AMD can look to embedded devices for growth

Embedded devices market less competitive for chipmaker, says industry analyst, who notes AMD's current focus on emerging markets, low power and cloud part of efforts to be aligned with market trends.
Written by Liau Yun Qing, Contributor on

With Intel dominating the microprocessor market, AMD should grow its presence by developing chips for the embedded devices market which is currently less competitive, suggests an industry analyst.

According to Sergis Mushell, principal research analyst at Gartner, said AMD can target these markets particularly as Intel is now looking at the mobile space. Although it may take a while for a chip maker to gain a strong foothold in the embedded devices market, should it succeed in penetrating the market, Mushell noted that it will also take a while for the company to lose its market share in this space.

The analyst's was responding to ZDNet Asia's queries on how AMD can gain market share in view of Intel's dominance in the semiconductor market. A Gartner report published in August revealed that Intel's share in the worldwide market share stood at 79.3 percent in the second quarter, while AMD took home 20.4 percent.

AMD's former CEO Dirk Meyer had resigned in January which the company's board of directors described then as necessary to "accelerate the company's ability" to meet its objectives of establishing market leadership and achieving significant growth. Other reports suggested that Meyer was ousted due to his failure to address the mobile market. Former Lenovo executive, Rory Read, in late-August took took over the helm.

A spokesperson from AMD's corporate headquarters told ZDNet Asia that since the CEO change, the company had restructured its business to focus on low power, emerging markets and cloud computing.

"At the end of the day, our goal is keeping pace with consumers and the market, and delivering the best possible PC experiences to them. That is how we are going to win," he said in an e-mail interview.

AMD in right direction
According to Mushell, AMD's three focus areas are aligned to market trends.

Low power is "on top of everybody's mind" since lower power consumption was required in mobile devices and users also demanded longer battery life for their gadgets, he said.

However, the Gartner analyst said AMD's focus on lower power chips does not necessarily mean the chipmaker is looking solely at mobile devices, adding that microprocessors that consume less power can also be used in laptops.

He also noted that the chipmaker's eye on emerging markets follows the trend of PC sales. He said volume growth in this segment will come from emerging markets where most buyers are purchasing their first systems. In contrast, users in developed markets already have feature-rich PC systems and are looking for supplementary mobile devices, he explained.

The AMD spokesperson highlighted the "critical importance" of the Asia-Pacific region and other emerging markets to the company, as many first-time buyers of PC systems are from those economies. "Nearly half the company's revenue in 2010 was generated in greater China," he added.

According to Mushell, AMD is also targeting cloud and virtualization with its Bulldozer series of server chips. Virtualization technology is a "must have" in servers, he added. Cloud providers, big Internet companies such as Google, Facebook and Baidu, as well as hosting companies will also drive the growth and deployment of servers, he said.

Mushell added that there has been a lot of interest from consumers surrounding AMD's Fusion chips as consumer apps are increasingly graphic-intensive.

First announced in 2009, Fusion is the company's accelerated processing unit (APU) offering and touted product differentiator.

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