Analysts: AMD has no answers for Intel's assault

Analysts: AMD has no answers for Intel's assault

Summary: Analysts on Wednesday panned AMD's second quarter and said that Intel's Atom chip for netbooks is squeezing its smaller rival. While netbooks may be a risk to Intel's margins, one analyst made the case that Atom is a real killer to AMD.

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Analysts on Wednesday panned AMD's second quarter and said that Intel's Atom chip for netbooks is squeezing its smaller rival. While netbooks may be a risk to Intel's margins, one analyst made the case that Atom is a real killer to AMD. Simply put, AMD doesn't have any answers for Intel.

AMD, which doesn't play in the netbook space, is squeezed for two reasons, according to J.P. Morgan analyst Christopher Danely:

  • The chipmaker doesn't have an answer for Atom and that limits revenue growth;
  • The presence of Atom in the chip market hurts pricing overall.

Add it up and it's an ugly quarter for AMD. The company missed projections and gross margins were well below estimates as AMD sold down inventory. Like Intel, AMD said that the PC market has stabilized, but that outlook was overshadowed quickly. On a conference call, AMD chief Dirk Meyer tried to get analysts to focus on more than just the second quarter. Meyer wasn't successful.

Danely sums it up:

AMD stated that it expects revenue to increase slightly quarter over quarter in 3Q09, significantly below normal seasonality of a 13% quarter over quarter increase. We believe AMD is losing share to Intel due to inferior products and is being hurt by lack of a netbook processor, which limits revenue growth and hurts pricing. We would note Intel processor sales outgrew AMD by 13% during 2Q09 and are expected to outgrow AMD by another 3% during 3Q09.

Goldman Sachs analyst James Covello said it's possible that AMD will struggle no matter how much the PC market improves:

While fundamentals for both PCs and MPUs continue to improve as evidenced most recently by Intel’s solid report and guidance, AMD’s tepid top-line results/guidance and weak margins suggest continued execution issues and potential share loss. We expect the competitive dynamics in MPUs to remain challenging for AMD despite new product introductions, as Intel ramps Nehalem, Westmere, and CULV products in 2H’09/1H’10.

And then there's JMP Securities Alex Gauna who was even more gloomy on AMD. Gauna said AMD's financial results was "another disappointing quarter from the perennial CPU also-ran." Gauna upgraded Intel based on AMD's results.

However, Gauna's research note foreshadows more problems for AMD. He said that Intel was just the known problem for AMD. Gauna added:

In addition to the crushing pressure Intel is able to exert against AMD with its process technology lead, AMD must contend with the rising interest in ARM-based computing solutions. If ARM technology is able to establish itself as a viable mobile computing solution beyond cell phones, and we believe it will, AMD’s benefit to OEMs as a second source to Intel will be greatly diminished. The result would be accelerated share losses in the 2011 timeframe, with servers likely to be the only viable product category for the company. We believe AMD’s Fusion strategy will ultimately fail due to more powerful NVIDIA GPU technology advances and more compelling Larrabee parallel computing offerings from Intel.

Topics: Processors, Hardware, Intel

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52 comments
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  • Sure they do...

    They'll go cry to the EC that Intel is being mean to them again, giving the EC another opportunity to extort billions more from Intel.
    Hallowed are the Ori
    • SPOT ON!!! (nt)

      .
      No_Ax_to_Grind
    • unfortunately...

      This is exactly what I was thinking when I read this article.

      If AMD looks to be circling the drain, the EU will punish INTEL and beneift AMD regardless of the fact that they make a superior product to AMD.
      IF the EU won't, the US might. We can't have only one chip maker. The courts will order INTEL broken up into two companies - or some other stupidity.
      Fark
      • Intel will never let AMD go under, they know it's not good. (nt)

        nt
        shadfurman
    • They will win too.

      Because AMD has a fab plant in Dresden. Intel should open a plant over there, so that to punish Intel would punish EU members.
      osreinstall
      • That's a good idea. (nt)

        nt
        Hallowed are the Ori
        • (nt)? Pardon my nescience,

          what is this signifying?

          Thanks.
          chrome_slinky
          • It means "No text" in the body of the message. (nt)

            nt
            Hallowed are the Ori
        • Microsoft should do the same.

          Have programmers over there contributing to code instead of India. When it hurts their employees to punish companies, they hardly go thru with it.

          It took the destruction of GM to layoff Germans at Kaiserslautern's Opel plant and they were not working 40 hours a week.
          osreinstall
    • You do realize

      that the Athlon was FAR superior to the P4 and the only reason AMD didn't gain more market share during that time was because Intel threatened OEMs by withholding processor shipments if they sold the Athlon... I'd say that's a pretty clear case of using monopoly power to influence the market.

      Intel didn't have a better CPU until the Core 2 came out. I agree Intel is currently the better option, but 3 years ago it was a completely different story.
      LiquidLearner
      • For which Intel got panned, fined and restricted.

        The fact of the matter is that AMD got a foot-hold in the market by blatantly ripping off Intel's chip designs and releasing their own bargain-basement x86 CPU's. My first PC was a Viglen 386-33 running an AMD CPU.

        The fact of the matter is that AMD is in trouble today, not because of Intel's heavy-handed business practices 10 years ago, but because they got caught completely flat-footed.

        AMD were the creators of what became x64. AMD created x86 CPU's with built-in MMU & Hyper-Transport architectures that Intel has only just caught up with in their i7/i5 CPU's.

        Although AMD have some formidable design capabilities and more than enough internal IP to createa family of low-power CPU's for netbooks and hand-helds, they conciously decided to NOT enter the low-end netbook processor market.

        Fools. Whilst the margins may be MUCH lower than traditional desktop chips, that's where much of the new growth is going to be.

        Intel saw this and took their P4 single-core CPU design from 10 years ago, and shrunk it, used todays manufacturing materials and processes in order to give it a reasonable power envelope and marketed it as something new called "Atom".

        GENIUS!

        Where's AMD now? Crying in their beer.
        de-void-21165590650301806002836337787023
        • ref 86x

          It was NOT riped off, it was a tech sharing deal. AMD had tech that Intel wanted and AMD wanted the 86x.
          Dragon_z
        • Look at this way

          Intel WERE doing some dodgy dealings. AMD had the better chip.

          How much revenue did AMD lose? And more importantly, how much brand awareness.

          Brand awareness is vital. Intel prevented AMD from becoming a major player by preventing OEMS from using the better chip.

          AMD lost a lot of money that it could have spent on R&D all because of neferious tactics (and illegal) by Intel.

          To claim AMD got wrong footed is laughable.
          Bozzer
        • Ripped off Intel?

          You Said - "The fact of the matter is that AMD got a foot-hold in the market by blatantly ripping off Intel's chip designs and releasing their own bargain-basement x86 CPU's. My first PC was a Viglen 386-33 running an AMD CPU."

          Apparently you are not aware that AMD started in the CPU manufacturing business by making the CPU's FOR Intel. They also had legal rights to manufacture the chips with their name on them through the 486 era.

          I believe there was one heck of a lawsuit that AMD won concerning this issue. AMD ripped off No One, and I will continue to support them as long as they can keep their heads above water.
          babyboomer57
      • Intel and AMD leapfrog often...

        but Intel has always had the more advanced
        manufacturing process and majority wise has
        better chips. AMD has stayed in the market
        making budget chips for the most part.

        But...

        AMD was first to hit the GHz mark (non-liquid
        cooled)

        They were first to market with 64bit desktop
        chips

        And I THINK they were first to market with
        desktop multi-core, but I could be wrong there.

        And for a long time they had a faster FSB.

        I still prefer Intel, call me biased, my dad
        works for Intel. :-P
        shadfurman
    • Corruption?

      In the corrupt US anything goes, ponzi schemes,
      bailouts with tax payers money, condoned anti trust
      practices, derivatives that only the mafia could
      concoct. Elected Government pandering to
      Corporations with one sided IP and patent laws and
      the DMCA act. Then they try and sell this corrupt
      pile of crap to the rest of the world. But the house of
      cards is crumbling down because the rest of the
      world is not buying it. There is evidence that Intel
      bribed retail sales channels to only carry Intel
      equipped PCs because AMD had better CPUs then.
      Crappy corruption and the consumers suffer, so pay
      up Intel because the EU government represents the
      people, case closed.
      bigpicture
      • May be more corruption, but also more freedom...

        I'd rather live in a capitalist country than a
        socialist country. Some of the biggest
        advancements in world history came out of the US,
        and it was the free market that drove those
        innovations.

        Besides, the "evidence" I've seen is hardly worth
        a pile of dog crap.
        shadfurman
      • Corruption?

        more Kool-Aid anyone?
        ICUR12
  • AMD should make the next step from ATOM

    ATOM had it's heyday, now the chip seems more like a smartphone chip rather than a computer chip. It's not powerful enough to run multiple apps on a device larger than 11" IMO. I think AMD should make a chip for the 12" laptop/netbook range. It's the medium that people are looking for. People want the lightweight extended battery life, but want a processor that can handle the multitasking with a decent video card for games.

    AMD owns ATI.... best of both worlds, now create something that will astound the world with the laptop/netbook.
    Maarek
    • Heyday? It is just getting going!

      Atom is the new kid on the block. It hasn't even begun really. They have a rev that consumes 50x less power than now with the same performance. Some versions of Atom support 64 bit others support hyperthreading and others virtualization.

      And at 2 Ghz they have the performance too.
      MeMyselfAndI_z