AMD shorted system builders

In fact, company president Maurice Hilarius is only just receiving some top-of-the-line CPUs ordered last August.
He isn’t the only AMD system builder having trouble. All of them are.

Earlier this month AMD chairman and CEO Hector Ruiz apologized to the channel for shortages, explaining the company has been favouring OEM manufacturers for months because demand from them unexpectedly soared.

“We let down our channel partners,” he told a Morgan Stanley tech conference. “We took our eye off the channel.”

That, combined with a price war with Intel, made him acknowledge that AMD won’t be able to meet its prediction of earning between US$1.6 billion and $1.7 billion this quarter.

He also said that CPU supply won’t match demand until the end of the second quarter – meaning June.

He dodged suggestions from a conference moderator that AMD will post losses in the first and second quarters. The company reported a net loss of US$574 million in the fourth quarter of last year.

He has some sympathy from Dean McCarron, principal at Mercury Research, a Scottsdale, Ariz.-based microprocessor analyst.

Eagerly wanted
Deals with OEMs are eagerly sought after because they are a stable source of revenue, he said, but they are contractual. AMD “got what they wished for,” in OEM deals, he said, but demand “came on much more stronger than anyone expected.”

Not having seen this kind of demand for its CPUs, it couldn’t forecast what it would take to keep up. For AMD, “it’s kind of a learning experience” that Intel went through years ago.

Still, he added, “they could have planned a little better.”

Hilarius is also forgiving, to a point, even though 90 per cent of Hard Core’s servers and workstations use AMD chips and he believes he’s lost some business – although he couldn’t say how much – from the chip shortages.

But AMD made sure chips he ordered – when they could be had – were sent directly to Hard Data from Singapore, bypassing Canadian distributors.

After all, he added, parts shortages, disruptions, model changes and the fluctuating Canadian dollar aren’t rare. So he’s not mad at AMD. “It’s business,” he said.

Meanwhile, Ruiz told the conference that the revenue shortfall is merely a “blip in this quarter.

“We don’t see it as a long-term blip . . . We’ll continue to grow our OEM business dramatically,” in the second quarter, he said. As for the rest of the year, “we’re very bullish.”

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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