AMD Sheds GlobalFoundries; Sets Q1 Revenue Record

AMD Sheds GlobalFoundries; Sets Q1 Revenue Record

Q1 was the first quarter AMD reported its results entirely separate from those of GlobalFoundries, and the company's numbers were quite good. Revenue for the quarter was a record-setting $1.57B, the company reported an operating income of $247 million, and an operating profit of $182 million. That's an excellent shift from a year ago, when the company lost $298 million on revenue of just $1.18 billion.

The company's gross margin of 47 percent (up two percent from Q4), thanks to a richer product mix. Revenue in both AMD's CPU and GPU businesses fell sequentially, in line with standard seasonal trends. AMD didn't break out its estimated market gains by segment, but believes it gained ground in server and mobile CPUs and in mobile GPUs as well. When asked about the TSMC situation and the current state of 40nm production, AMD declined to comment other than to confirm that yes, Radeon 5000 series GPUs are still production constrained. Although GPU revenue declined slightly from Q4, volume shipments grew, primarily thanks to a record number of discrete mobile chips.


This is AMD's Magny-Cours. The company says it's already seeing good uptake from its recent server launch.

Q1 2010 was one of AMD's best quarters ever, but the company will have to thread a very narrow needle to keep its nose pointed upwards. One of the things Sunnyvale's executives discussed on the conference call is that ASPs are expected to be flat; gross margin improvements, if they appear, will be the result of improved utilization or more profitable product mixes. That's a tacit admission that AMD's ASPs are effectively capped by Intel's ASPs at the moment, and while we don't expect any major upsets, Santa Clara is ultimately calling the shots.

Llano, AMD's first "Fusion" part, will begin production in the back half of 2010 and ship for revenue in Q1 (implying we could see a late Q4 launch), and AMD is moving Radeon production to GlobalFoundries beginning at the 28nm node. The company wasn't willing to commit to when that might happen specifically, but GF's own roadmap shows the company beginning 28nm production at the end of this year. Without commenting on specifics, the CPU manufacturer implied that Llano is looking good—functional samples of two different Fusion products are running in AMD's labs, with one chip already sampled to a few customers.


This is what you get if you Google Magny-Cours without the AMD part.

The one concern we have with AMD's results is whether or not the company can sustain its momentum. After covering AMD's performance for a decade, it's painfully clear that the CPU manufacturer has had trouble maintaining consistent gains in performance, market share, or revenue. There are a lot of theories as to why that's been the case, but there's no denying that AMD has consistently leaped ahead, only to slowly lose ground to Intel as time goes on.

Don't get us wrong, we're thrilled by the company's latest reports, and the CPU manufacturer has been on an upward trend since it launched Shanghai. At this point, however, AMD is effectively out of second chances. If it wants to continue to make back the ground its lost to Intel since the Core architecture debuted in 2006, Llano, Bulldozer, Bobcat, and Fusion all need to hit dead-on target. So far, things look good—here's hoping it stays that way.
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Great write up Joel !!!!! At the current moment you are correct AMD is capped at "ASP" Average Selling Price it can charge per CPU as Intel remains the power segment, AMD must settle for the value segment. This has worked well for them as they offered AM2 and AM3 upgrade path to retain their core base of customers while attracting new ones on the value side of things. Performance is not embarrassing compared to Intel but a loss is a loss and some people take this personal when factoring in their decision.

I believe with the separation of the fabs to Global Foundries this was key for AMD to survive. Also with the courts finding Intel guily of monopolistic practices whether or not that was true will open things up for AMD as it has now been brought into the spotlight and will be watched with a keen eye to make sure neither party engauges in this type of practice.

On the graphics front I think we are finally starting to see the accusation of ATI back in 2006 starting to bear fruit. The 4 series was very good to AMD but they really executed well with the 5 series as we all know they were first out the gate with DX 11 and a 6 month lead on the competition. As far as the TSMC issues this will be resolved when production moves over fully to Global Foundries as this was the plan all along. Basically AMD is just buying time until the fabs are fully capable of transitioning over. It bears repeating though AMD will really start to shine IMO when Bulldozer, Bobcat and Fusion roll off the wafer line. I think this is when AMD will gain massive market share on a level they have never experienced.

In conclusion AMD is set up nicely and I think they will be ok, getting rid of the fabs was the key, and the backing of Abu Dhabi who is committed to this working as they have a stake in this as well for their own future will assure success as long as AMD can continue to innovate and execute.

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Yes we will have to watch and see where this goes. I would say AMD is not out of the woods yet, but they can see the sunlight through the trees.

The thing that I think they need to work on is R&D as they are still behind Intel on the size factor. This is significant because it also effects every other area of there components Vs. Intel. Where AMD has matched or beaten Intel on the energy usage side of things, which also effect both the heat, and energy usage side of the platform.

If they can draw even to Intel on this build size while maintaining there current performance envelope or exceeding it they will gain more market share. I also see there current talks with Apple as an added improvement to a degree. Apple however holds a small share of the market on the computer side of things though. So I don't see this as a major factor.

While this will add to there revenue stream I do not see it as major at least yet. On the ATI Nvidia side of things though I see this as a different story all together. The release by Nvidia of there new GPU I don't see having any real impact though. Nvidia is more expensive on all fronts. There component costs more while offering a relative and specialized advantage as well as this advantage being on the smaller side of things.

ATI has gained a significant amount of market share, not to mention the relative price versus performance ratio still being rather small. So if AMD/ATI can maintain and enhance there R&D on both sides they will continue to climb back out of this hole. They seem to be on a good path for now, let us hope they can continue with it. Having a large alternative as the present is very good for the market, and keeps all other players in check, which in the end makes the whole market a better place for the consumer.

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Actually, I disagree. I think AMD's superior GPU segment brings in quite a big chunk of income.

Their biggest issue on the CPU side is matching Intel per-clock, as their premium 6-core part barely edges out the extreme Intel 4-core. Of course, it does so at less power, heat, and cost.

If they can continue to dominate the mainstream segment and bring high-end competition back, it'll be much brighter for hardware enthusiasts and AMD investors alike.

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Looking at the GPU side of things is a great way to sum it up. ATI beats Intel on that market from just a pure customer satisfaction to price ratio.

The problem when comparing AMD to Intel, it is like comparing two airplane manufacturers. Both may produce good products from time to time. But the one with the big government contract is going to do well financially.

With Intel having a good run on the companies like Dell and HP, it allows consumers to hit those Box stores and pick up more choices from the Intel side of things. Yes they offer both to the consumers but if you notice there is always more built system choices leaning towards Intel chips. Also the AMD ones tend to be a few years behind when it comes to what you can select even if you are an AMD supporter.

Only if AMD is able to garner a lot more from the contracts with these companies then they might start to see the numbers jump up competitively towards Intel. Yet without the box stores pushing both of them equally, I don't see how we can adequately compare the two. It is kinda like the photo in this article. When people search for a new computer they walk in and see all the shinny black dresses, and say to themselves I like the one second from the right, front row! They don't care what kind of CPU is in there :P

If they can give the same fervor as Intel does with the build companies, Basically just stay in step with Intel. Then as far as Price/performance reputation and reliability. They would do a whole lot better than the competition.

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@sp12 you are spot on brother, AMD said on the conference call that the GPU side was very beneficial to their bottom line. As there was no competition from Nvidia for months on end 6 months to be exact, this was the one bright spot where they could keep their "ASP" Average Selling Prices high. Also they mentioned the server market was good to them as well.

I agree if AMD continues to innovate and execute they will be ok. I cannot wait to see what happens when CPU/GPU are the norm. Intel will have to make a move it will be interesting to see how this plays out, with regard to Nvidia as well.

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AMD has so many things going for them right now. Not only have they established their first line if Phenom x6 CPU's, but they are currently dominating the GPU market with their astounding line of ATI 5000 series cards. I think what really hurt them last year was their weakness in Dual and Quad core processors. Given a small comparison, it was incredibly easy to see that Intel had better performing processors, and AMD was feeling the impact blows of that from their stocks. I remember from the econ project I did. 

On the terms of leaps and bounds though, it is true that AMD has come out with some extraordinary things within the past 10 years. But then it seems like they go into hiding, while Intel retakes the lead in innovation and engineering. I'd like to see AMD stay right up there with Intel and really give them some competition. That's probably the best way for us to see Intel ease back on their prices. 

I remember a few years ago when their ATI model graphics cards just came out. They were horrible. They were mainly used in workstations that never demanded anything more than documentations and maybe a few small end games. Now look at where they are. I think that AMD needs to stick with their ATI graphics card, because the more that they innovate off of that, the more that it will push Nvidia to come out with some quality products. 

I wasn't aware of Intel being accused of practicing monopolistic business practices though. I bet that shed some light on the situation as well.  

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i'll take the google Magny-Cours

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Yeah, me too!

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Pervs!!.....Giggidy!

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Alright, so, let's talk a bit about ATI. Yes, AMD is currently reaping the benefits of the R600 architecture's strong performance. There are, however, two critical factors that must be accounted for when weighing the acquisition:

#1. AMD borrowed over two billion dollars in cash to buy ATI and paid out $4.2 billion in cash + 57 million shares of AMD stock. In the 3.5 years since AMD and ATI completed the merger, AMD came dangerously close to the brink of ruin, partly because it had spent the majority of its cash on hand and acquired additional debt.

#2. By writing down ~50% of its acquired goodwill, AMD admitted it overvalued ATI by 50%. From an investor's perspective, that's akin to flushing two billion down the drain.

#3. Fusion products are *extremely* late. AMD's original timetable for Fusion introduction was 2007, then 2008, now 2011 (for revenue.) I'm not suggesting that AMD should've shipped a broken GPU fused to a broken Phenom--better to take awhile and get it right then ship it back then--but this is a product the company promised years ago. Read the presentations from back then, and AMD justified the entire purchase by appealing to the strength of future Fusion products.

Here's my greater point: It's tempting to say that yes, AMD has seen the light through the trees, or at the end of the tunnel, but I'm not talking about short-term gain. AMD has executed well for the past two years. That's a great thing. It's positive. It doesn't change the fact that AMD needs to execute just as well (or better) over the next 2-3 years if it wants to regain the market position it held in 2005.

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