call painted a better picture of how the Barcelona fix is progressing. Engineering samples will be out in a couple of weeks while production samples will be shipped later in Q2. This sounds like Barcelona will only reach the general market right around end of Q2, probably Q3. AMD shipped close to 400,000 quad cores with the ratio of 2:1 (desktop to servers) in Q4. It is difficult to gauge the significance of that quantity in terms of margins but clearly it is just a large number thrown out there to impress people. It appears like it worked.

While it is evident that AMD is trending in the right direction, their strategy remains untested. Revenue may be trending upwards but so was demand in the 2nd half of 2007. The company grew revenue using existing products but their viability is relative to the competition who seems to be executing at a faster pace. AMD’s plan to return to profitability relies heavily on new products which appears to be limited to the mid to low-end segment (tri-core, 65W products). While this was proven to be marginally profitable in a healthy market, AMD needs to prove they can do the same feat in the midst of a price war. One can’t help but wonder if the actions of another entity plays a bigger influence on AMD’s profitability.

Intel's Q4/2007 Report

2008-01-15T23:31:00.000Z

Intel's Q4/2007 numbers:
• 2007 Operating Income $8.2 Billion, up 45 Percent
• Fourth-Quarter Revenue $10.7 Billion, up 10.5 Percent Year-over-Year
• Gross Margin 58 Percent, up 8.5 Points Year-over-Year
• Operating Income $3 Billion, up 105 Percent Year-over-Year
• Record Microprocessor and Chipset Units and Revenue
• Net Income $2.3 Billion; EPS 38 Cents

Q1 2008 Outlook
• Revenue: Between $9.4 billion and $10 billion.
• Gross margin: 56 percent plus or minus a couple of points.
2008 Outlook
• Gross margin: 57 percent plus or minus a few points.
• R&D: Approximately $5.9 billion.
• MG&A: Approximately $5.5 billion.
• Capital spending: $5.2 billion plus or minus $200 million.

Impressive figures, but unfortunately when a bear market looks for tell-tale signs of an impending recession they always find something negative to focus on. Take for instance Intel missing consensus by around $100M. "Aha!" said the market. "There's your global recession right there!".

Assuredly, the conference call was peppered with leading questions. In order to justify their recent industry downgrade, analysts tried their best to make Paul and Stacey say what they wanted to hear. Several questions focused on the inventory situation, looking for any cancelled orders and then drilled on the relatively flat gross margin prediction for 2008. But the analysts never got what they wanted. Instead, what they heard was exactly the opposite. Inventories are lower than expected; demand, especially in server and mobile, is solid while the market is expected to grow double-digits in 2008. Intel's slightly lower revenue was in fact primarily due to significantly lower memory pricing (a result of a global over capacity), and the charge for the NAND spin-off. While none of the shortfall was attributed to Intel’s computing group, nonetheless, Intel admits it is prudent to be cautious.

As for AMD, the general outlook Intel provided can be taken as positive news. A healthy market relieves pressure on margins going forward allowing AMD time to put things in order. The only problem for the scrappy little company is trying to catch up to a more focused and much leaner competitor. As Intel delivers on Silverthorne, 65nm chipsets, WiMax and Nehalem, 2008 is set to be AMD’s toughest year yet.

AMD delays Phenom because of pesky bugs customers

2008-01-11T14:52:00.000Z

AMD admits to recent rumours that higher speed Phenoms (9900 and 9600) will be delayed until the second quarter. Luckily for AMD, nobody waits for mid-to-low-end CPUs. So except for a few people at AMDZONE, nobody is really disappointed by this news. AMD vehemently denies that the delay is due to the TLB bug found back in November. “The B3 stepping is not bugged”, according to INQ reporter Charlie Demerjian after speaking to AMD’s Pat Moorehead. Pat Moorehead is the Executive VP of Marketing at AMD who is coincidentally also running the Barcelona Debugging Task Force. If we can take the word of an AMD executive then the company should now be focusing on understanding why their process is producing energy efficient chips instead of 9900 Phenoms.

Energy efficient chips are what our customers want, declares AMD, which is very fortunate because this is all they have anyway. Either this is a profound coincidence or AMD is confusing desktop with OLPC demand. Phenom 9900 and 9600 will be pushed out until next quarter because AMD is now trying to meet the ‘unusual’ demand in this low margin segment using nothing but very expensive parts. While some analyst believe that such a move is void of any logic, some would argue that at least AMD isn’t throwing the CPUs away like McDonald’s with their silly 15-minute rule on burgers. (But if McDonald’s goes into financial trouble and tried to sell cold and stale burgers because they insist it is what the customers what, it would just be pathetic).

Similar to how the tri-core Phenom is targeted at the tiny tetraphobic market in China, AMD believes that there is a healthy market out there for expensive energy efficient processors. Well at least until they figure out a way to fix Phenom.

~$1.5B Anyone?

2008-01-09T22:32:00.000Z

With the current price AMD’s stock is trading today, all you need is roughly $1.5B to take a majority stake in the company. Of course this is theoretical as such move requires approval from regulators, AMD’s board of directors and a lengthy cross-license negotiation with Intel. Trading at a 52-week low of $5.53, more investors abandon AMD's stock amid fears that a U.S. recession could be the final straw that would bring the company into insolvency.

After several days of trending synchronously with AMD due to a series of sector downgrades, Intel traded up today on a repot from Gold Sachs:
"Intel is very well positioned to continue to gain (market) share, particularly in servers, given AMD's disappointing execution," Goldman analyst James Covello wrote in a report (probably after readings some fierce comments from Sparks).

Meanwhile investors continue to dump AMD probably just for the sake of pissing Hector Ruiz even further. An open letter from Mr Douglas McIntyre (24/7wallst) calls on AMD’s board to dump Mr Ruiz who seems to be the only person in the world who doesn’t understand why the stock continues to slide.
An Open Letter To Frank Clegg, AMD (AMD) Board Member: “As a member of the AMD (AMD) board, you know how deeply disappointed the market is with the performance of the company's CEO Hector Ruiz. AMD shares hit another 52-week low today at $5.77. Wall St. has lost faith in the company's ability to release products on time and improve gross margins.”

When a company loses around $2B in a good year, one of the best the industry has seen in quite a while, just imagine how things could turn out if the economy enters a recession... And just when you thought things couldn’t possibly get worse.

AMD’s Law: “Just when you thought it couldn’t possibly get worse…”

2008-01-02T16:28:00.000Z

For AMD, 2007 was the year where everything turned south. Just when you thought it can’t possible get any worse, AMD’s management comes out with more bad news. In fact, it’s gone so horrible wrong that I am starting to feel a sense of weariness from too much AMD bashing. To be honest, it was most exciting when AMD’s decline was debatable. Then it was instantaneously gratifying when our analysis turned out to be correct. But today when we finally see closet fanboys re-write our opinions while gobbling up large quantities of crow, you begin to gather a sense of indifference. Have we heard so much bad news about AMD that we’re beginning to feel numb?

Case in point: today Banc of America downgraded AMD’s stocks from “neutral” to “sell”. Frankly, telling someone to sell when they have lost more than half of its value is quite useless especially when the reasons stated aren’t new and profound:
“Irrespective of whether AMD will be able to deliver on its promise to ramp the much-delayed Barcelona platform in volumes by the first or second quarters of 2008, we believe Barcelona will do very little to stem the share losses AMD will likely witness in servers and desktops vs. Intel's more competitive line-up. Furthermore, we believe that AMD's cost structure will be further pressured by higher depreciation and higher material costs associated with the ramp of quad core parts in 2008,"

I’m sure there’s a lot of AMD shareholders who would appreciate such advice right about a year ago! Nonetheless, finding this news completely uninteresting proves my point. On the other hand, an excess of gloom and doom of AMD can only be good for the company. Expect AMD’s stock to tick higher on any news that’s less than disastrous (i.e., see Q3’07 report). Clever management strategy, I say.

Sometimes an Intel delay can be bad news for AMD

2007-12-20T17:54:00.000Z

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”.

AMD ATI sucks according to one angry man

2007-12-19T18:24:00.000Z

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.

AMD's Financial Analyst Meeting

2007-12-12T17:16:00.000Z

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.

All AMD needs is some TLB

2007-12-05T14:19:00.000Z

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.

One!

2007-12-03T19:58:00.000Z

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?

AMD's Stock Reaches New Lows

2007-11-27T21:11:00.000Z

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.

The QuadFX Disaster Part Two

2007-11-19T22:08:00.000Z

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.

All Your Fabs Are Belong To Us - TSMC

2007-11-13T17:48:00.000Z

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.

Barcelona Benchmarks Are Non-Compliant - SPEC

2007-11-07T22:15:00.000Z

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!

What's In A Price?

2007-11-05T22:16:00.000Z

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.

The Game of Leapfrogging Needs At Least 2 Frogs

2007-10-29T18:47:00.000Z

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.

Ah Yes! That DTX Again

2007-10-23T21:50:00.000Z

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.

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

2007-10-18T20:46:00.000Z

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.

Intel's Q3 2007 Report

2007-10-16T22:27:00.000Z

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.

The Fundamental Law of Progess: NEW > OLD

2007-10-15T18:45:00.000Z

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.

Phenom Problem

2007-10-10T05:14:00.000Z

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

AMD Finally Admits K10's Inferiority

2007-10-08T21:54:00.000Z

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.

RIAA Wins Landmark Case

2007-10-05T02:42:00.000Z

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.

The Story Behind Intel's Breakthrough Transistor

2007-10-03T03:46:00.000Z

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

Intel's WiMAX Push

2007-10-01T17:08:00.000Z

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

2007-10-01T07:25:00.000Z

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.

Leaked Toliman Die Image

2007-09-27T10:56:00.001Z

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.

Reading Graphs 101

2007-09-21T19:18:00.000Z

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.

Intel Ticks On November 12

2007-09-20T18:28:00.000Z

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.

Raising the Dead

2007-09-16T19:39:00.000Z

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."

AMD’s Orwellian Product Launch

2007-09-14T23:04:00.000Z

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.

Time Of Death: 0:00 am September 10 2007

2007-09-10T16:53:00.000Z

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.

The Leaked Barcelona Numbers

2007-09-08T02:30:00.000Z

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

2007-09-08T01:46:00.000Z

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.

Value Gaming - game.amd.com

2007-09-06T21:59:00.000Z

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.

AMD and NIVIO

2007-09-03T23:24:00.000Z

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.

AMD’s Last Options

2007-08-29T21:51:00.000Z

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:

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.
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.
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.
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.
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.
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.
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.

Walked The Plank Or Rat Jumping Ship?

2007-08-23T20:01:00.000Z

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).

AMD CEO Confirms Barcelona is DOA

2007-08-20T22:57:00.000Z

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

The AMD Yard Sale

2007-08-19T11:48:00.001Z

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:

OEMs Ignoring Barcelona

2007-08-16T21:15:00.000Z

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.

Intel Ticks Off Another AMD Advantage

2007-08-14T18:02:00.000Z

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.

The AMD Pyramid Scheme

2007-08-10T16:51:00.000Z

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.

Countdown To Disaster?

2007-08-08T21:17:00.000Z

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.

Intel's Monopoly Profits

2007-08-02T21:07:00.000Z

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.

AMD's Market Share Gains Shows Deeper Problems

2007-07-31T17:21:00.000Z

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

2007-07-30T20:28:00.000Z

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

2007-07-26T22:26:00.000Z

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?

2007-07-25T19:04:00.000Z

“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?

2007-07-23T19:09:00.001Z

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

2007-07-19T22:05:00.000Z

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

2007-07-17T22:39:00.000Z

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

2007-07-16T18:05:00.000Z

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

2007-07-15T17:48:00.000Z

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?

2007-07-09T23:19:00.000Z

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?

2007-07-09T11:47:00.000Z

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!

2007-07-06T16:04:00.000Z

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

2007-07-03T23:06:00.000Z

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

2007-07-03T19:12:00.001Z

--! 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!

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

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

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

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

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

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

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.

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

Warning! Eating Too Much Crow Can Cause Mental Health Problems

2007-07-02T22:46:00.000Z

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

2007-07-02T17:02:00.000Z

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.

Leaked AMD Press Release Transcript

2007-06-29T21:53:00.000Z

AMD to ~~Release~~ Ship Industry's First Native x86 Quad-Core Processors In ~~June~~ August ~~31st~~

AMD's Stable Infrastructure Strategy Enables Availability of Systems from Platform Partners in ~~July~~ September

SUNNYVALE, Calif. - ~~March~~ June 29, 2007 – Continuing to lead the ~~industry~~ add: shift of mainstream enterprise computing to energy-efficient processors, AMD (NYSE:AMD) announced today that Quad-Core AMD Opteron(tm) processors, code-named "Barcelona," are planned for shipment in both standard and ~~extreme performance~~ low power versions at launch later this summer. add: This would be the first time AMD has made both standard and low power parts immediately available as part of a new processor launch...
Due to its enhanced architecture - it is the world's first x86 CPU to integrate four processing cores on a single die of silicon - Quad-Core AMD Opteron(tm) processors can deliver significant performance and performance-per-watt ~~improvement~~ enhancements over ~~the competitors best~~ existing processor architectures yet are designed to be backwards compatible with existing AMD Opteron platforms.

With planned availability at launch in a range of frequencies up to ~~2.6~~ 2.0 Ghz, AMD expects its native quad-core processors to ~~aggressively ramp~~ scale to higher frequencies in Q407 in both standard and ~~extreme performance~~ SE (Special Edition) versions. Designed to operate the same thermal envelopes as current generation AMD Opteron processors, AMD estimates that the new processors can provide a performance increase up to 70 percent on ~~most~~ certain database applications and up to 40 percent on ~~most~~ certain floating point applications ~~compared to the competitions best processor~~ , add: with subsequent higher frequency processors expected to significantly add to this performance advantage.

"add: More than ever before, customers are expecting ~~performance~~ energy-efficiency and performance-per-watt leadership as much as absolute performance. With this new reality of ~~irreparable manufacturing difficulties~~ computing, greater performance at the expense of greater power consumption is no longer ~~achievable for AMD~~ an option," said ~~Hector Ruiz~~ Randy Allen, corporate ~~CEO~~ vice president, Server and Workstation Division at AMD. "AMD has ~~no other product to ship other than~~ prioritized production of our low power and standard power products because ~~our current technologies are limited~~ our customers and ecosystem demand it, and we firmly believe that the introduction of our native Quad-Core AMD Opteron processor ~~delivers~~ will deliver on the promise of the highest levels of ~~performance and~~ performance-per-watt the industry has ever seen."

According to AMD, they're only releasing up to 2GHz not because their process is in a complete mess, but because the expectations of the entire market shifted into energy efficiency and performance-per-watt. AMD wants you to blame its customers for making them ship only low frequency Barcelonas. You have to agree, the spin is brilliant.

Barcelona Set For A "Squishy" Launch

2007-06-27T21:15:00.000Z

Please accept my apologies for the odd term I used to describe AMD's next generation microprocessor launch. News from the INQUIRER claims that Barcelona is set to launch sometime in September in a trickle-like manner similar to the R600 launch. Since the industry is in complete agreement that R600 wasn't a hard launch and AMD claims it doesn't do soft launches therefore, please, understand my need for a better word.

AMD plans to launch Barcelona at a measly 1.9Ghz/2.0Ghz. AMD's desperation to stop the server share erosion couldn't be more obvious. The wait to achieve target speeds appears too long and literally too costly that AMD is sacrificing the great launch for a timely launch. Everyone can now forget about the grand performance topping Barcelona entrance. AMD just wants it out. Perfect or not.

There will be frantic reviews and debate at Barcelona's launch. For AMD's sake I just hope they have at least enough 2.5GHz sent out to tech journalists. The future of this company hinges on Barcelona performance and an R600 media disaster is the last thing AMD needs. The slow speeds at launch plus the high 120W TDP on a low 2.4GHz part only spells trouble for AMD. On the other hand, we're all used to the over-promise and under-deliver rhetoric from AMD so I can't really say I am surprised.

Aceshardware Going Away

2007-06-26T21:03:00.000Z

Aceshardware Offline

Bit of a sad news as one of the best technology forum on the Internet is about to flip the switch.

"Just to let everyone know, our hosting agreement is ending this month and I will be decommissioning the Ace's Hardware server at the end of the week. From this point forward, the site will no longer be online, though email should still be active. I don't have a clear picture as to the immediate future of the site at this point, but there have been various ideas kicked around and plans are in development. Hopefully, the site will return at some point and begin to grow again".-Brian Neal

Hopefully the plans to revive the site (or continue the forum) on the shoulders of Johan works out fine.

Apple Gains Notebook Share

2007-06-25T16:53:00.000Z

How do you protect your margins from commoditization? Sell to an OEM with a proprietary product. The Apple-Intel alliance is hitting it big with healthy sequential growth rates both on the mobile and desktop segment. The money Intel makes selling to Apple is shielded from the protracted price war with AMD and should be a very useful leverage.

Macworld reports:
The May boost put Apple's laptops in fourth place, behind Hewlett Packard, Toshiba, and Gateway said Baker, and moved its combined laptop-desktop sales share from 11.6% in April to 13% last month. Separately Apple notebook sales rose to 14.3% of overall purchases from 12.5%, while desktop sales increased to 10.4% from 10.2%. In retail only, sales Apple showed a slightly smaller increase, from 9.6% to 10.8%.

V8 D.I.Y. Workstation Benchmark

2007-06-22T20:05:00.000Z

Very interesting. The guys at Legit Reviews benchmarked their self-built workstation from the off the shelf S5000Xvn Intel motherboard.

"That was half a year ago and it seems that AMD still doesn't have a quad-core processor on the market. For now, one can purchase two quad-core Intel Xeon X5365 processors (3.0GHz) and the Intel S5000XVN Workstation Board to create their own 'V8' system. The heart of the platform is the Intel 5000X-series chipset that powers the S5000XVN workstation board that utilizes FB-DIMM memory modules."

Vendor built or user built, the results are consistent:

And before you think that this is embarrasing for AMD, there's more:

More power for half the performance. No wonder their workstation market share is tanking.

Legit Bottom Line: Without even lauching a product line, Intel has been able to make AMD's QuadFX platform look like weak sauce thanks to their 'V8' demo systems.

AMD "Short-Term' Upgrade - Buy Today, Sell Tomorrow

2007-06-21T18:25:00.000Z

From the Associated Press:

"Stifel Nicolaus analyst Cody Acree upgraded the stock to a short-term "Buy" from "Neutral," and set a $17 price target on it... "We believe the first-quarter's underperformance was not representative of AMD's true end demand and that second-quarter revenue will likely recover a portion of first-quarter's shortfall," Acree wrote in a client note."

Sounds like I was right about the Q4 channel flooding. AMD tried to make Q4 look good and as a result compounded its Q1 numbers with a double serving of poor demand and inflated inventories. AMD's Q2 results may represent slightly normalized numbers and show things aren't as bad as first thought but don't get too carried away. The numbers are still terrible.

AMD needs to post at least $1.6B revenue this quarter to break even. At the moment they're only expecting at least ~$1.2B. The trend doesn't look to be in AMD's favour as Intel is just getting ready for another round of price cuts. AMD is about to mass produce a bigger die product while Intel will start transitioning to smaller ones at 45nm next quarter. The cost/unit gap between the 2 companies will only get bigger allowing Intel to mass produce quad-core profitably.

Intel has successfully denied AMD's the ability to generate enough revenue to support 2 Fabs and it is only about to get worse. Don't be surprised if AMD cancels its Fab38 upgrade.

AMD Too Broke To Expand

2007-06-21T06:15:00.000Z

From the TimesUnion: AMD seeks partner for Fab

"A new report by analysts at Citigroup says Advanced Micro Devices Inc. could be looking to partner with another company on its $3.2 billion computer chip factory planned for Saratoga County -- and AMD isn't ruling it out as a possibility."

What this means in other words is that AMD can't afford to build another Fab but wouldn't want the offer to go away. It is looking for a partner to cough up anywhere from 50 to 99% of the cost of the Fab. Preferably 99% since AMD doesn't even know where to get the money to continue the much needed upgrade for Fab30. Heck AMD doesn't even know where to get the money to repair the ailing tools from Fab30.

AMD is hoping the partner is unaware so it can get 100% of the grant from the state of NY. I must admit, it's a very clever scheme.

AMD Not Invited to the Q2 Recovery Party?

2007-06-18T19:23:00.000Z

It looks as if Q2 2007 is going to be a good quarter for the PC industry. Eric Savitz reports a strong 2nd quarter demand for the PC and PC-related components. He lists the following companies as those directly benefiting from the upturn as Intel, Nvidia, TI, Intersil and Fairchild. The following reason for the positive outlook follows:

Demand elasticity from low DRAM and CPU pricing, cutting the bill of materials for by upwards of $100.
Depleted IC inventory.
Higher-than-normal build at Dell to prepare for entry into the retail market in the second half.
Restocking at Hewlett-Packard after the company reduced inventory by more than $1 billion in its fiscal Q2 ended April.
Intel’s launch of new Santa Rosa notebook platform.

You’ll notice that 4 out of 5 of those reasons should affect AMD in a good way. Then why is AMD not included in Eric’s list? This could be an explanation.

Mr. Douglas McIntyre thinks that AMD’s storm wrecked Q1 will only be followed by another perfect storm of lower ASP, poor demand stiffer competition from its unrelenting competitor. Q2 of 2007 should be strong quarter for the PC industry but nobody seems to have invited AMD.

Intel Breaks AMD's Business Model

2007-06-15T17:13:00.000Z

It is becoming more apparent that AMD's days as an IDM are numbered.
Forbes:
"Covello told clients he upgraded his rating (for Intel) because AMD's likely move to an outsourced business model will create significant benefits for Intel over the longer term."

An increasingly larger chunk of AMD's volume is no longer generating enough margins to warrant in-house production. Thanks to AMD's price war and failed campaign to grab 30% market-share, the commoditisation of x86 processors was accelerated. AMD miscalculated the large performance gap Intel was able to establish with its Core2 generation of processors. Along with its cost advantage, Intel managed to protect itself from AMD's scorched earth strategy of flooding the market with sub-$100 processors.

Intel understands the danger of having a significantly sized competitor which is why it is determined to continue to put the hurt on AMD. Intel's planned price cuts next month shows its willingness to sacrifice margins in the short term to deny AMD the financial means to expand its in-house manufacturing capacity. In fact the strategy worked so well that Intel even managed to deny AMD the financial mans to run 2 Fabs on a day-to-day basis.

AMD's earning projection shows red until the end of 2008. In order for AMD to survive, it needs to outsource. You can mark this down as the beginning of the end for AMD. No semiconductor company has yet to return from outsourcing. Commoditisation doesn't allow it. Talk about shooting yourself in the foot.

Eye of the Storm Explanation Indeed

2007-06-13T08:10:00.000Z

I thought I found Scientia’s title for his latest blog very appropriate, the "Eye of the Storm". This is usually used as a metaphor for a brief respite which normally leads to a false sense of security. I had an impression that he was trying to give an explanation about AMD’s current Barcelona problems but as it turns out, his explanation was even more chaotic than reality. The trouble with Scientia’s blog has always been his position in the Intel-AMD debate. And because of his desire to defend the indefensible, stretching the imagination in the style of Sharikou is becoming a necessity for him. Either that or he really doesn’t know what he’s talking about.

Take for instance when he wrote:
“…We know that AMD first demonstrated Barcelona November 30, 2006. This was presumably a stable Alpha chip. The earliest Conroe's were also Alpha chips and we know that it took Intel about six months to go through two revisions to get to the B1 release version. However, we also know that Intel's B1 had a minor bug that was fixed in the B2 revision, so B2 is also a reasonable assumption for production. We know too that the fastest that AMD could run off inline test chips would be 10 weeks. So, if we project this from the November 2006 demo we get:
November 30, 2006 – Stable Alpha silicon demo
February 8, 2007 – B0
April 19, 2007 – B1
June 28, 2007 – B2 (originally intended launch?)”

The alarming number of errors on this paragraph alone is giving me difficulty in trying to determine which one I want to start with. The most erroneous assumption Scientia made is his idea that silicon stepping is a standard measure that can be used as a benchmark. And what is even worse is he applied this benchmark to make a prediction for another company. What Scientia obviously doesn’t understand is that silicon stepping is a relative designation. It’s created for marketing with the purpose of creating distinctions between product/process revsions. A change in the letter signifies a major change while a change in the number is a minor change. B2 stepping doesn’t mean “launch ready”, it just means it had a minor change from B1 stepping. You have to go and read the documentation to understand specifically what was changed. It never is the same for any step for any product, let alone between Intel and AMD. To claim that Barcelona will launch at B2 just because Conroe did is the pinnacle of Scientia’s naivety.

And since we’ve established that the beginning of Scientia’s blog is grossly inaccurate I don’t see any reason to continue just to point out his mistakes. Besides, I’m not a fan of wearing down readers with lengthy posts.

-------------------
Update1: AMD’s Presence in Workstations Plummets in Q1’07 - John Peddie Research
Vendor - Q2CY06 --- Q4CY06 - Q1CY07
Xeon ----- 86.7% ------ 88.9% ---- 92.0%
Opteron --- 3.3% ------ 11.1% ----- 8.0%
It looks like Intel made a brilliant move to offer Quad-core conquering the workstation segment while the competition is struggling to keep up. Once again it shows how time-to-market is key.

No Barcelona in 2007

2007-06-07T21:49:00.000Z

It looks like we'll see Penryn out before Barcelona.

http://www.fudzilla.com/index.php?option=com_content&task=view&amp;id=1351&Itemid=1 I

UPDATE1:
I hope the FUDZILLA haters can forgive me now with these additional links:
The Inq
The Tech Report
Anandtech

I can only imagine serious implications for AMD if this rumour is in fact true. The key to any technology business is TIMING. Forget about Cost or Quality. If the timing is off when demand picks up, also known as the "demand curve", the business is lost. The demand curve for Quad Core kicked off 6 months ago when Intel released Kentsfield and Woodcrest. AMD has paid a heavy price in server market share by having nothing to compete in this space when the high end demand shifted to Quad Core.

Delaying Barcelona will surely result to more market share erosion in the short term. But what is more significant long term is the loss of design wins AMD was hoping for this year to sustain its server business. As to the impact of the delay to Barcelona's eco-system we've already seen an example in Cray's fiscal warning. Do not brush of Crays announcement as insignificant. Cray had an axe to grind with AMD as it hedged a significant portion of its business on this product and felt let down. Making an earnings announcement 6 months in advance just shows the frustration it has with AMD's poor execution and this is something you don't see everyday. While a lot of other businesses will surely be losing money as a result of this delay, most of them won't be as vocal as Cray. But I can assure you they are losing money and they're equally frustrated. Hard lessons are being learned here about doing business with AMD... again.

UPDATE2:
I've started writing about AMD's shipping of Radeon 2400/2600 but i fell asleep. That always happens to me with pre-fragged product releases. I only wanted to point out how AMD doesn't do soft launches. I wanted to know how AMD would describe what they just did with R600. If it wasn't a soft launch and definitely not a hard launch, then what exactly is it? I can't wait for the next gobbledygook from Advanced Maker of Doublespeak.

The Barcelona Miscarriage

2007-06-06T17:22:00.000Z

I’ve started re-thinking my position regarding Barcelona being dead on arrival (DOA). It now looks as if that projection was a little bit too optimistic. One month from launch and AMD cannot seem to come up with a working silicon as per designed. Forget about the initially promised 2.6GHz. It looks like the scaled down promise of 2.3Ghz is also fast becoming an impossibility. AMD today demonstrated a crippled 1.6Ghz Barcelona. I don't think AMD can even make Barcelona work!

You’d think AMD won’t be stupid enough to reveal just how badly broken their process so close to launch but it appears AMD has become desperate. They forced Supermicro, MSI and Tyan to demo a server that shows its industry leading ability to boot up. If you’re a product engineer you know that these half-alive CPUs are production rejects, but AMD badly needs to demo something. I can easily imagine AMD product engineers foraging through their rubbish bins filled with tons of dead Barcelona trying to look for one that can at least boot up. It’s refreshing to know they at least found 3 for the Computex demo.

And since these are rejects, the result of the demo weren’t surprising: Barcelona shows to only match the performance of K8 while at the same time being trashed by the soon to be replaced 65nm Xeons. AMD’s promise of better performance at the same clock frequency seems achievable considering 1.6Ghz is all it can muster.

Typically technology certification demands that yield targets are met 6 months before launch to allow enough time to build inventories. AMD requires 15 weeks to build Barcelona from wafer start to device shipped. If AMD were to launch Barcelona in 7 weeks time (July) and the best they can show right now is a 1.6Ghz CPU, I can only see disaster. Delay the launch or ship a broken product. Neither one will be good for AMD.

Meanwhile just across the hall, Intel demonstrates its V8 system with 45nm Penryn at 3Ghz:
The rumoured Barcelona performance in a 4x4 config could only muster ~16K. That is of course on paper. Let's wait and see if AMD can actually make the damn things first.

AMD Brings Down Another Customer - Cray

2007-06-05T22:38:00.000Z

From Forbes: "Cray recently became aware that there has been a delay in volume parts availability for a key component of the quad-core XT4 until later in (the fourth quarter)," wrote Northland Securities analyst Chad Bennett in a note to investors. "We believe the most logical key component is the quad core processor from Advanced Micro Devices Inc. (nyse: AMD - news - people )".

Be it Barcelona or just the old K8 Opteron that's going to be delayed, it doesn't matter. AMD has let down another customer by not meeting the committed volume. If it is Barcelona that is delayed then we can assume that the rumours of process issues are most likely true. But if its Budapest that's delayed, we can also assume that AMD's mistake of loading its tiny Fab with the large die Barcelona is finally affecting its overall Fab capacity and its ability to meet promised volume. You can look at it anyway you want, the bottom line is AMD is reinforcing its horrible reputation as an unreliable supplier with its already unprofitable business platform.

Dell, Sun, ATI and just about anybody on this list knows exactly what I'm talking about. Sun has learnt its lesson of the dangers of relying solely on AMD. Expect a Crey-Intel announcement in the coming months.

Analysis of a Privately Owned AMD

2007-06-04T17:13:00.000Z

We’ve heard the rumours from several sources that AMD is being targeted for a private equity buyout. While most people have negative associations with corporate takeovers, this doesn’t necessarily mean a bad thing for AMD. Current global market conditions have allowed private equity investments to flourish, making it easy to raise large sums of cash at favourable rates. The general idea is to buyout an undervalued public company, take it out of the stock market, re-invest, increase its value then sell when it matures. AMD today is perceived to be undervalued relative to its capital and revenue potential. I am aware that AMD is predicted to be in the red for the next 2 years, but bear in mind that future earnings for the next 2 years are not as important in a privately held company as if it was publicly owned.

Privately owned companies do have several advantages which can benefit AMD. One that quickly comes to mind is the absence of restriction and influence of the media and the stock market in making business decisions. Management can make huge and risky decisions like build or decommision a Fab without the pressure of stock market fluctuations and negative valuation. AMD needs this at the moment as their current business model doesn’t seem to generate enough revenue to turn a profit for the next several quarters. AMD needs a major overhaul.

Another advantage privately owned companies have has something to do with the quality and effectiveness of the management. The CEO’s compensation terms are never publicly declared in a PE company. This allows the new owners to select the best people to do the job. Top level management can also be compensated generously in proportion to financial performance. The scrutiny of investors, the board nor the financial governing body does not exist in such internal affairs. The absence of publicly reporting financial results relieves CEO’s from the time consuming tasks of managing investors and the media. This leaves the CEO to focus 100% of its time to improving the company.

The timescale to improve is definite and relatively short-term. The goal of creating value for the private equity owners in the span of 3-5 years drives quick and drastic changes. Major changes that publicly owned companies wouldn’t be allowed to do without the lengthy investor consensus or board approval. In the last few quarters AMD spent a lot of time media massaging and creating PowerPoint presentation just to calm investor anxiety. The benefits of focusing only on solving internal issues are obvious.

There is one critical disadvantage for AMD if it goes private and it has to do with its long term survivability. Private equity investors typically sell the company once the rate of return on investment reaches it peak. This is typically within the 3-5 year window and for a microprocessor company, this is pretty much short-term. The main objective why PE funds engage in such activity is obviously to make money. Heavy R&D investments for future products 5 to 10 years down the line may not hold special interest to PE owners as these are long-term spending which doesn’t necessarily add value to the company at its present state when it is time to sell. This doesn’t mean that there will be absolutely no spending on R&D. It just means that it is safe to assume that Intel will care more about its long term future than a privately owned AMD which hopes to sell the company in a few years. Generally, PE investors focus on optimising mid-term value gains which in some cases have detrimental impact to the long term viability of the company.

As it stands today, AMD’s long term survivability is in danger anyway so a private buyout should be welcomed. This is the biggest reason why AMD’s stock has been slowly climbing. A PE buyout normally pays a premium. Being owned by a private equity with a bottomless cash supply should allow AMD to transform into whatever it needs to and as quickly as it wants to. For the industry watchers this can get a bit dull with AMD having less interest in public hyping. Focusing more on making money rather than gaining popularity.