By: Zachary Xue
With past setbacks and rumors of bankruptcy at their feet, semiconductor corporation Advanced Micro Devices (AMD) is here to stay under new management from CEO Lisa Su and her vision of the consumer electronics industry.
In 2012, semiconductor corporation Advanced Micro Devices (AMD) was at a crossroads between bankruptcy and stagnation. At the turn of the century, AMD was one of the world’s leading developers in computer processors for both the consumer and business markets. They produced central processing units (CPU), graphics cards, motherboards, and a variety of other components for consumer electronics, even surpassing Intel in processor speed and efficiency. This lead wouldn’t last long. The company was focused on the unimportant markets, such as the tablet and smartphone markets, while remaining overly dependent on the personal computing market as their main source of revenue. Persistent roadmap and strategy changes were plaguing AMD with an unfettered sense of disorganization and miscommunication; they were nearly $2.5B in debt and revenue had been negative since 2007. Furthermore, AMD’s management has been haphazard at best for a while. According to The Verge, “CEO Hector Ruiz stepped down in July 2008 in the middle of a series of layoffs, and was later implicated in an insider trading scandal that caused him to step down from AMD spin-off Globalfoundries in late 2009” (Hollister 4). Following this predicament, the company experienced a period of rapid leadership turnover. This included the firing of CEO Dirk Meyer, who was credited with jumpstarting AMD’s profitability a few years before. These conflicts brought AMD vulnerability and staggered confidence within the industry.
With the arrival of new CEO Lisa Su in October 2014, some much-needed transparency was brought back to the company. Su focused on revitalizing the company’s culture by forming the Radeon Technologies Group (RTG), which provided a more vertical focus on their graphics and immersive computing divisions, allowing for specialization and minimization of downtime within the company. She identified a streamlined roadmap and product cycle–new graphics processors every year and new computer processors every 1.5 years. AMD’s new business model determined a new procedure/business strategy of trading with “stickier”, high-growth, price-inelastic markets, such as the cloud computing and gaming console markets. In addition, streamlined R&D initiatives and Intellectual Property (IP) monetization strategies were established to increase market opportunity. A prime example of this continued evolution is present in AMD’s collaboration with Microsoft and Sony as the official silicon partner for their respective gaming consoles. This partnership was possible as a direct result of Su’s focus on RTG.
As a result of Su’s performance as CEO in the two years following her appointment in 2013, AMD experienced their third subsequent revenue increase in desktop unit share for Q3 2015, more than doubling their stock price since 2013. In the following years, AMD launched a new enterprise, server level chipset known as EPYC, and coupled with deals involving companies such as Cisco and HP, AMD saw a nearly 50% increase in processor volume in Q2 2018. In late 2018, AMD’s market share for desktop CPUs was sitting comfortably at 17.1%. Compared to 2017, AMD realized a 4.8% gain in desktop unit share. Q1 2019 saw AMD release their highly-anticipated 7 nanometer manufacturing process-based “Zen 2” microarchitecture chips for the Ryzen 3000 series. Following the wildly successful launch, AMD unit share jumped to 31.9%.
However, despite all the gains made by AMD in recent years, the company is still in the process of ramping up production and spending. Intel’s massive, multi-billion dollar market development fund (MDF) is a lucrative incentive towards attracting investors and partners. Without a substantial MDF like Intel’s, AMD needs to further expand R&D and market spending, as well as increase mindshare over Intel. Arguably more important than market share, AMD will never reach into the heart’s of consumers and the general public without a more prominent image as a reputable and formidable opponent to Intel. Although Intel has been unable to innovate past a 10 nanometer manufacturing process onto a smaller node (i.e. 7nm) for years and has faced multiple issues with their Core i9 processors overheating and damaging Apple’s Macbook Pros, they are still known as the go-to semiconductor manufacturer for the world’s computing needs. AMD’s R&D division might be skyrocketing in terms of innovation and performance, but their marketing team needs to undergo drastic changes in order to allow their image to sink into the minds of consumers.
Moorhead, P. (2016, November 1). AMD CEO Lisa Su And The Art Of A Turnaround. Forbes. Retrieved from https://www.forbes.com/sites/patrickmoorhead/2016/11/01/amd-ceo-lisa-su-and-the-art-of-a-turnaround/#539053f549fc
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Duggan, W. (2017 August 16). For AMD Ryzen Chips, Will Gains in Mindshare Lead to Marketshare? Benzinga. Retrieved from https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9939019/for-amd-ryzen-chips-will-gains-in-mindshare-lead-to-mark
Alcorn, P. (2019 August 14). AMD Q2 2019 Market Share: The Calm Before the 7nm Storm. Tom’s Hardware. Retrieved from https://www.tomshardware.com/news/amd-desktop-pc-mobile-server-overall-market-share,40141.html
Hollister, S. (2012 November 15). What Happened to AMD? The Verge. Retrieved from https://www.theverge.com/2012/11/15/3646698/what-happened-to-amd