CPU and GPU maker AMD is going to face a tough second half to 2012 as consumers turn their attention to tablets, the PC market becomes soggier, and Intel continues to grab increasing market share in the server market, claims Sterne Agee analyst Vijay Rakesh.
The way AMD is tied to the PC market is a big problem for the company, claims Rakesh. "While expectations in the PC supply chain are high for Win8," writes Rakesh in a company report, "actual PC OEM builds and sell-through might fall short given the plethora of skews with Ultrabooks, WinRT-Android, into a limited holiday window in 4Q12, post a late October Win8 launch".
Translating that from analyst-speak, there's too much competition for buyers' cash, and Windows 8 might not be the huge draw that the OEMs expect it to be.
Another problem facing AMD is pressure in the graphics market from both Nvidia and Intel. Rakesh claims that Intel should be of particular worry to AMD because Ultrabooks are gaining traction and most make exclusive use of Intel graphics.
If that's not enough, Intel's launch of the Romley dual-socket Sandy Bridge EP based servers back in March of this year "presents more headwinds to AMD".
But the biggest pressure that Rakesh sees facing AMD is the price pressure placed on processors as tablet prices approach what he describes as "the magic clearing price" of between $299 and $399. This, he claims, pushes the target processor average selling price down from the $70 to $100 that AMD Fusion APUs sell for to a more reasonable $20 to $50. This is great for buyers, but it's likely to be bad for AMD's bottom line.
"AMD needs to reinvigorate its product mix even as challenges grow despite its new Fusion-Radeon platforms with pricing pressure and Opex [cut in operating expenses]," concludes Rakesh.
|Gallery: AMD Embedded G-Series APU|
Image source: AMD.