AMD Q3 Report

[BadTrip]

http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid=355504

 

[earl45]

When is fab light going to start looking good for AMD.
we were all told how great this was for AMD to become
fabless with a 30% stake in GF it's not looking like AMD
can make a profit, maybe AMD should sell the remaining
30%.

 

[jimmysmitty]

^AMD will sell of the remaining 30% to ATIC from what I hear over time. In the end, AMD will be fabless much like nVidia and ATI.

But from the report, AMD had a net loss of $118 million while Intel posts 11.1 Billion.

Not sure AMD can survive a price war and its a good thing that Intel doesn't seem to be pushing towards one because if they did, AMD would hurt badly.

 

[fazers_on_stun]

What I found interesting is the below info from AMD's earnings conference (obtained from some guy over on AMDZone ):

Patrick Wang - Wedbush Securities
My first question is just on the 32 nanometer Fusion parts that are coming out here. You talked about some challenges when you updated your product launch schedule last quarter. Just curious how pleased you've been with the yields. How has hit ramped just over the last couple of months here?

Dirk Meyer
The high order answer is that we can't say we're pleased in the sense that we announced last quarter that the yields were not at the level of maturity that we had planned. And for that reason, as well as for a few others we mentioned, we moved the ramp back into next year. If your question is what kind of progress we're making, I'll say that over the last 90 days the GLOBALFOUNDRIES team has made progress, are building momentum, and we need to see that progress continue into next year, and we expect them to do so.

David Wong - Wells Fargo
With your current schedules will Llano appear in systems and ramp before the Bulldozer desktop and server ships, or after the Bulldozer desktop and server ships?

Dirk Meyer
Before.

So if Llano is now Q3 of next year as according to some reports, then Bulldozer is also Q3 or later. And since server is supposed to be before desktop, I'm thinking Fudzilla's Q4 prediction may be true.

I hope JF-AMD can shed more light on this..

 

[Wisecracker]

Fab Lite has led to a significant swing in free cash flow at AMD ...

Not to the level of IBM or Intel, but more than 2x that of nVidia.

Digging Into the Cash Flow at Advanced Micro Devices from The Fool

 

[earl45]

Fab Lite has led to a significant swing in free cash flow at AMD ...

http://g.fool.com/img/editorial/templates/AMD_CFChart_2010-10.png

Not to the level of IBM or Intel, but more than 2x that of nVidia.

Digging Into the Cash Flow at Advanced Micro Devices from The Fool

Still not profitable is my point, no fabs and still can't make a profit, what else can they do to make money.

 

[earl45]

bottom line AMD states they aren't going anywhere and have plan(s) already in motion for the future and competing with Intel.
so if there going to be around and going to try, I'm willing to see what happens..

Well you can't keep losing money and expect to stay in business no matter what AMD say.

 

[Frizzo]

the government isnt going to let AMD go down.

 

[fazers_on_stun]

Still not profitable is my point, no fabs and still can't make a profit, what else can they do to make money.

From what I read, it's the ~30% share AMD still owns in GF that cost them $$. If they had completely divested themselves then they would have made a profit.

Also read that AMD reamortized some $800M of senior notes due in 2015 at 6% interest, to $500M of 7.75% interest senior notes due in 2020. Seems to me that perhaps they are sweetening the pot a bit for a potential buyout by pushing debt out even further, plus they did not outright deny that AMD is not for sale, given a proper offer.

 

[fazers_on_stun]

the government isnt going to let AMD go down.

I'd believe that Intel wouldn't let AMD go down (and be an outright 100% monopoly instead of just 80%), but the voters are a bit fed up with gov't bailouts right about now ..

 

[earl45]

From what I read, it's the ~30% share AMD still owns in GF that cost them $$. If they had completely divested themselves then they would have made a profit.

Also read that AMD reamortized some $800M of senior notes due in 2015 at 6% interest, to $500M of 7.75% interest senior notes due in 2020. Seems to me that perhaps they are sweetening the pot a bit for a potential buyout by pushing debt out even further, plus they did not outright deny that AMD is not for sale, given a proper offer.

Well we don't no what would have happen if they sold the fabs outright.
AMD keep blaming their losses on GF don't mean that's actualy where the
losses are come from.

 

[fazers_on_stun]

Well at the time, the x86 license from Intel specified that AMD and ATIC would have to each have a 50% control over GF and AMD to have at least a 30% ownership share, IIRC. So that was the best AMD could do at the time. I'm sure they would have preferred to just sell the fabs outright and be done with it, rather than drag it out for years. I believe the renegotiated license lets AMD divest themselves completely from GF.

I read somewhere that no semi company that spun off its fabs ever became a success - if AMD succeeds then they would be the first.

I also think that the divestiture will mean GF and AMD have started to see their company goals diverge, since GF appears to be going after ARM and other non-SOI customers and AMD is their only SOI customer, plus the fact that the 32nm node is costing billions. Given the problems with Llano causing it to get pushed back (Q3 now apparently), my feeling is that perhaps GF is devoting more time and resources to landing those bulk Si customers who appear to be stronger financially.

For a while last year, I sorta thought the FTC's anti-trust litigation against Intel, if successful, would make them split up like the FTC did to AT&T some 25 years ago. Including maybe making Intel spin off their fabs. In which case we might have seen AMD turn to Intel's fabs to make their 32nm CPUs..

 

[JAYDEEJOHN]

Imagine what would it have been with 100% ownership, having to pay for the R&D for the newer nodes, plus HKMG
These expenitures will show a profit later, to me its more an investment, like any good R&D, providing its a winner

 

[ares1214]

AMD has been making money all year. Between interest, producing and not selling 6xxx, and probably a lot of R&D, id expect a loss this quarter. However, this year has been a very good year, and if Bulldozer and 6xxx/7xxx do well, so should 2011-2012. I doubt they will gain much on Intel, and they already have the lead over Nvidia, but this could get them out of any debt, and really help set them up for a better future. Most games are apparently being designed with Radeon in mind for 2011-2012, so that could be a nice advantage for ATi division. Once they get out of the hole they made for themselves, they will be better off and they actually have made a decent chunk of change this year...until another "Phenom" disaster comes :lol:

 

[JAYDEEJOHN]

The investments into ATI and their fabs havnt seen full potential as yet
Now, to argue will these be enough, or focused properly, or in the right direction, is an all together differing POV
Til these things happen, itll be a smaller recoup on R&D evpenditures.

I also agree, Intels been generous, not really entering into a price war, tho Intels setup with their investors may not be too compelling for this strategy
Whatll be interesting in the future, like what was seen in the settlement, is if AMD does garner more marketshare, Intel declared the gloves will be off, and thats when we, the consumer will see some very nice pricing, if this ever occurs of course

 

[ares1214]

The investments into ATI and their fabs havnt seen full potential as yet
Now, to argue will these be enough, or focused properly, or in the right direction, is an all together differing POV
Til these things happen, itll be a smaller recoup on R&D evpenditures.

I also agree, Intels been generous, not really entering into a price war, tho Intels setup with their investors may not be too compelling for this strategy
Whatll be interesting in the future, like what was seen in the settlement, is if AMD does garner more marketshare, Intel declared the gloves will be off, and thats when we, the consumer will see some very nice pricing, if this ever occurs of course

I agree, right now Intel is the big kid holding the little kid back with their hand on their head. If AMD ever got big enough to challenge the big kid, things could really get interesting.

 

[JAYDEEJOHN]

Dont have it on hand, but I remember in the settlement, a certain marketshare change changes many things, which I read as the consumer wins

 

[BadTrip]

The investments into ATI and their fabs havnt seen full potential as yet
Now, to argue will these be enough, or focused properly, or in the right direction, is an all together differing POV
Til these things happen, itll be a smaller recoup on R&D evpenditures.

I agree. The fabs will pay off oneday.

 

[JAYDEEJOHN]

If we look at the shrinking competition, and moves towards groups pushing forwards, since fabs exist only to make a good/better product, my thoughts are theres a certain potential profit margin allowed in all this, as its a certain expenditure of the overall product(s), and has to gaurantee a certain stability in the overall costs structure.
Will these profits be huge as pertains to the fabs?
My opinion is no, but adding ATI , thats a whole differing thing, but again, nothing so far but scraps, with lower profit margins, tho even just confined to discrete offerings, shows some decent returns possibly in the near term, other than the IP paid

 

[ares1214]

Rumors are once again circulating on the possibility of another CPU maker joining the ranks of Intel and AMD. This possible new maker isn’t new to the computing scene but is better known for its high end graphics cards. NVidia is rumored to be hiring engineers to work on a new x86 CPU platform. The claims so far are that NVidia is not trying to compete with the top end Intel chips but to open in the lower to mid range market.

It will be interesting to see the outcome of this rumor and what it brings for the future. NVidia along with ATi have long been known for their graphics abilities in the gamers market so I’d expect a good quality product if they do enter the x86 market. We’ll just have to wait and see what they do next.

Nvidia has the tegra line, but thats always been more of a Ultra mobile smartphone thing, and never very sucessful at that. Id like to see the 3 duke it out on a full scale. Each in CPU, and each in GPU. Now THAT would be interesting! :lol:

 

[ares1214]

Intel could really do some damage in GPU market eventually, and Nvidia could really use a CPU division. As much as they dont like each other, a merger would be economical in the event AMD, or more specifically ATi gets stronger. Nvidias massive die thing isnt working. As MP gets smaller, it will be more prone to problems, problems that have and will screw up Nvidia entire lineup. Where as Nvidia is going for another G80 grandslam every time, AMD's small die is more profitable (not necessarily, but in a sense, it is) and easier to mantain. However, If Nvidia really wants to keep going big die, Intel could really help them out with that, and Intel could manipulate Nvidia to keep ATi in check if it grows to become a 800 pound, which it very well might if Nvidia has more fermi's and ATi has more of these successes.

 

[earl45]

Maybe I didn't form my questions the right way.

1. How can GF be such a threat to anyone with all the business and company's
it buying but not equate to a profit for AMD which own 30%.

2. If fabless is the way to go what AMD's problem, Intel has many fabs and making record profits.

 

[JAYDEEJOHN]

For AMD, in the scenario they found themselves in, fabless light was the way to go
The investments of keeping a full cutting edge fab costs monies, which hasnr seen the light of day as yet, so in essence, once these improvements do (32nm/28nm/HKMG etc) then profits will arrise, such as more di per wafer, more competitive product in power/perf, thus higher values of components etc.
Thats answering both if I got it right

 

[earl45]

For AMD, in the scenario they found themselves in, fabless light was the way to go
The investments of keeping a full cutting edge fab costs monies, which hasnr seen the light of day as yet, so in essence, once these improvements do (32nm/28nm/HKMG etc) then profits will arrise, such as more di per wafer, more competitive product in power/perf, thus higher values of components etc.
Thats answering both if I got it right

Well from past statements you insinuated AMD was doing the right thing and Intel may find it self
in trouble for having all the fabs it owns, as of today that's just not true AMD is still having money
problems and Intel is making billions.

 

[ares1214]

Excellent debate very informative.Keep up the good work guys.But one question~ why would intel ever sell x86 license to nvidia?

Well, they have before to others, so its not impossible. Makes a merger seem even more lucrative :lol: