News & Analysis
AMD: Fighting the unbeatable foe
Bolaji Ojo
12/1/2008 12:01 AM EST
AMD has been outspent, outgunned and outmaneuvered for decades. The foundry joint venture it set up in October with Abu Dhabi-based Advanced Technology Investment Co. (ATIC) won't remove the humiliation AMD executives must feel, knowing they fired the company's last and most potent weapon and still left their competition largely unscathed.
As it turned out, Intel was more concerned about the disruptive effects of the ongoing credit crunch than about the balance sheet improvement actions of rival AMD. "Our future operations involve a number of risks and uncertainties—in particular, current economic uncertainty, including the tightening of credit markets, as well as future economic conditions," Intel noted in its third-quarter regulatory filing.
Industry analysts hold a similar view of AMD's situation. "AMD's market position remains substantially unchanged," said Lucy Patricola, an analyst at Standard & Poor's. "The increased liquidity [from the JV] extends the time during which AMD must address substantial marketplace pressures, including its second-tier position behind industry leader Intel."
Other analyses confirm AMD must undertake a tough task to match Intel's spending power. Bill McClean, principal analyst at IC Insights, made it clear that AMD executives had poured scarce cash into an unwinnable war with an opponent whose resources were vastly superior. AMD, McClean noted in a report, spent $6.4 billion on capital equipment from 2004 to 2008, compared with Intel's budget of $25.6 billion during the same period. "Intel's capital expenditures over the next five years will total about $30 billion, which would be five times [AMD's] Foundry Company's most optimistic plan of investing $6 billion over that time," McClean said.
The conclusion, McClean said, is that "AMD's new strategy and business model keeps them in the MPU game—however, it will not shift the balance of power in the MPU or foundry segments of the IC industry over the next five years."
Next: Blind ambition
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deyyoung
12/2/2008 8:43 AM EST
Intel has been wanting us to believe this tripe for 10+ years now. I'll wager Mr. Ojo has some financial incentives from Intel ...
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octop
12/9/2008 5:59 AM EST
I agree that AMD is no match for Intel's resources, at least for now. However, I do not agree AMD is chasing "Blind Ambition" that needs negative "Reality Check". In fact, if we gauge the growth of this company from being 1 of the clone x86 microprocessor companies to later become the only survivor in x86 CPU market and the strongest competitor for Intel, should we call these achievements a product of "Blind ambition"?
In fact, the author of this article should discuss how AMD can sell survive market competition by using process technology an generation older than Intel (65nm vs 45nm) yet still staying relevant. To be fair, AMD might go default without financial injection from ATIC but that doesn't justify by viewing an catching-up company as desperate. The fact is, the latest flagship Intel CPU codename Nahalem, pocesses architecture similarity (i.e embedded memory controller, point-to-point communication bus like HT3 etc.) that AMD've been using a years ago.
It'd be a blind review if the author compare the resources of Intel to AMD and come to conclusion that AMD is not wise to continue competition & chase her dream. If it happen, Mr. Bolaji may need to pay uncompetitive price for a computer to write his articles in future if Intel remain a sole microprocessor producer.
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