AMD's Insurrection

Amidst the news of death and disaster in the Notebook and PC market, AMD foresees a huge opportunity in infusing advanced graphics processing and power efficiencies into the mid range notebook market, at economic price points. In fact Dell has begun to offer AMD’s Carrizo (or A series) based laptops, PCs and desktop modules this year, post an extended hiatus with the company. This was announced during Computex 2015.

Is this market dying or poised for reinvention? The latter is probably true with significant potential for growth via economic but value added products. With the launch of Carrizo, AMD is essentially attempting to capture the value spectrum that lies between high cost-high performance PCs and low end Tablets. 52% of the consumer computing space is occupied by Notebooks and Laptops, with the biggest section of this market at the $400 - $700 price point. This is the price point most people buying laptops are willing to spend.

AMD’s Carrizo is said to offer twice the gaming performance as Intel’s i7 with advanced compression and 4K support (because of High Efficiency Video Coding or HEVC). The processors will carry 4 CPU and 8 GPU cores as well. While Intel continues to see a declining market share in this space, primarily due to its pricing and its shift towards Cloud and Data Centers, AMD may be positioned to capture a bigger piece of this market with its sixth generation A-series offering.

AMD has been in hibernation with few product launches and therefore the launch of Carrizo, along with the anticipated launch of the Fiji GPUs should lift the prospects of this semiconductor leader – Samsung potentially acquiring it or not. 

Chips on the Cloud

Semiconductor majors have never before been as quickly commoditized as what has happened in the cloud arena. Though the market space is massive - for instance, NVIDIA wants to clock $1 billion in revenue (in the next two years) from cloud alone, the positioning from most semi majors is not very clear. Why would you pick one from the other, except for pricing?

Consolidation in this sector underscores this aspect. The $37 billion acquisition of Broadcom by Avago and the ~$15 billion courting of Altera by Intel, enunciates the power of scale in commodity play. Contrast this with what happened in the Communication, PC or Wireless markets, where the focus of acquisitions was IP based differentiation such as computing to power ratios, or protocol specific applications. Avago CEO Hock Tan has actually stated that Avago and Broadcom may not have the best strategic fit but have cost-cutting potential to build value.

At this point it’s probably fair to speculate that real differentiation will be at the software or SDK level with very little at the core processor level itself, except for custom chip development that Intel, for instance, is driving with its eASIC partnership. Focus therefore for all the semi majors seems to be to improve their profit margins through operational efficiencies.

This still leaves one question open – where will the next big innovation drive in the semi industry come from?