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Advanced Micro Devices has to shift its corporate culture and change its focus onto expensive microprocessors in order to stay competitive in the long term, according to Atiq Raza, the former president and chief operating officer of AMD.

“AMD has to become a different company. It has to become a much more nimble, fast-moving company to close the gap with Intel. [AMD chief executive] Dirk Meyer has to give AMD the culture of a large startup rather than a small Intel. Dirk is a very creative person and can make AMD become that company. Right now it is run as a smaller Intel. If it is a small Intel running against a big Intel, the big Intel will win,” said Atiq Raza, entrepreneur in residence at Khosla Ventures and a veteran of Silicon Valley, in an interview with EETimes web-site.

In fact, AMD had an opportunity to change significantly when it acquired ATI Technologies back in 2006 and brought a lot of new blood into the company. However, shortly from then the world’s second largest designer of chips decided to sell off multimedia businesses of ATI in order to solely concentrate on central processing units (CPUs), chipsets and graphics processing units (GPUs), which naturally limited its addressable markets. Moreover, the company retained its corporate culture and continued to be a “small Intel” instead of becoming a large ATI Technologies, partly because Hector Ruiz remained chief executive officer until 2008.

According to Mr. Raza, the founder of NexGen, the CPU designer AMD acquired in 1996, it is logical for AMD to concentrate on x86 computing, however, the Sunnyvale, California-based chip developer has to refocus onto high-end solutions.

“They have focused to where they have a benefit. But if they focus on only the lowest cost products, there will no longer be a race between Intel and AMD, just a partitioning of the market and of necessity in such a partitioning AMD will make less money than Intel. The re-engineering of AMD has to occur, but it depends on how hard AMD wants to work. It's a much more comfortable path for AMD to just be a low-cost supplier and partition that part of the business and make less money but still make some. That will give them another 5-10 years of reasonable life, but I don’t know what happens after that for that kind of company,” said Mr. Raza.

Although the market of CPUs is very well established, the entrepreneur still believes that there are opportunities for chip companies to emerge.

“It is possible to design better multi-core processors. [The cellphone is] exploding in workloads and unit demand. If markets are growing, there is always an opportunity to do something better. Whether I am able to come up with something better I don’t know, but it's intriguing me a lot. Starting another [multicore] company is a step further than I have thought, but I can imagine things that can be done that would make a big difference. Talk to me in say three years,” concluded Mr. Raza.

Tags: AMD, ATI, x86, Phenom, Athlon

Discussion

Comments currently: 4
Discussion started: 05/18/10 05:28:01 AM
Latest comment: 05/21/10 01:11:01 PM
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1. 
Focus on high end products, wow what a brilliant original idea. Did you think that AMD focuses on the low end products not out of choice but because they can't keep up with Intel's massive R&D budget. Intel spends more on R&D than AMD earns a year in revenue. That AMD can compete at all is testament to how effective their business model works.

I'm sure AMD would love to be selling i7 spanking CPU's at $1k a pop, but they can't. Thats why they focus on the low end where they can compete.
0 1 [Posted by: genie  | Date: 05/18/10 05:28:01 AM]
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Intel spends loads of money on process technologies + materials R&D + they spend on fabs. R&D budget does not exactly mean that one can sell a very high-end product. Nvidia cannot compete against ATI Radeon HD 5970 despite of the fact that it has spent vast amounts of money onto Fermi R&D. Nokia cannot sell a mobile phone for $1500 - $2000, despite of the fact that it spends times more than Apple, which manages to sell iPhone for a high price.
0 1 [Posted by:  | Date: 05/18/10 07:11:00 AM]
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Big money doesn't necessarily mean good R&D but expensive R&D and small money doesn’t necessarily mean low performance CPUs. When NexGEN was aquired, their K6 and K6-2 architecture brought was around 90% ~ 100% of Pentium 2's performance or even more, depending on the application and I don't think NexGen was "Big Money" back then while Intel was. And their K6 - III was actually better than P3 but AMD chose not to continue developing that tech but chose the EV6 architecture instead. And that was a very good choice.
0 0 [Posted by: East17  | Date: 05/19/10 03:47:21 AM]
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2. 
you have got the wrong idea really. Amd isnt making the most powerful cpu they could make. Thats not at all how it works. Intel isnt making the fastest they could either. They are both making cost effective CPUs that they can sell at a profit. AMD has set its performance bar low in a trade off to sell cheaper CPUs in the "mainstream" segments and that is what this article is about. Surely if they were in such a battle as a lot of ppl wrongly think then intel would have the edge and still outperform amd. AMD is barely showing any threat to intel so much as shown by the fact intel has now a new line up of less capable cpus then the original i7. They have went down to attack amd on their own budget court. The court amd decided was their focus and went after. But they couldve produced better performing cpus all along. Even with the phenom2 architecture there is deliberate cost with performance trade-offs that ultimately ended with the performance they thought was acceptable at the lowest cost possible. The lower cost cache amd used on these chips is terribly slow and it hurts performance across the board. Amd thought the trade off was acceptable for the market they wanted to sell in. There are many cost savers with deliberate outcomes. Amd couldve been selling much higher performing CPUs today but they shot for a different market. Thats not to say they couldve stole the throne from intel but many decision put amd in the position it is today. It wasnt to long ago amd had the crown.... they lost it in a very great manner. after the original phenom disaster it appears amd was really wanting to play it super safe with little risk just to recover from it. They lost much of the market and a lot of their reputation. So it makes a little since amd sought the mainstream market the phenom 2 was intended to compete in. Gain some of the market and make "amd" a household name ppl could trust. It is where amd put their eggs for better or worse but i do believe amd already knows they must start competing cause intel is now in their budget market and Intel has been very successful in making very cost effective CPUs that perform extremely well. AMD sought to dominate this lower cost segment and intel has responded with "if you arent gonna compete on my turf then i will destroy you on yours!!!!" AMD has to change plans now, just as the article says. There is no way they dont already know this
0 0 [Posted by: ocre  | Date: 05/21/10 01:11:01 PM]
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