AMD: Manufacturing alone not critical to product success

Posted by Wolfgang Gruener

Sunnyvale (CA) – Investors and shareholders questioned the competitiveness of AMD’s current semiconductor manufacturing technology as well as the firm’s information policy about upcoming products during a shareholder meeting yesterday.

The critical questions did not come entirely as a surprise, as shareholders have to sit out a stock value that has declined almost two thirds over the past year and the fact that the firms past two quarters brought more than $1.1 billion in losses.

In response to questions from the audience that Intel will be moving to 45 nm processors much quicker than AMD and therefore may be able to produce these CPUs much cheaper than AMD, the company’s CEO, Hector Ruiz, said he does not believe that a product’s success entirely relies on the process technology behind it. While he conceded that AMD is “two to three quarters behind,” he said that innovation and product design would allow the firm to make up for this disadvantage. “Opteron showed that four years ago and and Barcelona will demonstrate that again,” Ruiz said.

Ruiz noted that the company has been trying to keep the distance to new Intel technologies at “not more than two quarters” and will try to begin closing the gap with the introduction of 45 nm processors “and a little more [with every following technology.]”

Investors also voiced concerns about AMD’s strategy to remain relatively quiet before what the firm called an upcoming “tsunami of new products,” while Intel is heavily promoting the capabilities of its future products. AMD president Dirk Meyer and executive vice president Henri Richard explained the firm’s current strategy with the fact that the firm has become “more cautious” with the details it reveals to the public, as Intel “has begun following” AMD. “There are competitive reasons why we have become more quiet,” Meyer said.

However, Richard added that AMD intends to do “a better job at being more vocal in the near future.”

Ruiz did not reveal any new product information during his speech to investors and shareholders, but it once again became clear that all of the firm’s hopes for the near futures are placed on the Barcelona quad-core processor. “I have every confidence that AMD will be far and away the quad-core industry leader with this processor,” he said. “We will reaffirm that [the Opteron processor] indeed is the world’s best processor.”