AMD turns a profit... but can it last?

AMD turns a profit... but can it last?

Summary: Games consoles and healthy GPU sales mean that AMD finally turns a quarterly profit, but does the company have what it takes to maintain this momentum into the future?

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TOPICS: Hardware, Processors
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After Intel missed its earnings expectation, all eyes were on AMD. As a rule a bad quarter for Intel generally means an even worse quarter for everyone else involved.

But not this time.

This time the company managed to post a net profit for the last quarter of $89 million, which is good, but not enough to make up for the previous bad quarters that overall resulted in a loss of $83 million for 2013.

But it wasn't the PC industry that buoyed AMD's last quarter, but the wins it secured with Microsoft and Sony to get its silicon inside the Xbox One and PlayStation 4 games consoles. According to analysts at FBR Market Capital, this deal can add more than a $1 billion in revenue annually to AMD's bottom line, and more than $5 billion over the full life of the consoles.

Not a number to be sniffed at.

Things are also good in terms of graphics, with AMD's Radeon graphics business showing strong growth. In 2012 this pulled in revenues of $1.4 billion, growing to $2.2 billion in 2013.

But things are not altogether rosy. If we look at AMDs computing business we can see just how bad the bottom has fallen out of the PC business.

In 2012 this was worth $4 billion to AMD, but by 2013 revenues has shrunk to $3.1 billion.

Put that another way. The billion that consoles are estimated to be worth to AMD per year is all but obliterated by the collapsing PC business.

That leaves graphics to pick up the slack. It must bring comfort to AMD that it picked up ATI Technologies – the company responsible for Radeon – back in 2006 in a deal valued at $5.6 billion.

So, can AMD keep on turning a profit? Well, it is capable of, but long-term success is dependent on a number of variables:

  • Will the demand for consoles be high enough to offset the decline in computing revenue?
  • Will the current-generation consoles hang around as long as the Xbox 360 and PlayStation 3 did?
  • Will that much-predicted PC upgrade cycle happen in 2014? If it does, will AMD be ready to take advantage of it?
  • How much growth is left in the graphics market?
  • Does AMD have a game plan for mobile, or is it leaving that market to the likes of Qualcomm, Intel and the likes?

Topics: Hardware, Processors

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  • AMD is better positioned to move the market

    They are working on ARM processors with 64-bit instructions and incredible graphics (compared to where ARM OEM's are at presently), which can be used either in Windows or Android. Both platforms have their place. Windows is fully entrenched in desktop systems, but Android is the mobile OS that is making waves. Intel isn't doing enough for Android, and ARM isn't doing enough for Windows. What AMD needs to do is to push RISC-based ARM instruction set compatibility for Windows, and to work with ARM to include DX11-class GPU specifications for GPGPU. AMD can leverage their x64 knowledge to get ARM support into Windows Server too.
    Joe_Raby
    • ARM mashed with Intel architecture???

      Won't work. You end up loosing on both.

      ARM is an efficient instruction set, capable of being implemented with minimal clock counts.

      x86 instructions are not. Very cumbersom,requiring LOTS of preprocessing/translation into RISC/VLIW instruction sets, requiring LOTS of overhead.

      Do better to go for high speed ARM processors, then port QEMU to ARM to emulate the intel set.

      It will still run slow, but at least it will run, and be a lot cheaper.
      jessepollard
      • As a note

        The Intel Core i7 Extreme Edition 980X (Hex core), gets 147,600 MIPS at 3.33 GHz.

        A similar ARM would about 10 times faster as many ARM instructions execute in one clock tick.
        jessepollard
      • what are you talking about?

        AMD x86 Macro Ops have been RISC based sincle the original Athlon processors.
        slickjim
      • You clearly know absolutely nothing

        about the relative merits of ARM vs X86.

        If what you wrote was true then Bay Trail (x86) would be measurably slower in CPU than
        an ARM based S800 , and its not.

        And Avoton and Rangely would be slower than their ARM based server competitors in the same power envelope , and they're not.

        And a Haswell based chromebook would be either slower or more power-hungry that its Tegra based equivalent ... and its not.

        So tell us more about the excess speed wonderment that is ARM .....
        P0l0nium
      • RISC vs CISC

        Just because a RISC can do instructions in a clock cycle doesn't mean a CISC can't do the same with a subset of its instruction set.
        If you were comparing RISC and CISC back in the early 90's, you may have a point, but CPU technology has come a looooooong way and CISC has pretty much become a superset of RISC.
        The only issue has been die size, cost and power usage.
        ARM's real advantage is die size and cost.
        With the advent of Bay Trail and Haswell, the power efficiency argument went out the window.
        warboat
        • All I can say is this:

          3Dmark for WinRT lists the Tegra4 Surface2 beating out a Z3740 Bay Trail Windows tablet running the same tests. So how does that comparison fare now?
          Joe_Raby
          • 3Dmark is a GPU test, not a CPU test

            nVidia has always been better than Intel on GPUs, no wonder Tegra4 outperforms Z3740 on 3DMark as it has nVidia's GPU inside. A much better comparison would have be CPU Mark.
            jsapaj
          • Why does that matter?

            The GPU is going to matter more these days.
            Michael Alan Goff
  • AMD turns a profit... but can it last?

    Seems like AMD can profit if only they stay in a specialized market like game consoles or video cards. AMD for desktop CPUs is dead.
    Loverock.Davidson
    • wow

      Loverock commented about them being dead on the desktops, now I'm more certain than ever their desktop CPUs and APUs will be around for a long time!
      slickjim
      • AMD

        What? Are you saying LD was wrong about tablets being a fad or that Linux has an open telenet port?

        The horror!
        THavoc
      • Well spotted!

        It is damn important for ZD readers to read what Owl, LD, William.Farrell and other MS trolls say because you can then be assured that the very opposite is the truth!
        1,2,3
        • One Left Foot - the other one is in your mouth ...

          I used to use AMD exclusively. I also used Unix quite often and other things that were out there. That is, until I realized that most businesses use Windows, and most of their systems use Intel. This isn't a "Ford vs Chevy" thing, but one of practicality. When I stopped using the TI994a, it wasn't because the PC was better, but it was where the world was moving. I was upset, of course, but I had to face reality and stop defending something that "wasn't meant to be".

          Once I had taken an honest look at reality, I realized that I DID know of apps that I had spent a lot of time debugging, only to find out that the software had issues with the CPU. At that time, the problem was with a Cyrix chip, but I have had my encounters with AMD too. It's not as true these days but, for me, the die has already been cast.

          I was discussing this with someone once, and they pointed out that, all software vendors will ALWAYS be compatible with Intel, but you don't always know that this will be true for any other CPU maker and, in buying AMD, you are always taking a chance that the "software glitch" you find yourself complaining about is actually caused by some difference in the processor.

          Not only does AMD have no chance of catching up with Intel, but I believe they are going to continue their decline. Look what happened to NVidia. They slept while AMD bought ATI, which left them in a market where 2 of the 3 CPU manufacturers make their own graphics cards. And Intel has continued to improve their graphics capabilities that most systems that people buy (and the purposes they buy them for) render the need for discrete cards.

          Intel drove in the final nail in the coffin by telling NVidia that they would support their existing SLI technology but would not support any changes beyond that point, even though they fully embraced ATI and any of their changes.

          Since that time, Intel has improved their their CPUs and graphics capabilities to the point that even a lot of gamers (who play older games) can get by quite well with the onboard capabilities. Add in the compatibility factor and the inexpensive pricing for all but the very top echelon of processors, and its becoming very difficult for me, or any serious user to consider anything else. Sorry, but AMD is just not as attractive as they once were. Heck, I have hundreds of users that, with the right tweaking, have been able to continue using Intel-based systems that are over 10 years old without changing any parts.
          SPWilkins
    • AMD will always have a home in the enthusiast market.

      We both know that.

      Especially if Intel decides that the CPU needs to be soldered to the motherboard later on.
      Champ_Kind
      • Only in video chips

        I don't see AMD making a comeback for chips in motherboards. Too many little quirks with them.
        Loverock.Davidson
        • AMD would have great CPUs

          If only they would put enough cache in them like Intel does! They try to do everything to have low prices, but in the end the processor is so slow when a bit of processing power is required that I just stopped even considering them for new computers...

          They used to be soooo good... I remember my first ever computer, an AMD 386DX40, Intel never got the 386 above 33Mhz, AMD got it to 40Mhz, that AMD 386 was competing in speed with Intel 486s... I stayed with AMD all through the 486/Pentium I/II/III years of Intel with the AMD equivalents. The P4 got me back to Intel.

          Another error AMD made was to rename ATI a few years back... ATI is a name which had lots of recognition in graphics, why scrap the name? Nowadays for me the builtin Intel HD graphic is enough for my needs, I don't even buy discrete cards anymore.
          lepoete73
          • built in Intel?

            What do you do? Intel graphics are pretty horrible generally....
            But you are right, their chips need better Cache and a better cache association system.
            Jimster480
        • quirks?

          Interesting... I sense failed trolling here.... There are no quirks with AMD CPU's, if anything I could say that there are Quirks with Intel because it seems that whenever I am on an Intel machine its lagging for some reason...
          Jimster480
      • Not unless

        They release some enthusiast grade chips... They have let us down for generations of chips now. Considering that FX is a complete disappointment for anyone running Phenom II and not actually an upgrade path. Even to have an 8 core FX, while its fast in many things its quite a bit more power hungry and not nearly as fast in single threaded perforamance as a stock clocked Thuban. And the FX-6300 while it is a hell of a chip for the price.... its not anything to upgrade to if you are on a quad core Phenom II or better..
        Now if you are building a new PC because you have nothing or are stuck on Core2 with the slow FSB, then FX is an option and offers alot of bang for the buck. But my (and alot of others) problem with FX series is Bulldozer/Piledriver/Steamroller all have issues with IPC. They have wildly variable IPC based on what they are doing. This is what always kept me off of them. And while the PC that I am typing on is a AMD Test Drive PC running Linux (A10-6800k @ 4.6Ghz w/ 8GB DDR3 2133 Radeon RP & A88X mobo) its fast and I don't have a complaint about the speed.... But its about the same speed or a bit faster/bit slower (depending on the work) than my Phenom II @ 3.36Ghz..
        And while this isnt an issue for the average person (who doesn't care if the clockspeed is 1Ghz or 50Ghz as long as its "quick"), its an issue for the Enthusiast who wants really fast parts and has no upgrade path.
        Everyone was mad about Steamroller FX (including me) saying they wanted Steamroller FX... But after seeing Steamroller in General.... I see why they didn't bother to make an FX. 10~% IPC Single threaded and 20% Multithreaded... Its not that big of a performance jump, especially considering that they are using Bulk Silicon now vs Silicon On Insulator (SOI) on a newer process so their Power consumption would be up and the chips are not as stable at higher clockspeeds (why Kaveri is 4Ghz Turbo). This means no overclocking headroom for most chips (considering most of the Piledriver FX run @ ~4Ghz) and that would cause rage for most enthusiasts, and they don't want a repeat of Phenom I (where most chips could only OC by 100-300Mhz at most since most couldn't even really hit 3Ghz).
        Jimster480