review amds 2007 analyst day platforms and the glass half full

AMD’s 2007 analyst day: Platforms and the glass half full

Two phrases can sum up the message AMD related to analysts in its 2007 analyst day presentation today: “the glass is half full” and “business as usual.” The company believes its current momentum can carry it to profitability next year, and it made almost no mention of the “asset light” business model some were expecting to be unveiled.

Starting off with the company’s bread and butter—its microprocessor business—AMD President and COO Dirk Meyer opened the presentation with mention of the TLB erratum that’s drawn so much attention lately, but he went on to say stumbles in AMD’s quad-core roll-out have overshadowed the company’s achievements. Meyer pointed out AMD’s expanded business with Toshiba along with its strong notebook presence, completed transition to 65nm process technology, supply chain improvements, and increased average selling prices and margins.

The “glass is half full” mentality also manifested in Meyer’s assertion that AMD doesn’t need the fastest chips around to succeed. “Many people feel AMD needs to have the best-performing CPU component . . . That perception is false,” he bluntly stated. Throughout the presentation, Meyer and other speakers (notably Computing Products Group Executive VP Mario Rivas) made a point to de-emphasize the microprocessor and instead draw attention to the graphics component, which they say is key to the overall “end-user experience.” However, they were quick to follow up by promising that AMD doesn’t plan to drop out of the “race for supremacy” in the microprocessor market.

Rivas also contrasted AMD’s current position to that of four or five years ago, pointing to the firm’s large number of design wins with major PC vendors and its newfound presence in the graphics, consumer electronics, and game console markets.

However, AMD isn’t kidding itself: it needs to return to profitability, and quickly. To do so, Meyer said AMD intends to tap “all the major profit pools” in the industry and focus on the sweet spots in terms of volume and revenue in order to “deliver high-end performance to the mainstream.” The company also intends to make strides in the small and medium business, notebook, commercial client, graphics, and consumer electronics markets.

Part of AMD’s efforts appear in the form of a crowded list of new platforms planned for the next couple of years. Those platforms span the notebook, enterprise, mainstream, enthusiast, and server/workstation markets, and they mark a radical departure from AMD’s tradition of providing an open ecosystem for companies like Nvidia and VIA to plug their graphics and core logic products into.

Among AMD’s list of new platforms are the notebook-oriented Puma and Shrike. AMD has already talked about Puma: it’s on track for a launch in the first quarter of next year, and will include a new “Griffin” dual-core processor, an RS780 chipset with DirectX 10-class integrated graphics, an M8x mobile graphics processor, and support for the DASH PC management specification.

In 2009, Puma will be followed by “Shrike,” which will introduce a 45nm “Swift” CPU with three K10 microprocessor cores and one graphics processor core. (“Swift” is basically AMD’s Fusion CPU/GPU chimera under a new code name. AMD says it will come out in the second half of 2009.) Shrike will also bring M9x graphics, a next-gen south bridge, and DDR3 memory support.

One of AMD’s slides suggests Griffin will be dubbed “Turion Ultra,” although AMD didn’t speak about the brand directly. As for the M8x graphics processor, it’ll be based on 55nm process technology and will feature native support for DisplayPort display outputs. The General Manager and Senior VP of AMD’s Graphics Products Group, Rick Bergman, boasted that AMD has secured more design wins with notebook vendors for 2008 than Nvidia. Bergman believes AMD will return to being the number-one vendor of discrete graphics processors for notebooks next year.

In the enterprise (or “commercial mainstream”) segment, AMD will roll out a new “Perseus” platform in the first quarter of 2008. Perseus will presumably fight it out with Intel’s vPro platform, and it will bring quad-, triple-, and dual-core processors based on AMD’s K10 architecture, an RS780 chipset with DX10 integrated graphics, optional R600-series graphics with “Hybrid Graphics,” and support for the DASH and Trusted Platform Module specs. Hybrid Graphics technology will basically allow users to pair up a system’s integrated graphics with a compatible discrete graphics card for improved performance. Perseus will also put an accent on energy efficiency, with a maximum processor power envelope of just 65W.

In the latter part of 2009, a new platform dubbed Kodiak will succeed Perseus. Kodiak will bring triple- and quad-core 45nm processors with the same RS780 integrated graphics chipset (albeit with a new SB700+ south bridge), optional R700-series graphics, and Socket AM3 motherboards with support for DDR3 RAM and future versions of the DASH spec.

AMD’s “platformization” will carry over into the mainstream market, too, where the company will unveil a new Cartwheel platform in the first quarter of 2008. Cartwheel will combine quad-, triple-, and dual-core K10 processors, the RS780 DX10 integrated graphics chipset, optional R600-series graphics processors with Hybrid Graphics functionality, and Vista Premium certification. Cartwheel will include AMD Live! Explorer software to provide users with a “common [user interface] for all entertainment,” as well.

Cartwheel will be followed in 2009 by a “Cartwheel refresh” platform with 45nm quad-, triple-, and dual-core K10 processors, DDR3 memory support, an RS780 chipset (but with a new SB800 south bridge), optional R700-series graphics processors (also with Hybrid Graphics capability), and new Socket AM3 motherboards.

AMD has already rolled out its Spider platform (see our reviews of the Phenom processors, 790FX chipset, and Radeon HD 3800 graphics processors) but there’s plenty more where that came from. Spider is set to be succeeded by the “Leo” platform in the latter part of next year. Leo will feature 45nm triple- and quad-core K10 chips with DDR2 memory support, 790FX/790/770 chipsets with SB700 south bridges, and R600-series graphics processors.

Leo will itself be replaced by a Leo Refresh platform in 2009. Leo Refresh will feature 45nm triple- and quad-core CPUs with DDR3 memory support, a new RS800 chipset with an SB800 south bridge, R700-series graphics processors, and new Socket AM3 motherboards.

AMD even has plans for platforms in the server and workstation worlds, although those plans won’t see the light of day until next year. For the second half of 2008 and early 2009, AMD will pair up its 45nm “Shanghai” quad-core Opterons with Nvidia and Broadcom chipsets as it currently does with its 65nm “Barcelona” Opterons.

In 2009, however, the situation will change as AMD rolls out its 45nm “Montreal” octal- and quad-core processors. Those chips will have 1MB of L2 cache per core, 6-12MB of L3 cache per chip, DDR3 memory support, and a new G3 socket code-named “Piranha”.

Montreal processors will be coupled with the RD890S and RD870S north bridges and an SB700S south bridge. On the graphics front, AMD will offer R700-based FireGL and Fire MV graphics processors for workstation customers as well as ATI ES-1000 chips on the server. AMD hasn’t assigned a code name to this bundle of products, but it will be an all-AMD platform much like those mentioned above.

Miscellaneous tidbits
AMD’s presentation didn’t dwell entirely on platforms—the company also revealed more details about future individual products. For instance, Rivas stated that we can expect 2.5GHz quad-core chips in the April-May time frame. On the graphics front, Bergman talked about the upcoming R680, which he confirmed will combine two graphics processors on a single graphics board and launch with a price tag in excess of $300.

AMD also has a pair of new mainstream graphics processors lined up for January: the RV620 and RV635, which will both feature DirectX 10.1 and PCI Express 2.0 support, Universal Video Decoder technology, and the ability to work in CrossFire X multi-GPU configurations. Driver support for CrossFire X three- and four-way GPU setups will become available some time in the first quarter of 2008, as well.

There’s been talk among analysts and the press of AMD selling its fabs and outsourcing all production, but there were no traces of such plans in today’s presentation. Doug Grose, Senior VP of Manufacturing & Supply Chain Management, talked about AMD’s manufacturing strategy, and he said the company is still pursuing its “asset smart” model—outsourcing graphics processor production to TSMC and UMC, outsourcing some microprocessor production to Chartered Semiconductor, and handling remaining microprocessor production with its own fabs.

AMD’s plans for a “Fab 4x” in New York are still on, too, with Hector Ruiz himself stating, “We’re looking forward to the day that we ship the greatest products in the processing arena out of New York.” Ruiz also added, “We want to continue to have a world-class manufacturing operation.” Still, Chartered is ready to produce quad-core chips in 2008 should AMD choose to have it do so.

Moving on, Grose spoke about AMD’s plans for the transitions to 45nm and 32nm process technology. 45nm production is still scheduled to ramp in the first half of 2008, with product shipments due in the second half.

As for the 32nm process, Grose said it’s being jointly developed with IBM and that it’s an efficient, “gate first” high-k/metal gate process. AMD has already done test ramps of 32nm SRAMs, and according to AMD’s process technology roadmap, production is set for the 2010 time frame.

AMD Executive VP and CFO Bob Rivet then came on stage to talk about AMD’s financial plans. He also uttered the “glass half full” mantra and stated, “We have a lot of opportunities staring us in the face.”

Those opportunities were neatly listed on one of the presentation slides, as was Grose’s guidance for 2008 unit growth. Grose expects growth of 15% or more in microprocessor units, growth of more than 6% in graphics units, and growth of more than 10.5% overall in the consumer electronics space—numbers that should all equal or surpass the expected industry growth rate.

On to more nitty-gritty financial details, Grose said AMD is aiming for higher margins, lower research and development costs, lower marketing, general, and administrative costs, and a return to profitability in the third quarter. He also suggested the company would break even in Q2. In the meantime, AMD has something in the neighborhood of $2 billion in its piggy bank and an additional $600 million worth of assets it can monetize “at the appropriate time.”

So where does that leave AMD in 2008? Based on what we heard today, we can expect disappointing financial results for the fourth quarter of this year and the first quarter of 2008. However, AMD is right about one thing: it has a fair amount of momentum, and if it manages to execute as planned, 2008 may very well turn out to be a good year.

On the microprocessor front, AMD should have 45nm tri- and quad-core chips ready in time to meet Intel’s 45nm Nehalem processors. Even if it doesn’t manage to keep up with Nehalem, AMD’s plethora of platforms should help keep large PC vendors interested. AMD looks set to regain much-needed market share in the mobile graphics market, although how well the AMD graphics division will do on the desktop remains to be seen. The Radeon HD 3870 and Radeon HD 3850 are certainly encouraging efforts, though.

While it’s probably still a little early to make any forecasts pertaining to 2009 and beyond, AMD’s outlook and confidence suggest the company still has at least a few more rounds to go—even with naysayers predicting its imminent demise.