AMD hangs up on smart phone market

SUNNYVALE, Calif. — One word drives everything Advanced Micro Devices does these days—profits. It's in that context AMD execs spent significant time at its annual analyst meeting here dissing the mobile x86 markets archrival Intel Corp. is pursuing with its Atom processor.

AMD will deliver a 65 nm chip set geared for small notebooks next year, but it will not pursue the class of so-called Mobile Internet Devices (MIDs) and smart phones Intel is going after with its current and future Atom CPUs.

"Of all the opportunities we could go after, we have eliminated microprocessors for smart phones," said Randy Allen, general manager of AMD's computing solutions group. AMD will target everything "from a mini-notebook to the highest-end of x86 performance, but we are not going any further than that for the foreseeable future," he said.

"We don't expect the MID market to become meaningful relative to other opportunities we can address," Allen said. "It's a 'tweener between a cellphone and notebook," he added.

Ironically, Intel's Atom processor is one of the few bright spots in an otherwise bleak outlook for PCs.

A Barclays Capital analyst said unit shipments of PC processors will decline about two percent in 2009, excluding Atom sales. When Atom sales are added in, sales will grow, albeit by a meager two percent, Barclays estimated.

AMD will produce early next year a Yukon platform for mini-notebooks that dissipate no more than 25W. It will be based on a 65 nm processor, chip set and graphics to ship in the first quarter of 2009.

The move is part of a strategic shift at AMD to focus on mainstream PC markets because they hold the majority of the industry's profits, according to an analysis by Allen. Mainstream and value products represent 60 to 75 percent of the profits of desktop, notebook and server sectors, he said.

"It's counter-intuitive because performance segments are the highest margin, but they are completely overwhelmed by the higher volumes," he said. "This dictates our strategy of where we focus our investments," he added.

Allen sketched out plans for several 45nm processors and platforms coming in 2009 and 32 nm chips debuting in 2011.

AMD's Tigris platform targets mainstream notebooks with a 45 nm CPU due in the second half of 2009. Consumer desktops will be served by a Pisces platform using three- and four-core versions of 45 nm processors.

In 2011, AMD will roll out its first 32 nm CPUs, including its first desktop and notebook chips that combine x86 and graphics cores, the four-core Llano for desktops and two-core Ontario for notebooks.

The Orochi, a 32 nm CPU for PC gamers, will have more than four x86 cores but no integrated graphics. The 32 nm chips will sport the first ground up core redesigns for AMD in several years.

At the heart of the new road map is the quest for profits, a push that has also driven the company to split off its design and fab operations into separate companies.

AMD reported its first profits in many quarters recently. It believes with the spin off it can achieve sustainable profits as long as quarterly revenues hit or exceed $1.5 billion, a target it thinks is achievable.

"We have the opportunity the first time ever to turn this company into a cash-generating machine," said president Dirk Meyer. "We have collectively had enough of losing money and we want to hear the cash registers ring," he added.