AMD Enters Pivotal 2016 With Product Road Map That Must Lead to Growth

By Jeff Burt  |  Posted 2015-12-20 Print this article Print
AMD Strategy 2016

"It's not one company that is going to have all of the innovation in their products," she said.

At this point, any gains for AMD in the data center would help, O'Donnell said.

"They went from having a huge position in servers a few years ago to almost zero, so any gains they get in servers would be good for them," he said.

A challenge for AMD will be that the company is not the only vendor vying to be that second silicon supplier. ARM and some of its chip-making partners, including Qualcomm, Applied Micro and Cavium, are looking to push the low-power architecture commonly found in mobile devices into servers. In addition, IBM is looking to expand the reach of its Power architecture deeper into the data center through its OpenPower initiative.

AMD officials also expect to see continued gains through the company's semi-custom efforts. At the annual Credit Suisse technology conference earlier this year, Su noted that the gaming console cycle is five to seven years.

"The peak of game consoles are probably anywhere from the third to fourth year," she said, according to transcript on Seeking Alpha. "We believe this year game console units are up relative to last year. From our visibility, next year will be up relative to this year."

The CEO also said there are other semi-custom design wins coming in the second half of 2016. It's a healthy pipeline, she said.

AMD's roadmap is broad and touches on a wide array of areas. Yet it still remains to be seen whether they will help the company in efforts to gain market share and return to profitability. The weaker-than-expected PC market this year helped push back AMD's plans to return to sustainable profitability in the second half of this year, and now analysts are saying it could happen within the next 12 to 24 months.

The company over the past couple of years has undergone a painful restructuring to streamline the business that had included several rounds of job cuts, with the latest being announced in October, when officials said they planned to lay off about 500 people, or 5 percent of the workforce.

In addition, the chip maker continues to reduce its exposure to the PC industry. Last year, 60 percent of its revenues came from the PC industry, while Su said during the Credit Suisse event that she expects that to drop to 50 percent by the end of this year or early in 2016.

The company faces its share of challenges, from whether the PC market rebounds to competition from Intel, Nvidia and others. However, for AMD, much of that will come down to how well the company executes on its roadmap, according to analysts.

In addition, all the milestones in the roadmap mean there are a lot of variables that have to be managed. Next year "will be the most pivotal year that they have had," Moorhead said. "They have to be successful. … It is a make-or-break year for AMD."

TECHnalysis' O'Donnell noted that there have been unconfirmed media reports that some tech vendors—including Google and Microsoft—have been interested in buying AMD.

"It's not going to be an easy path for sure, and it's one of those things where it's not inconceivable that they could go away," he said.

AMD's Su noted that the chip maker is entering an important time in its history, but added that it will come down to how the company performs. And that is where she wants the responsibility to lie.

"The next 18 months is our payoff cycle," she said. "We have to show the industry, our customers, our team that we are executing on what we have committed to. We have great people and great ideas. The difference will be how we executive. In that sense, it's our story to define."


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