Chip manufacturer AMD (Advanced Micro Devices) was in the news this year for all the right reasons. In March, it completed its Asset Smart strategic transaction with the Advanced Technology Investment Company (Atic) and Mubadala, setting the stage for the formal launch of its US headquartered semiconductor foundry, temporarily called "The Foundry Company".
In September, Atic acquired Singapore-based Chartered Semiconductor Manufacturing, which adds a major Asian base to Global Foundries, now operating two former AMD fabs in Dresden, Germany. This acquisition puts them in the top league of manufacturers in Taiwan, such as Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics. This gives AMD access to best technology and manufacturing facilities.
On the product front, its competitor Intel is already feeling the pinch with the huge anti-trust fine it had to pay to authorities for illegal business practices.
With business dynamics changing in the technology industry, customers are also realising the potential of AMD products and technology. The processor company is no more considered a copycat of its competitors and is working to build a stronger market share in the PC and server segment.
Emirates Business spoke to Dirk Meyer, President and CEO, AMD, about the growth expected in 2010.
Are the dynamics starting to change in the PC industry compared to the beginning of 2009?
AMD is hoping to see recovery as sale of PCs increases year-on-year in the fourth quarter. And if the same trend continues, 2010 should be a good year. The consumption rate compared to the fourth quarter last year shows a positive trend.
Does this mean positive signals for the industry, AMD and its share holders?
The year 2009 has been good for AMD with the Global Foundries transaction closed in March. Clearly the global economic crisis was tough, but AMD sold innovative products. The third quarter of this year was also important due to the restablishment of profitability for AMD's products.
In the beginning of 2009, you had said that sales in the industry would increase by five to 10 per cent in the second half of 2009, is that figure on track?
Comparing the third quarter of 2009 to the third quarter of 2008, sales were flat, which shows recovery was quicker than expected. This is good as PC unit growth in 2010 could be 10 per cent compared to 2009.
Are you saying that rebound in the industry is happening?
We are clearly beginning to see resumption of growth in the PC industry as rebound is measured by positive growth rates.
Do you attribute this to the launch of new operating system Windows 7 from Microsoft?
There was year-on-year positive growth even before Windows 7 was built and the third quarter was flat compared to last year, which is a sign of recovery.
'Fifty by 2015', a statement made by your predecessor gained a lot of media attention, where does AMD stand on that front?
This was a visionary statement made by Hector Ruiz, former CEO of AMD. 'Fifty by 2015' means 50 per cent internet penetration by 2015 in emerging countries. With initiatives such as OLPC (one laptop per child), this penetration is happening and we have not put any marketing budgets to push this initiative. This is already happening in the industry as the IT ecosystem is already building this capability. As more networking devices are made available to both low- and high-end PCs and with phones entering the category it is becoming a reality.
AMD is already putting its products, partners and channel programmes in place to get them all to participate and make this vision possible.
Will AMD look into tie-ups with sovereign funds such as Abu Dhabi-based Mubadala in emerging markets?
The nature of the IT industry is partnership driven and AMD wants to establish a culture of win-win partnerships. We did that in Dresden, Germany, which is now a self-sufficient cluster.
Dubai Silicon Oasis, the technology innovations hub based in Dubai, also has Dubai Circuit Design, a chip designing centre. Are there any discussions on to design chips for AMD?
AMD has chip design centres worldwide, including China and India. There are capabilities represented by Dubai Silicon Oasis representing future opportunities but there is nothing to announce yet.
What about acquisitions or stakes in local companies or entrepreneurs like Yahoo made in Maktoob and Intel Capital's invesments in local entrepreneurs?
It is important for AMD to deepen our partnership with Atic to make sure Global Foundries continues to expand its business potential. AMD wants to develop infrastructure in Abu Dhabi, including human infrastructure. This will enable us to build a fab in the future. We want to participate fully in the market making sure we are involved in the education system through the involvement of our technology. Additionally, bring more IT savvyness into the system.
Currently, acquisition is not part of the strategy but over time it could be considered.
With the available talent and vision of Abu Dhabi this area will be an important part of the IT process in the future.
Does the acquisition of Chartered Semiconductor make you a strong player in the market?
This has been good for both Atic and Global Foundries as they are all part of the same umbrella. AMD is a strong number two player with the critical scale of the business separated.
Years ago, a slogan, Real men have fabs, was raised by your predecessors, what is the new slogan?
Smart men own foundries.
Does such a partnership make AMD a strong player with close competitor Intel, especially in the notebook segment where they are a dominant player?
They clearly have a dominant position but our strategy is to enable our customers with compelling solutions and deliver at a price point with better value.
AMD always had a competitive processor technology. We have been focused on getting the technology to notebooks by improving battery life and the big opportunity in consumer notebooks is to bring graphics and video to the notebook. For consumers, it is much more than office productivity as they use media to a large scale in office and home.
Have you lost out on growth prospects for AMD in the battle with Intel?
I would not say we have lost out as Intel is a much bigger company and had the opportunity before us to deliver products to a specific category.
Do you expect to break Intel's monopoly in 2010?
The goal is not to break the monopoly but to have profitable business. I am looking forward to 2010, as a new notebook platform being made available to OEM partners and the entire notebook line up will be refreshed. A whole new server platform will be launched in the first quarter of 2010 followed by new desktop and notebook platforms in the second quarter next year.
So it does not bother you that Intel monopolises the industry?
It bothers me that Intel's practices are illegal measured by many countries as per the anti-trust regulations. The reason we are engaged in the legal battle is mainly due to the efforts taken by the regulatory organisations, who are now understanding that these business practices are illegal.
For AMD as a brand, it is still not strong in the notebook segment. Is the graphic capability helping you to gain marketshare?
Our engineering team has been putting in efforts. In 2008, 4,000 series of graphics chips was introduced followed by 5,000 in the third quarter this year. Performance per watt has exceeded expectations.
AMD has got more than half the discreet graphics market and will continue to be a dominant player.
What about the overall notebook platform?
This is our single biggest opportunity for growth and we are clearly under represented in the notebook category. Looking forward, we have got competitive technology and in the consumer market, video and graphics will help us gain market share.
AMD has also been pushing the concept of a $100 (Dh367) notebook? What is happening on that front?
It was more of an initiative from the one notebook per child organisation. The vision for affordable computing was set up by Hector Ruiz and brought to the IT industry. I agree with this vision, which will continue to make PCs available to everyone.
Affordable computing and AMD go hand in hand. Would you look at launching an AMD branded notebook?
No, our strategy is to partner with OEM partners and make their brands more visible and support them. The $100 notebooks is the best example of the sub-$200 product. These kinds of form factors will continue to happen and one of the results will be computing devices that will be more affordable.
What about the netbooks segment? You have always been talking about the merging of netbook and notebook?
There is a distinction in the industry between a notebook and netbook but that will fade away. This is mainly because you will not continue to see notebooks of different form factors and prices.
There is now a distinction because netbooks cannot provide a complete satisfaction experience and expectations are still high from notebooks.
The netbooks category has done exceptionally well in emerging markets, especially in the Middle East, but you don't focus too much on the netbook. Do you think it's a missed opportunity?
Missing out implies we have infinite capacity and R&D, but for us the focus is on big PC market. AMD recently launched a notebook platform, which is thin and light. AMD has been innovating but is still focused on bringing the full PC experience.
Intel has been talking about the MID platform. Do you have any plans to launch a similar concept?
AMD has purpose-built platforms in development. For AMD, the low-end notebook segment is between smartphones and notebook, which up to this point is not a high volume market place. Presently, we have got other big targets to focus on as a company.
There have been reports in the past on AMD duplicating chipsets from Intel What are your comments?
More recently it's been Intel copying our innovations. This could be 64 bit computing or direct connect architecture.
In terms of current architectures, the industry has moved to quad core from a single core processor. Is there a limit to this expansion on the core?
The industry is already getting to the point of diminishing returns in terms of adding cores. Therefore our strategy focuses on adopting 'heterogenous computing' encompassed by the fusion processor.
Even the GPU has gained popularity in this regard as its right core for many applications and therefore AMD is putting its energy in developing the GPU. This enables a lot of work to be done efficiently.
AMD sold off it handheld division to Qualcomm a few years back, do you have any interests in coming back in that segment?
I will not say 'no, not never' as we look at capabilities in all markets and all the opportunities provided by our technology. Smartphones is definitely an area where CPU and graphics are applicapable. But, currently, we want to focus on being profitable and sustain profitability.
AMD is still terribly under-represented in the PC and server segment as our OEMs want us to be a more bigger part of that business. Therefore, we are going to focus on the core of our business for the time being.
Where do you see AMD in the next five years?
AMD will be the most exciting company in the semiconductor space. Growth in the industry is going to come from this segment and technologically our assets are suited to consumer needs.
With 18 per cent of growth expected this year from the PC segment, AMD must be able to sustain profitability, which is the primary goal.
PROFILE: Dirk Meyer President and Chief Executive Officer, AMD
Prior to taking up the CEO position in 2008, Meyer served as President and Chief Operating Officer of AMD, a role in which he shared leadership and management of AMD with Executive Chairman Hector Ruiz.
From 2001 to 2006, Meyer led the company's microprocessor business, overseeing related R&D, manufacturing, operations and marketing.
His leadership during these five years resulted in the doubling of revenue for the microprocessor business and a substantial expansion of AMD's global profile.
Meyer joined AMD in 1995 and led engineering for the AMD Athlon microprocessor. In April 1999, he was promoted to Vice-President of Engineering. In 2001, he was named Group Vice-President and General Manager of AMD's microprocessor business and in 2002 was named Senior Vice-President and an Executive Officer of AMD.
Prior to AMD, Meyer spent nearly a decade at Digital Equipment Corporation, where he was co-architect of the Alpha 21064 and 21264 microprocessors.
As one of the world's leading microprocessor design innovators, Meyer was presented with the Association for Computing Machinery Maurice Wilkes Award at the 2003 International Symposium on Computer Architecture.
Meyer graduated from the University of Illinois, where he received a Bachelor's degree in computer engineering. He has also received a Master's degree in business administration from Boston University.
This interview was conducted before the $1.25bn settlement between Intel and AMD.
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