AMD analyst day takeaways: Closing the INTC gap with 2011 product roadmap, GloFo execution

November 15, 2010 – Several analysts reporting from talks at AMD’s analyst day in Sunnyvale, CA, came away with the company’s for profitable growth and new products coming down the pipeline — and if its leading-edge manufacturing partners can execute, the company could offer a new challenge to longtime rival Intel.

The company has a clear focus on profitable growth, eyeing 10%-15% unit growth for MPUs and GPUs in 2011 and 44%-48% gross margins (up from 40%-45%) and a better product mix and lower opex of 35% (vs. 37%), notes John Pitzer from Credit Suisse. Moving to wafer-based pricing (from 2Q) and transitioning away from SOI on 28nm should help those margin targets, adds Doug Freedman of Gleacher & Co.

Pitzer is bullish on the company’s slated 1Q11 ramp of 40nm (via TSMC) single-chip processor + graphics "Brazos" platform for notebooks and netbooks, which he thinks could compete favorably with Intel’s 32nm Sandybridge and give "modest upside" to its notebook share. AMD’s 32nm "Llano" (made at GlobalFoundries) for midstream notebooks should start shipping in mid-2011 followed in 2012 by a 28nm version for netbooks/tablets. A 32nm "Bulldozer" chip (6-16 core variants) for servers is due in 2H11 (though a demo, according to Doug Freedman of Gleacher & Co., was "rather uninspiring"). Those offerings for notebooks/netbooks and servers "could result in AMD’s most competitive MPU line-up in 3+ years," Pitzer notes.

Execution in fleshing out that lineup is critical, though, the analysts agree, particularly with GlobalFoundries and 32nm-28mm manufacturing. Freedman notes AMD management "quickly dispelled" rumors of 32nm yields slipping again and they instead pointed to "a healthy current ramp (1H11 volume shipments) to support a 2011 product cycle" and the 28nm version ready to sample in late 2011 and ramp volume by year’s end. Nonetheless, he agrees that there needs to be visible "’meat-on-bones’ execution and volume silicon before putting all doubts to rest."

AMD seems to have plateaued at 18%-19% share in computing, by far its biggest revenue slice (73%), and being one generation behind Intel in process node (now 45nm) and a "weak roadmap to compete vs. Intel’s Atom into netbooks/tablets and Nehalem into servers" is unlikely to move the marketshare needle "until 2011 at the earliest," Pitzer suggests. Nevertheless, AMD does seem committed to closing that gap with Intel, notes FBR Research’s Craig Berger. "While AMD’s 32nm delays continue to disappoint investors, we do think AMD continues to make progress on closing the process node gap vs. Intel, and is improving its product offering with its Fusion products integrating better graphics functionality than what Intel will offer in Sandybridge," he writes.

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