NEW YORK—In search of a path to long-term profitability, Advanced Micro Devices is pushing back into the high-performance PC and data center server markets, focusing on emerging markets like immersive computing.
Speaking at a May 6 financial analyst meeting – the company’s first in three years -- CEO Lisa Su and other AMD executives outlined a roadmap that includes a new high-end PC chip based on the upcoming "Zen" architecture, and new Radeon graphics products. The graphics products will feature new high-bandwidth memory (HBM) technology in the short-term, and x86- and ARM-based chips for servers and other data center systems in the mid-term.
Su, who took over as CEO more than six months ago, said the goal is to "gain profitable market share" that is sustainable going into the years ahead. To do that, AMD officials had to decide what markets the company could best compete in and what spaces to ignore. With that in mind, they decided to focus on premium products as well gaming and immersive computing, where the company's expertise in high performance CPUs and GPUs, energy efficiency and visualization can be leveraged.
The discussion comes as AMD looks for ways to compete with larger rival Intel—which has significant money and manufacturing advantages—in an industry that is seeing significant and rapid changes brought on by the rise of such trends as IT mobility, big data analytics, the Internet of things (IoT) and the cloud. At the same time, AMD, which is committed to using ARM's low-power system-on-a-chip (SoC) architecture in the data center, will have to compete with other ARM partners, including Qualcomm, Applied Micro and Cavium.
Su said the key was figuring out what AMD did best and not worry about other markets that did not offer a good return. That includes low-end PCs, smartphones and the tens of billions of devices that will make up the IoT. The key was to simplify, she said.
"We don't need to do everything," Su said. "We need to pick the things we can do very well."
In the gaming segment, that includes not only the consoles from Microsoft and Sony that have been the key revenue generators over the past year, but also casino and cloud gaming ,as well as high-end PC and graphics chips. Immersive computing includes virtual and augmented reality, digital signage and thin clients, while the data center means servers, storage systems, networking infrastructure and high-performance computing (HPC).
AMD executives expect to return to profitability in the second half of the year after losses in the first six months. Devinder Kumar, senior vice president and CFO said the company will be able to build its cash reserves from $800 million to as much as $1 billion.
The AMD roadmap executives laid out was met with a mixture of enthusiasm and skepticism from the financial analysts. Some analysts brought up AMD's unreliable performance in the past and its history of developing strong products which later turned out to be one-hit wonders. One example is its initial 64-bit Opterons, developed more than 10 years ago. The server chip enabled AMD to grab server chip market share from Intel, but later AMD failed to effectively follow through on subsequent offerings.
Su admitted that there had been mistakes in the past, but said she was confident that the company this time has successfully mapped out where it can offer differentiation from competitors, and has put in place plans to ensure continued innovation.
To get back into the high-performance desktop market, AMD next year will launch its Zen CPU, a core design that the company has been working on for more than two years. The chip will be a departure from previous AMD chips, which featured a technology called Cluster-based Multi-Threading (CMT) designed to improve the performance of the chips. Zen instead will use simultaneous multi-threading (SMT), a technology similar to Intel's Hyper-Threading.