by Anton Shilov
12/10/2012 | 12:00 AM
In a bid to cut costs, Advanced Micro Devices claims it is turning down certain low-volume deals that require it to invest into implementation of its products. While such approach leads to a significant decrease of market share, it naturally means leaner financial structure of the whole company.
“Not all design wins are created equal. Actually, more is not better. More equals more complexity, it means testing platforms, back-end costs that drive [company’s] costs. […] What I am going to do in our space is to focus on design wins that are going to drive volume. […] Every design has associated cost with testing, putting on the platform, etc.,” said Rory Read, chief executive of Advanced Mice Devices, at Credit Suisse technology conference in late November.
The policy of cutting implementation and other costs has reduced the company’s operating expenses from circa $610 million to about $450 million per quarter this year. For a struggling company, $160 million in cash is a significant amount of money.
But reduction manufacturing costs in many ways causes market share decrease. Many criticized Nvidia Corp. for pumped up OpEx due to implementation costs and other manufacturing-related charges that the company faced during the Kepler GPU family ramp up. As the time has shown, Nvidia is now the No. 1 supplier of notebook GPUs (based on data from Mercury Research provided by Nvidia) because of AMD’s reluctance to help integrate its Radeon Mobility products based on the recent architecture.
Mr. Read also complained about the production technologies used by AMD. Given the vast product lines, AMD used up to nine different process technologies at two of its foundry partners (45nm and 32nm at Globalfoundries, 55nm, 40nm, 28nm with or without LP features). Mr. Read wants AMD to only use two process technologies. Moreover, he wants to reduce the number of metal layers that contain logic elements within microprocessors to “industry standard” levels, which naturally means compromises in performance.
The chief executive of AMD believes in speedy execution, when his company is able to quickly develop a chip solution for market needs. Unfortunately, so far this strategy has been slowing AMD down as the company had to delay the roll-out of its next-generation Steamroller micro-architecture-based central processing units from late 2013 to late 2014.