Stability in the PC market has benefitted many chip and computer companies, but not Advanced Micro Devices.
The chip design company hopes to shore up its position in the PC market with its new chip called Carrizo, which will ship during the second quarter this year, AMD CEO Lisa Su said during an earnings call on Tuesday.
“Consumer and commercial design-win momentum for Carrizo continues to gain momentum because it will deliver the largest ever generational leap in performance-per-watt for our mainstream [processors],” said Lisa Su , CEO of Advanced Micro Devices, during a fourth-quarter earnings call on Tuesday.
AMD’s chips are mostly used in budget laptops and desktops, and the PC business remains the company’s largest source of revenue. But weak shipments of desktop and graphics processors hurt AMD’s earnings during the fourth quarter of 2014.
AMD reported revenue of $1.24 billion, down from $1.59 billion during the same quarter a year earlier. It posted a net loss of $364 million, compared with $403 million in the year-earlier quarter.
Revenue for the Computing and Graphics segment, which deals in laptop and desktop chips, was $662 million, declining from $888 million in the year-earlier quarter.
Carrizo, which is based on the Excavator CPU core, will probably do better than its predecessor chip, code-named Kaveri, which was released at the wrong time, said Dean McCarron , principal analyst at Mercury Research.
“The PC market was entering a decline phase, and they introduced products as that was happening. That’s less than ideal timing,” McCarron said.
Over the last few years, AMD has been changing its business model so its revenue mix relied less on mainstream laptop and desktop chips. It’s trying to generate more revenue from graphics and custom chips, with some success. Its specialized processors are used in Microsoft’s Xbox One and Sony’s PlayStation 4 gaming consoles.
But PCs remain an important market, and Carrizo is in a better position than previous chips to capture that market, Su said.
“Overall, it’s 300 million units. That’s a big market,” Su said. “We can improve our execution, and there is a lot of focus … to ensure our 2015 products are strong,” Su said.
Worldwide PC shipments are still declining but expected to stabilize over the next few years. But AMD has been losing x86 market share to Intel, which is trying to rejuvenate the PC market with new features such as 3D cameras and hybrid PC designs in which laptops double up as tablets.
AMD hopes to put more Carrizo chips in laptops through a new design approach in which it will supply just one motherboard design for PC makers to use in laptops of all sizes. AMD hopes the new approach will prove attractive to PC makers, who will be able to use a wide range of Carrizo chips while reducing the cost of designing a PC. AMD’s biggest customer is Hewlett-Packard, and others have been slowly dropping AMD from laptops.
PCs may be back in focus for AMD as the market stabilizes, but that won’t change the company’s plan to generate revenue from other markets, McCarron said. With PCs becoming cheaper and shipments not growing as fast as they used to, AMD will have to focus its limited resources on markets that are growing faster.
“You can see the same thing at Intel. We’re entering a stable replacement phase for PC,” Mercury Research’s McCarron said. “We have this constant market that is not high-growth, but it’s obviously significant with the unit volume behind it.”