Bloomberg News

AMD CEO Read Says Flexibility Trumps Speed in Sales Race

May 15, 2012

Advanced Micro Devices Inc. Chief Executive Officer Rory Read said his company’s success will hinge on getting products to market more quickly as Qualcomm (QCOM:US) Inc. and other phone-chip makers move into computing.

AMD will broaden its designs to include other companies’ technology, a move that will tailor chips more directly to specific customer needs, he said. The company will also stop trying to take on Intel Corp. (INTC:US) directly in striving to make faster processors, a strategy that’s going to produce chips that are needlessly powerful.

“That era is done,” Read, 50, said in an interview. “There’s enough processing power on every laptop on the planet today.”

Computing is increasingly moving to the cloud -- data centers that supply services over the Internet -- creating a need for chips that are tuned for displaying video and other media and don’t need to crunch large amounts of information, Read said. It’s shifting the competition to a race for chips that contain multiple functions, exactly where phone-chip makers excel, he said.

Qualcomm, Nvidia Corp. (NVDA:US) and other makers of chips based on ARM Holdings Plc (ARM) technology will gain an entry into the PC market later this year when Microsoft Corp.’s Windows 8 debuts in versions capable of working on the type of chip which dominates the mobile-phone industry.

Shares of Sunnyvale, California-based AMD fell 2.2 percent to $6.60 at the close in New York. The stock has gained 22 percent in 2012, after two straight years of declines.

Introducing Trinity

For now, Read is touting the company’s new line of chips, called Trinity, whose designs predate his tenure at the company. The former International Business Machines Corp. and Lenovo Group Ltd. (992) executive took over as AMD’s chief executive in August after a seven-month search to replace his ousted predecessor Dirk Meyer.

Trinity is one of the first steps in AMD’s attempts to produce processors that combine multiple functions rather than an emphasis on speed. Almost half of Trinity is devoted to graphics processing, something Read said will be important in displaying and enhancing processing work done elsewhere, in cloud computing.

The new chip design also has one model that uses less than half the power of current processors, making it better suited for the thinnest and lightest laptops. That will give AMD-based notebooks the ability to go all day on a single battery charge. Trinity will also have 70 percent better graphics performance that comparable Intel chips, AMD said.

Steal the Bacon

Delivering Trinity will also help AMD (AMD:US) prove to suppliers that it’s becoming more reliable. It won’t suffer from the supply shortages that held back sales of its predecessor, Read said. In addition, AMD’s pricing means that computer makers will be able to produce thin and light machines that are cheaper than the Ultrabooks being pushed by Intel, he said.

“I think we come in and steal the bacon around the whole thin-and-light movement and capture a significant portion of the opportunity there,” he said.

Read is trying to turn around a company that’s struggled against its larger rival ever since it was founded a year after Intel in 1969. AMD has reported five annual profits in the last 10 years, with losses dwarfing net (AMD:US) income over that period.

To change that, Read said he’s implementing a greater use of statistics and measurements in AMD operations and demanding employees take personal responsibility for mistakes. His strategy of differentiating AMD’s products from those made by Intel, which has more than 80 percent of the market for PC processors, will fully manifest in 2015, he said.

“It can be a very different AMD going forward, but we have a long way to go,” he said. “There’s been a passion for innovation but there needs to be a passion for delivery and a passion for the customers.”

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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