Earlier this week, AMD's Chief Financial Officer, Devinder Kumar, gave a presentation at Bank of America Merrill Lynch's Global Technology Conference. He covered several aspects of AMD's several year turnaround, its focus on new product strategies, and the company's long-term goal to earn 50% of its revenue from the non-PC market by 2015. Obviously winning all three consoles was a major coup for AMD's business and underwrites a substantial section of its long-term revenue plan, but Kumar's answer when asked what AMD expects from the console market long term is rather interesting:
Q: How do you see AMD’s view of the game console market? Are we headed to like one big year and then it sort of slows down? Is this the peak year, next year is a peak year? How do you manage that business knowing that it is such a consumer oriented?
Yes, consumer but it is changing in terms of current game console products are doing very different things than what the prior generation did; that’s one thing...And by the way, based on what we see in particular with some developments that you probably read about related to the Chinese market in particular, we think 2015 is better than 2014.
But the life cycle of the products are probably going to be shorter. Our customers are already thinking about what comes next. These are long life cycle products and as you know in the semi-custom space, you start with -- three years before you introduce a product, a decision is made to use a particular company. In this case it was AMD. And then you go ahead and co-develop the product with the funding dollars frankly, mostly coming from our customers.
Kumar also hinted that a major new announcement about 1-2 new semi-custom partners would come later this year, saying, "I can tell you that, very real highly confident with one to two design wins this year." He was unwilling to give any further information on what business segments the customers worked in or what the projects might be -- AMD
might have secured anything from a handheld console win to a new custom server chip -- or possibly something in the industrial / embedded market.
The idea that the Xbox One
and PlayStation 4
might have a shorter life cycle than their predecessors is interesting, but raises questions we can't answer at the moment. If anything, it suggests that Sony
, and possibly Nintendo
are keeping their options open as the nature of gaming changes and digital distribution increasingly becomes the norm. If cloud gaming takes off, it's possible that the console manufacturers might shift to different hardware models that emphasized fast network performance but ultimately served as gateways for cloud services rather than local rendering platforms.
Earlier in the talk, Kumar claimed that the opportunities AMD had identified for new semi-custom business were $200M-$500M opportunities, which could greatly buoy the company's revenue.
Is AMD Going To Outsource Chipset Development?
One rumor making the rounds is that AMD is preparing to outsource its chipset development to Asmedia. Asmedia is a subsidiary of Asustek, which is one reason why you frequently see ASM chips on Asus boards. This rumor would actually jive with a rumor we heard quite some time ago -- specifically, that AMD's last round of cuts in October of 2012 had hit the Markham chipset division particularly hard. It's been years since the company made any major changes to its chipset support -- but then, it's not as if Intel chipsets have been adding features like crazy, either. Save for the additional of SATA 6G and USB 3.0 support, most chipsets have been fairly low key.
This rumor comes on the heels of a report that AMD might partner with Asmedia on SATA Express support in future products, so it's possible that the two deals have been conflated. Even if they haven't been, the truth is, the external chipset isn't what it used to be. With more and more functionality moving on-die with every passing generation, it's possible that AMD has simply farmed out a few external interfaces and additional I/O capabilities.
Our Z77 review from several years ago
found that performance between Intel and Asmedia solutions was largely equal, though that's not always the case. Then again, AMD chipsets have lagged behind Intel for several years -- working with a third party might be one way to improve the company's average performance.