AMD, after losing its sheen during the past few years, is now trying to hit back at competition by targeting emerging markets like India. But will that alone suffice for an ailing chipmaker? B&E chats up with AMD top managers in US and India. by Steven Philip Warner, Amir Moin & Hsotuhsa Alobrah
Semiconductor manufacturing firms depend on four types of market segments – government, telecommunication & electronics goods firms, retail buyers and PC manufacturers. For AMD, you could add a fifth one – non-metro India. It’s strange that a 40 year-old native of Sunnyvale, California, should suddenly dream big of the smaller towns in the country. One natural reason is that Intel has largely gained supremacy in the big saturated quality-conscious metros; the second: it has little choice!
Eight years back, AMD looked like the unknown gladiator, who’d become an Intel-killer very soon. It almost got there; only almost. From 17% in Q3, 2000, it’s global market share in the semiconductor industry had witnessed a dramatic rise to 27% by end of 2001. The battle started getting dirty, with both Intel and AMD willing to play it out on the price front. None wanted to give up the market share advantage, and when Q4, 2007 ended, AMD had grown its share marginally to 28.7%. Then began the great slip, with AMD beginning to lose its market share in developed nations to newer players, across categories like server and workstations. When Q4, 2009 ended, its pie had fallen to 12.1%, while that of Intel had risen to 80.1% (as per the 2010 iSupply report). AMD needed a cure. It decided to do what Intel’s Otellini did more than two years back – milk the Indian cows! Patrick Wang, Senior Vice-President, Equity Research (Semiconductors) of Wedbush Morgan Securities, while speaking to B&E from New York justifies the move for AMD as he says, “India represents one of the most significant growth opportunities for AMD. Its strategy of addressing high volume, mainstream segments for notebooks, desktops and servers also fits in well with developing communities.”
Numbers prove why AMD is being forced to believe in the power of the Indian gods. For the first time, after a dozen quarters, the company managed to deliver positive bottomlines, a figure of $1.45 billion during Q4, 2009. And if you thought this was recovery, then think again. It was during the very quarter that AMD won $1.25 billion in “damages”, the outcome of a suit filed against Intel, about half-a-decade back – a significant proportion of the Q4 ‘profit’.
The most recent development in this India-foray, was the March 31, 2010 launch of a new server platform by AMD (the Opteron 6000 Series) in New Delhi. The server features the world’s first 8 & 12 core x86 processor, for both the high volume and value server market in the Indian subcontinent. “AMD is redefining the server market, based on current customer requirement,” says Ravi Swaminathan, MD and Vice-President (Sales and Marketing), AMD India to B&E.
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