After AMD CEO Hector Ruiz leaves his post and President Dirk Meyer takes day-to-day control of the chip maker, AMD will embark on a less ambitious agenda that will focus on chips for servers and PCs as well as processors for the low-cost notebook market.
Advanced Micro Devices CEO Hector Ruiz never lacked an ambitious agenda
the small but innovative chip maker when he took the top leadership role in
During his six years as AMD's CEO,
Ruiz oversaw the development of the Opteron, which gave the company a way to
enter the lucrative multisocket system market thanks to the processor's
backward-compatibility and integrated memory controller. When Intel was pushing
new architecture with its Itanium chip, Opteron seemed the perfect alternative
and that chip helped push AMD's share of the
x86 market upward and forced Intel to rethink its road map.
At the same time, Ruiz was AMD's leading
voice in fighting against what he considered Intel's abuse of its market
position, and the results have led to investigations in South
Korea, Japan and the European Union and, most recently, to a
U.S. Federal Trade Commission probe.
Now that Ruiz has left the CEO's office
and his handpicked successor, President Dirk Meyer, is taking over day-to-day
management of the company, it's hard to see AMD
with the same sort of ambition it had just a few years ago.
reported its seventh consecutive quarterly loss July 17,
and the company plans
divest itsself of the consumer electronics division it inherited during the
2006 acquisition of ATI. While Ruiz's successes were notable, AMD stumbled
badly when technical problems hampered the release of the quad-core Opteron in
2007 and the $5.6 billion AMD
paid for ATI has cut into the bottom line for nearly two years.
In a call with analysts, Meyer said he would refocus AMD's
chip research and development on the company's core PC and server products as
well as graphics for notebooks and desktops.
"I think we have to focus a little more narrowly on some of the volume
sweet spots," said Meyer, an engineer by trade who helped AMD
develop its Athlon line of processors for PCs.
During the call, Meyer mentioned several times that Intel had more money and
more resources than AMD and that reality
might force AMD to make tough decisions
about which markets it decides to put its limited resources into. Meyer and
Ruiz have each promised to return the company to profitability by the end of
"It appears these difficult times have finally necessitated more
structural shifts with AMD exiting non-core
operations, changing management and apparently narrowing the company's focus to
reflect its spending capabilities," Ross Seymore, an analyst with Deutsche
Bank, wrote in a July 18 research note.
While AMD is cutting back, it still plans
to deliver several products in 2008 and 2009. The first of these is "Shanghai,"
the company's 45-nanometer version of Opteron, which is due in volume by the
end of 2008. After Shanghai, AMD's
next step is what the company calls Accelerated Computing,
combine the CPU and GPU (graphics processing unit) on the same piece of
silicon. Meyer said the first of these chips will start shipping as samples to
customers in 2009.
During the same call, Meyer also hinted that AMD
would enter the low-cost notebook market and compete against Intel
and its Atom processors for both "netbooks" and mobile Internet
devices or MIDs.
Meyer did not announce a product name but said AMD
would talk about the chip at an analyst meeting in November.
Register reported July 18 that the chip
Meyer was referring to is "Bobcat,"
which AMD first began talking about in 2007,
but about which there has been little said since then. Whether AMD's
entrance into this market will help or not is yet to be seen and even Intel
has been greeted with some skepticism recently about Atom
and whether it could create a lucrative market for these chips.
Nathan Brookwood, an analyst with Insight 64, said he does not believe that AMD
will enter the low-cost notebook market anytime soon. Instead, he believes AMD
will pursue the midmarket part of the PC and server market. If that's the case,
Brookwood believes AMD will yield to Intel
when it comes to processor benchmarks and world records but will try to offer
features that appeal to buyers in this market.
"AMD is convinced that it has to be
in the midmarket," said Brookwood. "That's where they are
convinced the volume is and where issues like performance matter less than
features such as power efficiency."
While Meyer will provide a fresh voice in the AMD
versus Intel debate, it's not clear how much AMD
will change under his leadership, since Meyer and Ruiz were close and have
similar backgrounds. Ruiz himself will remain as chairman of AMD's
board and will oversee the company's yet-to-be-explained
"asset-smart" strategy, which should ease the company's chip
In a research note, Glen Yeung, an analyst with Citigroup, predicted that
Ruiz will head a new venture formed after the asset-smart plan starts and that AMD
already has a buyer in place for its consumer electronics division.
"There has been some speculation that Ruiz will
play an executive role in any new joint venture formed as a result of AMD's
asset light strategy," Yeung wrote. "We do not anticipate dramatic
changes at AMD as a result of this move but view it as a precursor
to 1) asset light strategy and 2) the divestiture of AMD's