AMD's days will become more beautiful

Late last month, AMD announced its fourth quarter financial report, and the results showed that the company's performance continues to be frustrating, especially the sluggish PC market has caused greater harm to AMD, even if half of the major game consoles The custom chip business has a certain salvation, and it is still difficult to conceal the fact that AMD is in trouble. However, despite AMD's poor performance, its management remains optimistic about the company's future. So, what exactly are the reasons that make AMD so confident?

In recent years, AMD's semi-custom chip business has been mainly driven by the field of home consoles, and its PC-related business has always been in a state of floating. In 2015, AMD's semi-custom business generates more revenue than its computing and graphics businesses, and it maintains about 10% of its operating margin. AMD CEO Lisa Su pointed out that AMD's semi-custom business was very successful in 2015.

In fact, in 2015, AMD's semi-custom business revenue also fell by 15% to only 488 million US dollars, this part of the revenue includes the game customization, low-power server and embedded device chip customization business. At the same time, AMD's share of each game console has gradually decreased, but AMD is confident that the semi-custom business in the second half of the year can contribute to revenue, indicating that in addition to game consoles, AMD won other semi-customs. Chip orders.

AMD expects its performance to remain poor in the first half of 2016, with revenue continuing to decline by 14% in the first quarter, which is far higher than industry analysts expect. However, AMD believes that overall revenue, market share, and profits will improve in the second half of the year. Auntie Su said that although 2016 revenue is expected to decline year-on-year, mainly due to the seasonal factors of the PC and console business, in the second half of the year, based on AMD's most exciting product portfolio and technology roadmap, profits and profits will be fully realized. The trend of the year will show an increase.

Obviously, on the technical road map, AMD will launch the "Polaris" architecture graphics products in the middle of this year, and later this year will release a new architecture of Zen CPU. Therefore, it is not difficult to understand that precisely because these two heavy products were released in the second half of the year, AMD believes that the real point of returning to profitability is not in the first half of the year.

In 2015, AMD’s net loss continued to expand, from 404 million in 2014 to 660 million. It should be noted that in the last quarter of 2015, AMD held only 785 million U.S. dollars in cash and was also loaded with 2.26 billion U.S. dollars in debt. In this case, AMD stated that it will continue to burn money in the first quarter of this year, investing about 100 million U.S. dollars, and the goal is to maintain a minimum cash of 600 million U.S. dollars.

However, the good news for AMD is that there will be a cash inflow in 2016. In October last year, AMD sold the large-capacity packaging and testing factories in Malaysia and Suzhou, China to China’s “Tongfu Microelectronics” company. The net income of US$320 million will be available in the first half of 2016. AMD’s CFO Devinder Kumar said at the time: “Awaiting regulatory authorities and related approvals. After deducting taxes and other expenses, it is estimated that there will be US$320 million in cash income in the first half of 2016.” An additional US$320 million in cash will help AMD has a more flexible execution strategy that will not break the minimum cash holding target at least for a period of time.

In the past 18 months, AMD’s share of the graphics card market has fallen by a large margin, mainly because AMD did not have any products to respond to rival NVIDIA in the past 10 months. In the third quarter of 2015, AMD's graphics cards accounted for only 20% of the industry's shipments, and it was almost in a stage of collapse. We can imagine how crazy NVIDIA's graphics cards are. What's more sad is that AMD's HBM revolutionary graphics cards aren't enough to make a difference. Aunt Su believes that AMD will be able to regain certain market share in 2016 thanks to the next-generation graphics card of the next-generation Polaris architecture.

It must be said that in terms of hardware, this year AMD Polaris and NVIDIA Pascal will both move in a similar direction. In recent years, AMD's most lagging area is software. Now it is finally in the development direction. In the past, NVIDIA's GameWorks software tool suite was very effective in optimizing the game's special effects. Various game masterpieces have high-profile claims that they support Gameworks, and AMD presents a one-sided situation. Recently, AMD announced the GPUOpen open source project and is struggling to catch up with NVIDIA.

In the server CPU market, AMD was a major player. In 2006, AMD’s Opteron processors accounted for 22% of the x86 server processor market share. However, today, AMD's market share in the server market is almost negligible. Intel's x86 server chips have a market share of up to 99%.

AMD has high hopes for the Zen processor to rejuvenate the server CPU business. Aunt Su said that the server CPU given to the Zen architecture has won key support from some of the world's top OEMs and believes it can quickly regain its presence in the data center business. However, the relevant server's chip may have to wait 2017.

As early as 2011 when AMD released the "bulldozer" architecture, it made an irreparable mistake. At that time, Intel's chips were single-threaded and Yaoyao was ahead of AMD. Former AMD executives also admit that bulldozers are the products that have failed within the company. They did not really find a solution to the core issues, which caused AMD's server business to suffer a great deal.

With respect to ZenAMD's confidence, the new architecture has brought significant improvements in performance. Compared to the "bulldozer" architecture, the execution rate per clock instruction set has risen by more than 40%. In the case of Intel's decision to postpone the 10-nanometer process, AMD is expected to ship 14nm chips at the same time. The same process process gives the company the opportunity to reduce the performance and energy efficiency gap between AMD and its rival chips. Therefore, it is not impossible for AMD to quickly regain some market share in 2017.