AMD's 3 Steps Forward and 4 Steps Back

I've decided to post the 2005-2007 Semiconductor Leaderboard for future reference. Quick note: Intel appears on track to get greater than $36B in 2007 while AMD slides down back to 17th place cosidering Q1'07's figure includes ATI sales.

Why ATI Sold Itself

VRZone:

"It is slightly off tradition that the GPU company's flagship product sails off not to meet the flagship of it's competitor, but one target lower".




One has to acknowledge ATI's brilliant move to sell while they realised first hand that they were going the way of the graphics dodo -3dfx. Dwindling sales, massive losses, and now a delayed product launch not even close to competition. It's hard to imagine how AMD can still say they are the smarter choice. Clearly the worst you can do right now is couple an AMD CPU with an ATI graphics.

An Erroneous Outsider's View of the uArchitechture Design Process

This a commentary reaction to Scientia's latest blog:
How we Got Here...
http://scientiasblog.blogspot.com/2007/05/how-we-got-here-x86-industry-in.html
"Since the separate Penium M line has now been abandoned in favor of the C2D Merom, we would seem to need one less design team. However, it is hard to believe that Intel which has always had three design teams is now down to just two: the Itanium and the C2D line. "


The history lesson is fine. The mistake is trying to tie-in R&D teams to released products.
The whole idea of trying to determine intel's design teams and design life cycle based on product releases is overly simplistic and completely wrong. Again, this is a common mistake of an outside observer.

There are multiple levels and teams of R&D affecting a product during its discovery, design and manufacturing phase. To say for example that Intel has "3 microprocessor design teams" is inaccurate. One can accurately say that intel has 3 microprocessor design integrators - which will be comprised of several design teams working on different architectural enhancements.

uArch enhancements done by pockets of R&D teams aren't product specific. uArch/ucode discovery which occurs 5-7 years before the technology is applied isn't product specific. For example, there are teams working on improving the ALU or the Scheduler and there are teams working on improving the integration of both. . There are different design teams working of different technology paths - and again, it isn't product specific. The same is true in process R&D. There are several R&D teams finding out solutions to problems we'll encounter 15 years from now. Even then discoveries are handed over to another team for development and then another team for deployment if feasible.

What is visible to an outsider like Scientia is the R&D team that responds to market conditions and tries to release a product based on demand and competition. This is just a tiny fraction of Intel's (and I'm sure AMD too) overall R&D headcount. This development/deployment team is defined based on what features/enhancement the CPU will have and is in fact very late in the R&D phase.

As for Intel's tick-tock strategy, what it means is that the number of product teams - design integrators are doubled. Instead of waiting and lumping all R&D discovered improvement in 4 year cycles, the idea is to leverage on R&D quicker and implement discoveries in an overlapping manner. 2 product teams in a 4 year cycle will result in a product family released every 2 years. So every year intel will either release a new product family or will move to a new process node.

Centrino Pro - Miles away from competition

Intel released its newest mobile platform this week codenamed Santa Rosa. Quite a lot of IT proffesionals and some of them I know personally are waiting for this release and should spur a small jump in corporate mobile sales.

http://www.tgdaily.com/content/view/31958/135/
Santa Clara (CA) – Intel today launched four new Core 2 Duo processors as part of the much anticipated “Santa Rosa” platform, which not only enhances the Centrino platform core components, but offers completely new features such as optional flash cache as well as wireless broadband capability.

Is it me, or does it looks like Intel is miles away not just in promoting the Centrino brand but in mobile innovation as well. All AMD could do in their press release last week is claim to have similar capabilities.

Scientia's Poor Attempt To Appear Unbiased

I suggest you go over Scientia's blog and have a good read:
http://scientiasblog.blogspot.com/2007/05/amd-is-doomed.html
Scientia said:
"I constantly get accused of being slanted/biased/pro/fan in favor of AMD. So, I'm going to try to see the world through the eyes of an unabashed Intel enthusiast. This is not an easy point of view to maintain though because Common Sense keeps getting in the way."

As you can see from his first paragraph, he doesn't get even past the 2nd sentence while quickly abandoning the attempt.

While his common sense tends to get in the way with his poor attempt to argue for Intel, mine was laughing at the trivial arguments raised. If anyone wishes to make a case as to why AMD may be doomed, all you have to do is look at AMD's conference call and listen to the questions that were raised. Read the guidance report from major investment banks. Read the industry and market reports from Gartner or Mercury and watch where the trends lead to.

AMD is back to below 80% market share. AMD's entire product portfolio is outclassed and outsold by Intel's product. AMD is making huge losses due to lower volume shipment and ASPs. AMD's $900M inventory continues to grow with a disgruntled channel and a wrong product mix. AMD was forced to cut costs and stop critical Fab upgrades. AMD and was forced to take in more debt and restructure its broken business model. The real kicker now is that AMD doesn't seem to have a concrete plan to turn things around.

Is AMD Doomed? By any normal standard; revenue losses, borrowing money, restructuring, its easy to claim that AMD has already lost. If we even apply Intel's standards on AMD, it may appear that AMD has been DOOMED for quite some time now. Do not be influenced by the low standards the AMD fanbase apply to their beloved company. AMD is struggling like never before and it is only a heartbeat from closing shop.

NVIDIA and Intel Cooperate Against AMD

From TGDAILY:
"Chicago (IL) – Nvidia apparently is looking for a closer relationship with Intel and release some of its graphics technologies in exchange for an improved cooperation with the world’s largest processor, graphics and chipset manufacturer."

Common sense requires that NVIDIA work with Intel to negate any advantage AMD has with its shared CPU and & GPU technologies. Intel on the other hand is quite open to helping out anybody that can hurt its main rival AMD. While it is known that Intel is looking at including graphics capabilities in future multi-core CPU's, the high-end graphics solution is a market segment intel does not wish to enter. The margins and return on investment to fighting a low volume segment does not appeal to Intel. NVIDIA will be more willing to share some of its secrets to get free reign in the discrete market.

Intel and NVIDIA shouldn't find it difficult to work out a win-win strategy as they both take market share from the struggling AMD instead of each other. Maybe they can both teach AMD a lesson about getting something without necessarily breaking the bank.

Intel Business to Get Better

From the Wall Street Journal:
"According to Mr. Otellini, while Intel expects to have revenue growth in 2007 and 2008, he expects the bottom line to grow faster than the top line."

This doesn't bode very well with Sharikou's Q2'08 Intel Bankruptcy.

$5 Billion savings in 2 years is quite an accomplishment for an already lean company such as Intel. One big question that needs to be answered is whether the $3B savings next year involves selling Intel's flash business. Otellini may be in for a big fight with the Intel's "grey men" which includes the company founders, Andy Grove and Gordon Moore. If you know anything about the history of the semiconductor and integrated circuits you would realise how Intel holds the Flash business close to its heart. For the old Intel, there is just too much history and pride involved with the money losing division. But then again, Otellini runs the show while Grove, Moore and Barrett knows exactly change is necessary.

For AMD, this is another $5B that Intel can throw just to keep competition at bay. Not good.