AMD Looks to Game Consoles to Help Fuel Future Growth
Having its chips in Microsoft's and Sony's game consoles will help AMD reach profitability and grow the semi-custom chip business, officials say.Advanced Micro Devices officials are expecting a lot from the company's wins in the game console market. AMD, which will have its silicon in Microsoft's and Sony's upcoming game consoles, and already is in Nintendo's Wii U, is expected to return to profitability in the third quarter, due in part on the strength of the business generated from those wins. Company executives also point to the game console deals as a driver for extending its reach in the booming PC gaming market, and as a proof point for its nascent semi-custom chip business. "Growth in the second half of the year [is] primarily coming from our semi-custom SoC [system-on-a-chip] products for both the Sony and Microsoft next-generation game consoles," AMD CEO Rory Read said in a conference call with analysts and journalists July 18 to discuss the company's second-quarter financial numbers. "These tailored products are great examples of the opportunities we have to quickly diversify our product portfolio and enter into new markets where our IP and design capabilities provide us with a competitive advantage."
AMD has targeted the embedded and semi-custom chip space as one of several key growth areas—others include dense servers and ultramobile devices—for the company. Read and other executives said the company is on track to have the embedded and semi-custom chip units to account for as much as 20 percent of AMD's revenues by the fourth quarter, and for all the new growth areas to become 40 percent to 50 percent of the company's business within two to three years.