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Chief executive officer of Advanced Micro Devices has ordered a research to review possibilities of splitting the company in two or spinning off a multimedia chip business unit, a media report claims. The company is mulling different options, as it desperately wants to become competitive against Intel. AMD itself denies that it is considering such a drastic move.
AMD is considering to separate its graphics and licensing business from its server business, according to a source with knowledge of the matter cited by Reuters news-agency. The details are scarce at this point and it is unclear how AMD intends to spin-off a division, which is a crucial element of its computing and semi-custom strategy.
AMD has hired a consulting firm to help it evaluate its options and prepare scenarios on how a break-up or spin-off would work. Nonetheless, at this point all discussions are preliminary and no decision has been made.
Advanced Micro Devices acquired ATI Technologies in 2006 in a bid to get graphics processing units and chipsets. GPUs have been considered as a crucial element of the future of computing because many of demanding workloads, especially in the HPC [high-performance computing] world, work better on highly-parallel graphics processors.
Since 2006, ATI has become an integral part of AMD and allowed the latter to sign multiple business deals with various companies as well as increase the amount of revenue streams. For example, AMD has become a supplier of system-on-chips for new-generation game consoles from Microsoft Corp. and Sony Corp. and this business is believed to be thriving. In addition, the company now sells all chipsets for its microprocessors itself and has even integrated core-logic into its mobile central processing units.
While fully-integrated AMD seems like a very potent corporation, the truth is that the finest moments of both AMD and ATI happened before the two companies became one. Since the acquisition of ATI in late 2006, AMD has been losing share in both microprocessor and graphics processor markets. In the recent years, sales of AMD’s CPUs took a dive and shipments of graphics processors collapsed in the recent quarters. In fact, AMD’s revenue for the first quarter of 2015 dropped to $1.03 billion, the worst quarter in more than a decade. Essentially, AMD and ATI now earn less than AMD alone in mid-2000s.
Disintegration of AMD, however, seems like a very tough and complex decision from administrative, technology, competition and many other points of view. The world has changed and it is impossible to bring back the old AMD and the old ATI. Nowadays microprocessors with integrated graphics have become industry-standard, whereas discrete graphics processing units for notebooks are considered as something exotic.
AMD ships multiple highly-integrated chips with Radeon graphics inside, including those for PlayStation 4 and Xbox One. If AMD spins-off its graphics business unit, it will have to license graphics cores from the new company, which is possible, but which will reduce AMD’s abilities to tailor such IP to its needs in the future.
For a number of years now AMD has tried to create a revenue- and profit-generating machine out of its EESC [enterprise, embedded, semi-custom] business unit while absorbing R&D [research and development] costs with its CG [computer and graphics] business unit. Spinning off AMD significantly changes AMD’s EESC strategy.
If AMD spins-off its graphics business unit, it will also essentially lose its semi-custom business because the latter requires a lot of various IP, including CPUs, GPUs, logic and other. While AMD may license intellectual property from other companies (e.g., ARM, Imagination Technologies, Vivante, etc.) to design chips for its partners, it will have fewer competitive advantages over rival chip designers. On the other hand, without its own graphics, AMD could license appropriate IP from Imagination in a bid to design ultra-low-power system-on-chips.
Since sales of AMD Radeon graphics processors have been declining for years and collapsed in the recent quarters, graphics business unit as a separate company will be extremely vulnerable because its financial strength will be incomparable to that of Nvidia Corp., the worlds’ largest supplier of GPUs. In a bid to fund its vast R&D operations, Nvidia sells a lot of high-margin solutions for professional graphics (Quadro) and supercomputers (Tesla) markets. In addition, the company is working with automotive industry to boost sales of its Tegra chips for cars. AMD's share in the market of professional graphics cards is not high and its accelerators for supercomputers are barely used. On the other hand, a company dedicated solely to GPUs will be tailored for particular market and will act quickly in a highly-competitive environment. One of the challengers that such company will face if it is created, is the amount of money necessary to design a competitive product lineup (hundreds of millions of dollars in the FinFET era).
AMD reportedly said that it did not explore any breakup or spin-off projects and reiterated the company’s commitment to its vision outlined at the financial analysts day in early May. AMD considered a breakup strategy in 2009 and decided against it. In 2012 the company evaluated a split once one more time, but concluded against it again. From time to time semiconductor companies do consider various strategic options, but not all of such potential plans materialize.
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KitGuru Says: Without any doubts, many enthusiasts miss ATI Technologies, competitive microprocessor from AMD and the fierce competition in the markets of CPUs and GPUs. While the competition may return if AMD manages to increase its research and development spending and bring back timely launches of new products, it is unlikely that AMD will split-up.
Called it. It’s clear AMD are too focused in corporate infighting and other matters rather than putting money into R&D.
$#)# I hope so, ever since AMD bought ATi, Complete Driver support fell of the face of the earth. Ether AMD puts for funding into Programmers (coders) for there drivers or sell off/ spin off AMD Video back to ATi and let them rebuild what they lost back in the HD 4xxx golden years
I think Catalyst has improved in recent years, but it does fall a little short of the competition at times. Maybe i just was unlucky in the past. Would be great to see ATI emerge from the ashes again.
I am not sure how to rate this news. The cut between EX-ATI and AMD as a company is maybe not a bad thing. We all hoped for ATI to rise again. On the other side this sounds fishy to some degree. To sell their graphics department would literally kill all the AMD products. To license the technology back could proof to be a double edged swort as written in the article. This risk is not to be ignored!
Besides this I fear that AMD will offload their immense debts off to outsourced ATI. This would not be fair and give the abysmal AMD mismanagement another bad mark.
and they wonder why AMD Refuse to send them a Fury X sample when they write speculative clickbait articles like this wonders never cease
This news is featured in several other tech sites. They name Reuters (U.S) as a source:
http://www.reuters.com/article/2015/06/19/us-amd-split-idUSKBN0OZ2KP20150619
You see it is not KitGuru’s fault for this “negative” AMD rumor, nor the first one to spread it. Important news for the interested tech people 😉
please don’t try the “but somebody else started it” argument maybe they should start acting like the “professionals” they claim they are and do research and testing and hell even get verification before posting speculative clickbait articles like this.
It’s like most TV news broadcasts the moment a journalist says “an inside source……….” its obvious they are talking out of their ass,are they that desperate for traffic and clicks they now resort to wild rumor mongering reporting on a article from another site based on a rumor of a rumor ?
You know that Reuters is one of the most important news services worldwide? They bring content to various TV stations in many countries. This is different from your usual FUD spread machine in the internet.
AMD could have even startet this rumor themselves because they secretly seek a potential buyer. Who knows? Don’t seek the negative everywhere if there is not always one.
It’s not the journalist’s job to divulge their source publicly, but only to verify their source internally to whatever degree their criteria mandates. This is why there’s a principle of ‘ethics’ in journalism, as there’s an element of trust needed between the journalist and the reader and why the reputation of the news agency itself actually matters. The reason a New York Times piece carries more weight than a National Inquirer story is not because the Times has better writers on staff, make fewer spelling mistakes, or have a page long list of citations and sources attached to every story. It’s because they have a history of high standards with which they are held to, and If they fail to meet those standards by making false reports or have improperly verified sources then they pay a price for it.
If you’re only wanting your business news to come from official PR channels after NDA’s have been lifted or from the quarterly conference calls, then all you’re really lobbying for is personal ignorance. Phrases like “speculative clickbait” in this context are little more than cliched rhetoric and using them does yourself a disservice by making you sound glib and uneducated.
If all you’re wanting to do is keep your head in the sand (as is your right) then you should stay away from news stories and stick to websites that only show bar graphs of 3Dmark scores and PR slides. For those of us that care about the long term outlook of this industry the reality is this: AMD is not doing so well as a company right now. Companies that aren’t doing so well tend to have negative new stories reported about them. If, in your opinion, reporting negative news stories warrants having press/promotional privileges revoked, then you need to stop and think real hard about the long term ramifications of that.
Isn’t this a nice thing? Free speech..
You made a video of something similar (free speech that is). About AMD not letting you go inside an NDA room.
You went on a ranting spree about how AMD denied you entrance into that room and how in the end (after all the uproar) they denied your Fury X test card saying that they don’t want to give test cards to negative websites. You went on a huge article about rebranding and tried to leverage people’s different opinions and now you do the same thing that you accused AMD of doing.
You deleted all posts who objected to your opinions and blocked people’s discus accounts so that they won’t be able to commend again.
It’s obvious that you are no different from the ones you accuse (AMD) acting like this. It’s a total pity because you act out of total anger and spite. I feel sorry for you and I regret for all the time I spent on your website reading about reviews and basically adding to your popularity by clicking on links and letting all the ads running.
It’s a total pity that despite you “calling” AMD biased, you are even more biased than they could ever be. And this is so provocative because it shows that you, “The Press”, become the “bully” when feeling threatened by people who object to your opinions and try to have a proper discussion using true examples and showing your own mistakes. And instead of embracing your mistakes so you become better, you try to “delete” the mistakes and keep living in your little world…….