AMD to target tablets for its recovery

Advanced Micro Devices (Nasdaq: AMD) on Thursday said it wants to put its chips in tablets, relenting after months of denying any interest in that market.

Users will see AMD chips in tablets in a few years, said Dirk Meyer, AMD’s CEO, during a conference call on the company’s third-quarter financial results.

Tablets represent a disruptive force in the laptop industry, and AMD has the technology ingredients needed for them, Meyer said. Fast chips with strong graphics capabilities are a strength of the company, he said.

The tablet strategy is important for AMD in the long term, but for now, the company will wait and observe the market, Meyer said. AMD will intensify its involvement and invest significant research and development money when the market is suitable. Tablets are still evolving, and new form factors will come over time, Meyer said.

The company will reveal more details about its tablet strategy at its financial analyst day, which will be held at the company’s headquarters in Sunnyvale, Calif., on Nov. 9.

AMD’s interest in tablets comes as shipments of the devices explode. Intel CEO Paul Otellini said Tuesday that tablets were biting into PC shipments by a few million units per quarter. IDC and Gartner on Wednesday said that tablets were severely impacting netbooks, whose proportion of overall mobile computer shipments had diminished during the third quarter.

Tablets would optimally use chips that draw two to three watts of power, which is about half the power consumption of a fanless netbook, Meyer said. Device makers may take AMD’s netbook components and build them into tablets, he said.

The company plans to formally enter the netbook market with its low-power Ontario chip, which will start shipping in the fourth quarter. Netbooks and low-power laptops with the chip will start appearing early next year. Ontario combines a CPU and a graphics processor (GPU) on a single chip.

The company has said that Ontario’s CPU core, code-named Bobcat, will be able to draw less than 1 watt of power. The power budget of the integrated GPU core has yet to be revealed, though GPUs tend to draw more power than CPUs.

For now, the company will focus on establishing itself in the netbook market, which will continue to grow in terms of shipments despite the onslaught of tablets, Meyer said. Intel’s Atom chips are the most frequently used in netbooks today.

AMD also has room to grow in the PC space, and most research and development money will be sent in that direction, Meyer said. Intel held an 80.7 per cent market share in PC microprocessor shipments during the second quarter, while AMD held a 19 per cent market share, according to an IDC study released in August.

AMD on Thursday posted a net loss for the third quarter, but reported a boost in microprocessor and graphics products sales as it inches its way back to profitability.

The company reported a net loss of US$118 million for the quarter ending Sept. 25, an improvement from the net loss of $128 million it reported in the third quarter last year.

As part of the results, AMD reported a $186 million equity loss related to its manufacturing spinoff, GlobalFoundries. Excluding that loss and other items, AMD would have reported a profit of $108 million.

The company reported revenue of $1.62 billion, which grew from $1.4 billion in the year-ago quarter. Analysts polled by Thomson Reuters expected revenue for the quarter to be $1.61 billion.

Revenue for the Computing Solutions segment, which includes revenue from microprocessor sales, was $1.23 billion, growing 13 percent compared to the year-ago quarter. Revenue for the graphics segment was $390 million, growing by 33 per cent.

Ahead of the earnings, AMD lowered its revenue forecast for the third quarter, citing weak demand for laptops in western Europe and North America.

Despite weakness in the consumer segment, the company continues to focus on new products, said Dirk Meyer, AMD’s president and CEO, in a statement.

The company hopes to receive a boost later this quarter when it starts shipping its much-delayed Fusion family of chips, which could appear in PCs starting early next year. The chip integrates a graphics processor inside the CPU, which could save battery life on laptops and provide better graphics capabilities.

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Jim Love, Chief Content Officer, IT World Canada

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