Review Index:

AMD Q1 2012 Earnings Analysis: Looking Back and Looking Forward

Author: Josh Walrath
Subject: Editorial
Manufacturer: AMD

Wrapping Up


In non-GAAP terms, AMD actually pulled a $92 million profit for Q1. This shows us that AMD is moving in the right direction in terms of how they are running their company. The big loss was due to the money given to GF, as well as the liquidation of AMD’s stake in that company. In GAAP terms, having a loss of $590 never looks good. But this does appear to be money well spent, and the investment will hopefully pay off in 2013 when AMD releases their 28 nm APUs.

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Rory Read has really cleaned house at AMD. When many of the top (and familiar) people at AMD were either let go or resigned, my gut reaction was that Rory was simply pandering to Wall Street. After seeing how AMD has handled getting away from partial ownership in GLOBALFOUNDRIES, how it has dealt with TSMC and its 28 nm woes, and how it has aggressively redefined itself in the past 9 months, I am firmly behind what Rory appears to be doing. Rory’s stated goal is to turn AMD into an execution machine. 

History does not look to be kind to Hector Ruiz’s time at the helm of AMD. When Jerry Sanders, III retired and handed over the reins, AMD was in a tremendous position. It had an aggressive roadmap for its processors, it was not all that far behind Intel in terms of process technology (about 10 months rather than the current 18 months), and the company was gaining marketshare in mobile, desktop, and server spaces. Apparently Hector came in and made some sweeping changes that derailed AMD from that roadmap. The changes did not allow AMD to be flexible enough to respond to Intel’s Core and Core 2 technologies. Instead users received the Athlon X2 Rev. E which added DDR-2 support. Then they had to deal with the original Phenom which never lived up to expectations.  Dirk Meyer was an engineer first, and while he helped AMD get back on track in terms of execution, he appeared to be far too conservative in planning for the future. While we are still early in Rory’s tenure as CEO, the changes we have seen so far appear to be quite positive. Time will tell what kind of foundation he is laying and if he can do the job he was hired for.
Rory knows that AMD is the only real competitor to Intel in the processor field, and that very fact gives AMD a certain guaranteed market share. Rory feels that the graphics expertise that AMD currently possesses is their crown jewel, and they need to aggressively push that technology up and down their product roadmap. AMD is currently saddled with the underperforming Bulldozer architecture, and will be for the near future. This does not mean that it cannot be further optimized to decrease TDPs and increase IPC. Piledriver will be the first iteration of an improved Bulldozer, and while I am not expecting miracles in the IPC department, it does look like many of the negatives in terms of power consumption have been solved. Steamroller will be the next and is scheduled for a 2013 launch. In keeping with AMD’s increased pace of release, I would expect the first Steamroller based APUs to be released one year from now. These will initially be 28 nm parts, but if GF can get 22 nm out in 2H 2013 then we could expect those versions to be out by the Holiday season 2013. The 28 nm refresh of Piledriver should have the GCN graphics component, and those will again be released in early 2013. As per AMD’s conference call this quarter, they will be aggressively ramping 28 nm production at GF with these parts in 2H 2012 (hence the new exclusivity wafer agreement with GF).
Looking further ahead we see that AMD will slowly phase out their non-GPU enabled CPUs. AM3+ will get a refresh later this summer with a Vishera based unit that will share silicon with server based products. After that though, AMD will be moving towards APUs exclusively. We can assume that they will do the same for the server side and aggressively promote GPGPU and OpenCL applications for these server based APUs. One of AMD’s goals with GCN is to more tightly knit the CPU and GPU together. This will help simplify development, and in moving towards the future with GCN and later graphics technologies, AMD is hoping to carve out a larger marketshare in not only the traditional notebook/desktop/server spaces, but also in the fast growing mobile space. Expect to see AMD start to push out lower TDP products for tablets and eventually units which can fit into handheld devices. The improved Bobcat architecture can theoretically move into those TDP spaces.
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In closing, AMD had a good quarter even though the GAAP loss of $590 million does put a damper on enthusiasm. That money is an investment in the future rather than a material loss that is gone forever. AMD has restructured itself quite nicely. Although the reduction in staff has left a bad taste for some, it is a much leaner entity going into the future. They also are appearing to execute at a higher level than what we saw last year at this time. The complete change to a 28 nm based graphics architecture went off nearly without a hitch. Trinity is on time and performing at expectations. Brazos 2.0 is an interesting adjustment considering the 28 nm versions of that architecture were cancelled and AMD made some major changes to the current 40 nm product offerings that apparently have made up for it.
One final metric to comment upon is that of ASPs. AMD does not comment nearly as much on ASPs as they used to, and this is because the overall product mix they are offering makes ASPs far less meaningful than they were 10 years ago. For example, Brazos APUs and their attached FCH (Fusion Control Hub), sell for perhaps $50 as a combo for the highest level SKU (in this case the E-450). In terms of raw die cost each Brazos APU looks to be around $10, and the FCH likely around $7. It will take around $5 per chip to make a finished product (wafer cutting, processing, and application to a substrate). So for each combo we would expect a finished APU/FCH combo to be $27 (not counting shipping costs to and from the packaging facility). This is a VERY rough estimate, but we can see that AMD has a goodly amount of margin for a sub-$100 processor. AMD has sold 35 to 45 million of them in the past year. So for the past year these products have added materially to AMD’s bottom line, as they are inexpensive to produce and have a solid margin. This does degrade the ASP for the past year, even though by all measure Brazos has been a great success and a constant source of profit for the company. Stepping away from the ASP metric is a good thing, and I certainly hope more analysts will realize this.
It does feel like AMD is back on track and is working to be a strong competitor to Intel once again. But that particular journey has just started and is filled with pitfalls, and AMD has a lot to prove between now and their first 28 nm APU release in 2013. Still, the numbers are overall very positive, and AMD looks to have some very competitive products throughout the rest of the year in terms of APUs and GPUs. Time will tell if the Piledriver based units for AM3+ and the server space will live up to expectations though.


April 25, 2012 | 08:07 PM - Posted by tbone (not verified)

good read josh ;)

id like to add the design wins for all next gen consoles will also be a big plus for AMD

looking forward to seeing Trinity in the ultrathin/laptop market, but I have to say Kaveri looks to be pretty cool on the 28nm process, should be a powerhouse!

April 26, 2012 | 10:45 AM - Posted by Josh Walrath

Those design wins are a big plus for AMD, but we have not seen any money from them yet (afaik). Also, production is still a bit in the future, but hopefully the WiiU money will start rolling in for AMD. Q1 though is typically a down time for console royalties, and I think they mentioned that in the conference call.

Vishera will give us a good idea where AMD will sit with a more IPC/performance optimized Bulldozer redesign. The first iteration of Piledriver in Trinity was more about fixing thermal issues and some latency problems in the design (from what I am hearing, and what the performance leaks are showing). Vishera is a much more aggressive redesign that is "supposed" to address more performance issues along with thermals. That particular product will likely have the same IPC characterstics of Kaveri.

There are still a lot of hurdles that AMD has to overcome to get CPU performance up there to reasonable levels against what Intel currently offers.

April 25, 2012 | 08:58 PM - Posted by Meh (not verified)

You paint an overly optimistic picture of AMD.

They have no control over their manufacturing and process anymore.
They have lost investor confidence.
Their entire marketing of Bulldozer and propaganda ahead of it and damage control after launched FAILED.
Parachute payments to execs, shareholder value eroded.

What is exactly that you see, other than regurgitating their propaganda and powerpoint slides?

April 25, 2012 | 10:04 PM - Posted by Josh Walrath

There is a lot of upside to AMD, but as I believe I stated in the article, it still has a lot of hurdles in front of it before we can consider them successful against Intel. Then again, they are the only competitor to Intel and have lasted for some 40 years now.

Intel currently is the only semiconductor manufacturer (other than the memory guys, IBM, and Samsung) that has control over their manufacturing and process. NVIDIA, Qualcomm, Ti (who has closed down most of their fabs), Apple, Motorola, and countless other semi firms that all utilize foundries. I would say that we have definitely seen the shift to a fabless model for the vast majority of companies out there. With the capital behind GF, and the proven track record of TSMC and UMC, I don't see them falling all that much further behind Intel. Intel will always have better margins due to them owning their own fabs, but that does not mean that the other companies will not be able to pull a profit from that model.

Yes, investor confidence is down, and a lot of people have panicked with all of the upper management losses. Then again, look at the last two months and see how many upgrades the stock has received (from sell to hold, and hold to buy). There is a positive trend going there.

Bulldozer is bad. I have not seen any damage control from AMD other than they stopped sending out review products. I see a few basic ads, but it seems more like AMD is turning a blind eye to Bulldozer and focusing instead on Llano, Brazos, and the upcoming Trinity.

Shareholder value eroded... you mean share price going from $2.50 a share 9 months ago up to around $8 a share today? I would say the new management team has stopped the bleeding.

I see a lot of value in AMD's graphics technology. Bobcat is a very good architecture, and much more impressive than Intel's current Atom lineup. Trinity, while not a CPU powerhouse, looks to have fixed the power issues with Bulldozer and integrates the most powerful graphics processor on a CPU. If they can fix the TDP issues of Bulldozer, and improve the IPC further with Vishera (as they are rumored to have done... Vishera is another step above what they have done with Trinity), then we will see more competitive parts in the desktop and server space. Will they surpass Intel in performance? I really doubt it. Will it have good price/performance and a competitive TDP? I think they have a much better chance of pulling that off.

There is a lot of upside with AMD, and I don't feel that I am overly optimistic. Nowhere did I claim that AMD would retake the CPU performance crown, or that they would have a whole portfolio of products that will overturn Intel, but I did state that they have the best integrated GPU in the business from the low end to the midrange. They have very competitive products in the GPU market. Unlike NVIDIA, they are actually delivering a lot of products from top to bottom.

It really does look like AMD is reinvigorated, but again time will tell if this lasts. The foundation is there, they just need to execute and focus on smaller, more meaningful steps in terms of technology and architecture. Gone are the days of massive, sweeping changes in CPU architecture. We will see a lot of refinement in the CPU, but the biggest catalyst for growth will be the GPU. Even Intel sees that, and the jumps we have seen from them in the past 5 years in graphics has been impressive. They still have a lot to learn though, and that is an area that AMD can exploit.

April 26, 2012 | 02:36 AM - Posted by Matt Smith

I can't comment on the desktop space, but AMD's competitiveness in the mobile market has basically vanished.

Bobcat's actual processor performance is on par with Atom. The graphics portion is good for playing 1080p video and some older 3D games - and that's about it. It's obviously better than Atom's IGP in regards to 3D performance, but it's not much better than Atom + Ion.

In mainstream components, AMD's best mobile Fusion APU is well behind Intel HD 4000 in performance. And processor performance is so far behind Intel it's sad.

This is a poor state of affairs. I do not want to see Intel be a monopoly. But what hope is there? AMD could double processor performance tomorrow and still be in trouble.

April 26, 2012 | 03:17 AM - Posted by GettCouped (not verified)

Considering AMD's biggest success last year was in the mobile market with Brazos, and the fact that they have Brazos 2.0 and Trinity (which has a record number of design wins and will offer cheaper ultrabooks), I don't know how you can validate any of your statements

I am concerned about your agenda.

April 26, 2012 | 12:03 PM - Posted by Matt Smith

Rather than being concerned with my agenda, maybe you should spend time reading my reviews?

April 26, 2012 | 12:15 PM - Posted by tbone (not verified)

"AMD's best mobile Fusion APU is well behind Intel HD 4000 in performance."

really link me to a review that shows this? lol

April 26, 2012 | 04:35 AM - Posted by dragosmp (not verified)

To begin with I'd just like to say to say this is a nice overview. Maybe a bit optimistic, but if I didn't want AMD to recover maybe I wouldn't have been too interested in the article anyway. You can just see, actually is quite obvious, that Josh welcomes a possible AMD recovery, and why not? They have been worse, when they launched K7 it was laughable to spend more than 120$ for an AMD processor as they simply couldn't touch PIIs' performance. At the time they only had a desktop Celeron competitor which pretty much is the case now with Llano and Bulldozer. Now they're not quite that low as they have a server CPU and a mild presence in laptops.

About Brazos vs Atom+Ion, I'm not so sure. From a performance standpoint I agree that Brazos offers little over Atom+Ion, but Atom is limited by Intel @7-10 inch laptops, while my feeling is that most Brazos CPUs sell in 300-400 13-15" laptops (have a friend that is perfectly happy with a 15" Tosh based on E-450 & Momentus XT). So while Brazos doesn't bring much technical advantage, it is positioned differently in the market and this makes it more competitive than it would otherwise be.

Llano vs HD4000 - the only preview I've seen is the one @anandtech and I'm looking forward for your view Matt on an IB laptop. In that review the HD4000 is really competitive with Llano's iGPU, not to mention IB's CPU cores run circles around the K8 era Llano. However the HD4000 is only competitive, not really superior to the HD60something in Llano. And this is before considering drivers - I am not convinced at all that Intel provides decent graphics quality and I don't mean Medium/High settings. I mean something like the Intel IGP rendering a blue surface red, or jaggies/tears and pixels running about on the screen. I would love to see a detailed review of the HD4000 as a graphics processor with FPS, but also checking weather the games are properly rendered. For one I was hoping to game on the HD3000, but the drivers were a letdown (or buggy GPU?), now I wonder if the HD4000 is a 3DMark rallycar or a real competitor to a real GPU like Llano's.

April 26, 2012 | 09:42 AM - Posted by Josh Walrath

Some extra fuel for the fire:

April 26, 2012 | 12:06 PM - Posted by Tbone (not verified)

I believe Matt is smoking crack....

Intel HD 4000 doesnt beat llano igp

And Brazod ripped apart whatever Intel atom had in market share.

April 26, 2012 | 09:50 AM - Posted by Anonymous (not verified)

cant add much except why dump the 28nm brazos?

have long thought it would be a killer

I see little evidence that more than 2 cores achieves much

brazos would be my first choice apu for 28nm - not dumping it
A huge step. 40nm >28nm - 30% better power & heat in theory

thats 13~ watts from current 18

hard to believe intel/ion would have an answer - it would be a slam dunk for amd in all day ultra mobile or light devices

a 15" thin, light brazos 28nm would sure tempt me

one theory is they feel bad after all those design wins & then not being able to supply the oems who comitted to it - give them a chance to recoup for a while.

another guess is they couldnt resist a few tweaks to brazos using the easier current node & then doing the step change. Unusual to keep u roadmap secret, but it often makes sense.

April 26, 2012 | 10:27 AM - Posted by Josh Walrath

My guess is that Rory took a look at all the current projects, looked at their manpower and budget, and cut the ones he thought made the least amount of sense. Quad core Brazos, while nice in theory, really does not have as much of a market as perhaps a dual core. When going dual core Brazos on 28 nm, I wonder if they were just looking at a die size that was almost too small for the number of pads needed? Could be some other issues there, such as the theoretical TDP was not going to be as low as they were hoping, and it made more sense to revise/optimize the 40 nm product? A good question though, and one we can hopefully get an answer to one day.

Also they are probably still constrained with TSMC's 28 nm process. Would it make more sense to order Brazos wafers and potentially lose out on higher margin products in the GPU space? I'm betting the long and short of it is that AMD felt they could not meet 28 nm Brazos demand with the supply of wafers they had to deal with, all the while cutting down on the GPU supply... which would be bad considering that NVIDIA is even more supply constrained and AMD wants to take advantage of that.

April 26, 2012 | 09:53 AM - Posted by Anonymous (not verified)

No mention of drivers or chipsets

r not amd chipsets more integrated? & if not faster, more generous with port options?


April 26, 2012 | 10:52 AM - Posted by Josh Walrath

Drivers certainly are an advantage for AMD. Intel's graphics drivers are nothing to write home about. Now, compare AMD's recent attempts at drivers vs. NVIDIA, and we have some issues. AMD still has a lot of room for improvement there.

AMD chipsets do give more SATA 6G ports and they have integrated USB 3.0 for the FM1 platform since last year. Too bad they never integrated USB 3.0 for AM3+, and it certainly seems like the 1090FX chipset will never see the light of day. So no PCI-E 3.0 for AM3+ anytime soon, or USB 3.0. AMD is sort of shafting those individuals who desire that particular platform. Maybe if Vishera comes out better than expected they will update the platform, but I think that particular project is dead and buried.

April 28, 2012 | 03:03 AM - Posted by Anonymous (not verified)

ta for the replies josh

as i suspected

I hear reasonably priced intel boards are niggardly w/ ports, which can be an expensive hassle down the road

amds integration should yield benefits - i doubt many discrete chipsets are 32nm - let alone on die - esp usb3 - it handles some serious traffic

seems to me, in the am3+ market, they need all the space they can get to make the cpu keep up w/ intel (bulldozer a bit of a dud, but I hear is making some traction in servers that like lotsa cores cheap - which is some big servers)


May 12, 2012 | 04:05 AM - Posted by Anonymous (not an intel troll) (not verified)

I'm REALLY not an Intel troll (and I most certainly don't have Steve jobs posters in my bedroom.)

AMD is a useless company. Bulldozer is epic fail. Trinity is going to suck anyway. llano is bad.
EVERYONE KNOWS ALL THIS. proof not. needed. Because the truth is indisputable.

Anyway, anyone who buys cheap junk (anything without fruit logos) does not deserve to live. huff ...

Just an objective and broad-minded observation.

Yours sincerely
Mr.Not an Intel troll

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