AMD's Outlook

I showed in my last article that bankruptcy for AMD is unlikely in 2007. I also showed that benchmark code should use the PGI compiler since it is faster for Intel as well. But, let's concentrate just on where AMD is and where it needs to be.

AMD's luck has not been good lately. They've seen a sharp drop in revenue in Q1 that will probably be matched in Q2 and that will almost certainly make three quarters in a row with an average loss of $500 Million (for $1.5 Billion total). And, whereas AMD had good success with Nexgen, DEC, and IBM the ATI merger seems a bit different. While it isn't a total failure like AMD's later collaboration with Motorola and UMC, it does seem more of a work in progress. It also appears that AMD is going to have to have another revision of Barcelona before launch.

For discreet graphics, R600 is not exactly a success. The delay to May is now followed more delays and less than stellar performance for the 1900. Fuad has suggested that not only is AMD going to move to the 65nm process with R650 but that ATI is going to make some tweaks to the architecture as well. Basically, this means three things. It means that R650 is going to solve the current 1900 heating and power problems. It also means that R650 is much more than a simple shrink of R600. However, this means that R650 is what R600 should be right now so ATI has to be seen as trailing by about half a generation. R650 should be able to finally move beyond the current barrier of 8800GTS performance and get up to 8800GTX where it needs to be. Obviously, nVidia is going to tweak its own designs so there will be something faster by then however there is no doubt that R650 will close up some of the current large gap in performance. Beyond this it remains to be seen if AMD will still be trailing when R700 is released or whether these delays will delay it as well. This does indeed bring into question whether the ATI merger is helping or hurting ATI. My guess is that these problems were all in place at ATI before AMD even considered the merger and I would say that AMD is currently scrambling to give ATI some very needed assistance. AMD does seem to know where the problems are so its a question of how quickly they can get them fixed.

Barcelona now appears to be delayed further into Q3. Most likely, another revision was needed to fix some remaining bugs. Another revision means at least a two month delay and this seems to match with the latest release statements. The INQ suggested that the current revision was ready to go but it looks to me like they got it wrong. I'm also inclined to believe another revision was needed because it looks like AMD is trying to compress the transition from Opteron server chips to Phenom desktop chips to be able to hit the December buying season. AMD will also have to do this in the face of another round of price cuts from Intel, the faster 3.0Ghz Kentsfield and Clovertown, and the knowledge that Penryn could remove a lot of Clovertown's deficiencies. The launch clock speeds are very much up in the air though. AMD had originally said 2.3 in Q3 and 2.5 in Q4 for quad core. However, that seems to be when they believed that Intel would stop at 2.66 on quad core. There is no doubt that Intel's 3.0Ghz speed puts pressure on AMD to move higher. However, what AMD might be capable of delivering is anyone's guess. There are some pretty good indications that AMD could launch 100Mhz higher with 2.4Ghz instead of 2.3 and then go to 2.6Ghz in Q4. However, Intel could match this with a 3.0Ghz Penryn and then followup in Q1 or Q2 with 3.33Ghz. So, even if AMD bumped the speed to 2.8Ghz in Q1 or Q2 they could still end up trailing.

AMD doesn't have many bright spots but they do have some. Their integrated chipsets seem to be working okay and their mobile chipsets seem reasonably competitive. AMD should be able to do a lot of volume in the mid to low end desktop with both DTX and its chipsets and with mini-DTX. However, the desktop has lower margins than either mobile or server and this is the low half of the desktop. This does seem reminiscent of 2002 when AMD was hanging on by selling K7 against the lower performing Celeron. In fact, mini-DTX versus mini-ITX is exactly this kind of mismatch with mini-DTX having more memory and memory bandwidith, more expansion capability, and more cpu power. This should at least help AMD hold on in the 2nd half of 2007 if they can do modest mobile sales and gain back some position in servers. Obviously though, AMD has no real chance of challenging Intel on the desktop until they can deliver some real volume in 2008 and by that time they will be up against Intel's 45nm Penryn. AMD should be fine in 4-way and higher servers after Barcelona is finally released. AMD can probably claim the fastest desktop with QFX if Intel doesn't match with its own dual socket system. Intel could very well retain the title of fastest single socket system.


While Intel seems on track and only has to make small steps with Penryn and Nehalem it looks like AMD is going to have to work a lot harder to get back into the game. There are potential gains for AMD but none of them are going to be easy. If AMD works hard and stays on track they could be in a more competive position with mobile, graphics, and high end server by mid 2008. However, since Nehalem's performance is an unknown AMD could find itself with a much tougher high end server competitor in 2009 without ever having gained signficantly in either high end desktop or low end servers. Time will tell.