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The Strategy of AMD

Advanced Micro Devices has a history of producing dynamic random access memory (DRAM), flash memory, special purpose processors, clones of Intel’s processors and acquisitions of third-party designers to boost its CPU division.

Until late in the nineties, AMD had usually been a step behind Intel, as it either cloned its chips, or used micro-architecture not as technologically advanced as Intel’s one. But everything changed in 1999, when AMD introduced its Athlon processor, which was faster compared to the Pentium III in loads of applications. It took Intel nearly three years to recapture performance lead with its Pentium 4 “Northwood” processor in 2002, but AMD introduced its Athlon 64 chip in late 2003 and managed to grab the performance crown for three more years, which allowed the firm to significantly improve its profitability.

But the other side of AMD success on the microprocessor market is the company’s full focus on CPUs: the firm quitted flash memory business, the company ceased development of chipsets and the firm sold its special-purpose Alchemy processors division. AMD’s usual rhetoric concerning its concentration on the CPU biz have so far been the claims that the AMD64 processors fit perfectly into eco-system developed by third parties.

“AMD has long been a leader in providing solutions for networked computation and communications. Going forward, our efforts will focus on providing communications-enabled solutions at the personal computer platform level , where we can leverage our chipset design and systems expertise and the AMD Athlon processor. The interests of our customers, shareholders and employees will be best served by our action,” said W.J. Sanders III, chairman and chief executive officer of AMD back in 1999, when the firm announced sell-off its communications division.

Jerry Sanders, AMD's chairman emeritus

Mr. Sanders stressed that his company could offer the same functionality as the communications products division with the chipsets, but his successor – Hector Ruiz – held different opinion and after the AMD 8000-series chipset was released in 2003, the company has generally withdrawn from the market of core-logic solutions.

Mr. Sanders indicated back in 1999 that the company does want to be a provider of computer platforms and a creator of advanced chipsets. Currently the firm cannot actually afford it: manufacturing capabilities of AMD are generally limited and when the situation gets significantly better, the company will be in a situation when it has no expertise in developing advanced core-logic designs and has no abilities to offer a platforms for its customers due to the lack of any non-CPU technologies.

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