AMD Quarterly Report Discussion Thread

[mrmt]

Yet billions in direct and indirect losses each year for Atom. Why "bother with the hassle" then? Just give up and concentrate on other areas(yes,you might sense the sarcasm in my posts now).

Let me spell something for you: Any chip maker who doesn't have a presence on the mobile market by the end of the decade will be confined to small niches and will be largely irrelevant from the consumer POV. This is why Intel is spending billions on the mobile market, and will spend a lot more if needed. They have no other choice, period.

Consoles OTOH won't help anything to stop AMD's run towards irrelevance, just its run for the bankruptcy court.

 

[positivedoppler]

Well no since it is not free.

But i thought dumping is when you sale stuff for less than it cost to produce. I'm sure it cost Intel more than $5 to produce the chip.

 

[USER8000]

But it also means certain R and D can be covered by paying customers too. Considering how long the consoles were in development it is interesting to see how much of GCN and Jaguar/Puma core development was subsidised by Sony and Microsoft indirectly. For example the PS4 GPU is not GCN MK1 for example.




Yet billions in direct and indirect losses each year for Atom. Why "bother with the hassle" then? Just give up and concentrate on other areas(yes,you might sense the sarcasm in my posts now).

It makes me wonder even if they did manage to turn some sort of profit next year for the Atom segment of the company,how long it would take for them to make enough money to cover the losses they have made for years with Atom in the first place. Atom has been out for 6 and a half years - how much money has Intel actually made on it?

Its always next year. You might as well be Waiting for Godet.Its a good thing Intel has some,entrenched markets were they can make decent money in. AMD,is well the small fry in comparison,so they need to find what areas they can find a niche in,so it might not be such great news for enthusiasts on forums TBH.

The worse thing is if Intel has spent the kind of money on ARM core development,that they have on Atom in the last six and a half years, they would be ahead of everyone else in the segment,and things like the iPhone and iPad would have been Intel powered,and they probably would have not need all this subsidisation in the first place.

Let me spell something for you: Any chip maker who doesn't have a presence on the mobile market by the end of the decade will be confined to small niches and will be largely irrelevant from the consumer POV. This is why Intel is spending billions on the mobile market, and will spend a lot more if needed. They have no other choice, period.

Consoles OTOH won't help anything to stop AMD's run towards irrelevance, just its run for the bankruptcy court.

Like I said AMD is small fry,and always has been,so they will have to find some niche to survive even if they shrink massively in size. People as long ago as 1989 were saying AMD is doomed,they are still here. Even VIA is still here,even if means they only have tiny market penetration. Even ARM was said to be doomed,and they are still around. Even Intel would still exist based on other markets alone if not in a smaller form. So all this bankruptcy stuff,is just too much wishful thinking TBH. OTH,whether they would be relevant to the average consumer is another question.

The thing is Intel is loosing massive amounts of money in the segment due to an obsession with X86,and its been six and a half years of Atom not making much if any money at all.

Intel is riding on the fact that their process node advantage will give them a fighting chance,but at some point their competitors will start to narrow the gap.

How many years are they expecting the rest of their segments to keep subsidising Atom?? At what point will their Atom segment actually make a net profit overall??

What if companies like Qualcomm start subsidising their chips too,and they have nearly $40 billion currently,or Apple actually starts to integrate more powerful ARM cores slowly into more powerful consumer devices?? Currently the ARM based cores are either optimised more towards low cost or low power but this could change over time.

The latter might sound far fetched,but most computer users out there are not really that bothered by legacy software compatability,hence the reason why even £300 to £400 tablets like the iPad have sold well.

 

[USER8000]

Another problem is Atom itself.

As the ARM based chips get more and more powerful so will Atom.

At some point it will be powerful enough to negate the need for many people to get more expensive chips,especially if Intel is keeping the price down.

This will have an effect on more upper tiers of their consumer segment too,especially as OEMs would rather use lower cost Atom than say a Core i3 or Core i5.

So if Intel is not making decent profit margins on Atom by then,it sort of eating share from more profitable chips too,especially if OEMs expect very cheap Atom chips each year.

I would say a lot of people buying those Core i3 and Core i5 based laptops and desktops are not gamers,or professionals but people doing more basic tasks like internet browsing,image editing and office tasks.

But i thought dumping is when you sale stuff for less than it cost to produce. I'm sure it cost Intel more than $5 to produce the chip.

You could have a point there,looking at some of the trade wars over things.

I am sure there is some legal loopholes,which make it acceptable for some reason(otherwise the US and EU governments would probably be all over it by now).

 

[mrmt]

How many years are they expecting the rest of their segments to keep subsidising Atom?? At what point will their Atom segment actually make a net profit overall??

Two years. That's what they have been telling investors and that's what the financial community is expecting now. If they don't sort Atom problems in two years, they have to change their business model.

 

[mrmt]

Another problem is Atom itself.

As the ARM based chips get more and more powerful so will Atom.

What if Intel plans to move Core on phones on 7nm?

 

[USER8000]

Two years. That's what they have been telling investors and that's what the financial community is expecting now. If they don't sort Atom problems in two years, they have to change their business model.

Thanks,hopefully they can make it work then.

What if Intel plans to move Core on phones on 7nm?

A possibility,but the thing is even over here in the UK we are starting to see Atom laptops displace lower end Core based laptops in many retailers. A lot of OEMs,would rather cut costs as much as possible since to increase profits and if Atom delivers "good enough" performance and low power draw,I can really see the Core i3/Core i5 market suffering(well at least the dual core versions) with future Atom versions.

It does make me wonder whether instead of three product lines(Atom,consumer socket Core and the server Core lineups),we will eventually see Atom derivatives for the consumer market and Core relegated to only the high performance workstation and server markets. The consumer market does appear to be far more cost sensitive,so a smaller chip does seem to make more sense here.

 

[NTMBK]

Let me spell something for you: Any chip maker who doesn't have a presence on the mobile market by the end of the decade will be confined to small niches and will be largely irrelevant from the consumer POV. This is why Intel is spending billions on the mobile market, and will spend a lot more if needed. They have no other choice, period.

They have one obvious choice- spin off the chip design business and become a fully fledged foundry.

 

[mrmt]

They have one obvious choice- spin off the chip design business and become a fully fledged foundry.

Yes, that's an option. Not necessarily the option they should pursue now.

 

[Phynaz]

And I apologize for not having a better understanding in Law, but when Intel sales BT for $5 a pop, isn't that dumping?

If they were selling it for $5 it would be dumping. But they aren't selling it for $5, therefore not dumping.

 

[Phynaz]

Another problem is Atom itself.

As the ARM based chips get more and more powerful so will Atom.

At some point it will be powerful enough to negate the need for many people to get more expensive chips,especially if Intel is keeping the price down.

This will have an effect on more upper tiers of their consumer segment too,especially as OEMs would rather use lower cost Atom than say a Core i3 or Core i5.

So if Intel is not making decent profit margins on Atom by then,it sort of eating share from more profitable chips too,especially if OEMs expect very cheap Atom chips each year.

I would say a lot of people buying those Core i3 and Core i5 based laptops and desktops are not gamers,or professionals but people doing more basic tasks like internet browsing,image editing and office tasks.

People have been making this argument for 30 years. It hasn't happened yet. There will always be a need for greater computing power.

 

[AtenRa]

If they were selling it for $5 it would be dumping. But they aren't selling it for $5, therefore not dumping.

So you are saying that either they didnt sell 10M SoCs or their Revenue numbers are incorrect ???
Do you have another source about how much they are selling those SoCs ??

 

[Khato]

So you are saying that either they didnt sell 10M SoCs or their Revenue numbers are incorrect ???
Do you have another source about how much they are selling those SoCs ??

Actually their net revenue may well have been a bit below $5 each - have to remember that the $51 million figure includes more than just tablet SoCs (though that's somewhat balanced by the fact that there are core based tablets in the 10M figure which don't show up in the MCG revenue.) However they probably 'sold' each of those SoCs for something in the $15-$20 range, just that they then turn around and provide that contra revenue to adjust for the 'defect' in their product compared to competition.

Regardless, the only market where Intel's contra revenue subsidized tablet ambitions would be windows... which if the trend from Q1 has continued would account for 10-20% of the Intel based tablets. They might be doing slightly better now that Microsoft has joined in the cause of reducing platform cost, but that also just goes to show why AMD likely wouldn't be doing very well in the market even without Intel's contra revenue - pricing is driving volume, not performance. (There's a reason why AMD doesn't even dare mention how their tablet BoM compares...)

 

[witeken]

$32 for the Z3740

 

[AtenRa]

Actually their net revenue may well have been a bit below $5 each - have to remember that the $51 million figure includes more than just tablet SoCs (though that's somewhat balanced by the fact that there are core based tablets in the 10M figure which don't show up in the MCG revenue.) However they probably 'sold' each of those SoCs for something in the $15-$20 range, just that they then turn around and provide that contra revenue to adjust for the 'defect' in their product compared to competition.

Regardless, the only market where Intel's contra revenue subsidized tablet ambitions would be windows... which if the trend from Q1 has continued would account for 10-20% of the Intel based tablets. They might be doing slightly better now that Microsoft has joined in the cause of reducing platform cost, but that also just goes to show why AMD likely wouldn't be doing very well in the market even without Intel's contra revenue - pricing is driving volume, not performance. (There's a reason why AMD doesn't even dare mention how their tablet BoM compares...)

If i understood it correctly, the 10M figure was related to Tablets alone.
Also just to be clear, when we say they sold the SoC at $5 we mean after the Contra Revenue. That means that Intel may have sold the SoC at $30-40 but after the rebate the price falls to $5.

 

[mrmt]

$32 for the Z3740

Contra-revenue is not to offset the SoC costs only, but platform costs. The SoC itself might not get any rebates at all.

 

[AtenRa]

Contra-revenue is not to offset the SoC costs only, but platform costs. The SoC itself might not get any rebates at all.

That makes the final SoC price even lower than $5 then.
If you sell 10M SoCs + Platform and only make 51M Revenue that makes the SoC price lower than $5. :whiste:

Edit : But i dont think thats the case, Intel use the Contra Revenue at the SoC price in order to equalize the higher BOM of the entire platform. That is if the motherboard BOM is higher than the competition, then they use the Contra Revenue on the SoC price to counter the final price.
Lets say the BayTrail motherboard cost $35 to be produced by the OEM + $32 for the SoC, the final Platform cost will be $67. If the competition (ARM) platform price (Motherboard + SoC) is at $40 then Intel gives Contra Revenue of $27 in the SoC price. That makes the Total Platform (Motherboard + SoC) price to drop at $40 because the SoC is sold at $5.

 

[raghu78]

That makes the final SoC price even lower than $5 then.
If you sell 10M SoCs + Platform and only make 51M Revenue that makes the SoC price lower than $5. :whiste:

Edit : But i dont think thats the case, Intel use the Contra Revenue at the SoC price in order to equalize the higher BOM of the entire platform. That is if the motherboard BOM is higher than the competition, then they use the Contra Revenue on the SoC price to counter the final price.
Lets say the BayTrail motherboard cost $35 to be produced by the OEM + $32 for the SoC, the final Platform cost will be $67. If the competition (ARM) platform price (Motherboard + SoC) is at $40 then Intel gives Contra Revenue of $27 in the SoC price. That makes the Total Platform (Motherboard + SoC) price to drop at $40 because the SoC is sold at $5.

yeah the loss per baytrail bundle (SOC+ platform) was worked out to $28 by Ashraf Eassa

http://www.fool.com/investing/gener...tel-corporations-true-mobile-breakeven-p.aspx

 

[Khato]

If i understood it correctly, the 10M figure was related to Tablets alone.

Correct, with Intel's definition of a tablet being any device where the screen detaches to be a standalone device. Which, as said, does include some number of core based devices. Not a lot by any stretch of the imagination, but both that and other sources of MCG revenue do skew the straight derivation of $51 million MCG net revenue divided by 10 million tablets equals $5 per SoC. (The real question being how much non-tablet revenue there actually is for MCG as that's definitely the larger source of error in the calculation.)

Regardless, it's quite clear that Intel basically selling these chips at manufacturing cost is the only way to end up at a competitive platform cost due to the BoM delta. If that wasn't the case then either Intel wouldn't be offering quite so sweet of a deal or everyone would be switching to Intel en masse so that they could pocket the savings. Which is again why it's somewhat nonsensical to blame Intel's contra revenue for AMD's poor tablet showing.

 

[tollingalong]

Naw, its not carbon nanotubes, it is alien technology stolen from Area 51.

That's complete hogwash. It's well known aliens came to this planet, didn't find any intelligent life and left.

 

[AtenRa]

Regardless, it's quite clear that Intel basically selling these chips at manufacturing cost is the only way to end up at a competitive platform cost due to the BoM delta. If that wasn't the case then either Intel wouldn't be offering quite so sweet of a deal or everyone would be switching to Intel en masse so that they could pocket the savings. Which is again why it's somewhat nonsensical to blame Intel's contra revenue for AMD's poor tablet showing.

At $5 is even bellow the manufacturing cost,
also as i have already said, AMD only makes Windows Tablets (x86) and there is only a single competitor and that is Intel with the contra Revenue.

 

[seitur]

Alll this talk - you're forgetting about that it is not 1998 anymore with plenty of node shrinks.

Silicon is coming to an end. Real battle and real deal is about staying a big fish with very healthy finances and patenst/know-how in order to be able to R&D new material in beggining of next decade.

 

[dahorns]

At $5 is even bellow the manufacturing cost,
also as i have already said, AMD only makes Windows Tablets (x86) and there is only a single competitor and that is Intel with the contra Revenue.

I'll repeat myself--show me any evidence that OEMs were considering x86 Windows tablets (besides maybe high-end Core tablets) prior to Intel's contra-revenue scheme. Everything until that point was for ARM based Windows RT. Unless AMD offered similar discounts to offset BoMs, it wasn't going to be selling anything into tablets.

 

[Khato]

At $5 is even bellow the manufacturing cost,
also as i have already said, AMD only makes Windows Tablets (x86) and there is only a single competitor and that is Intel with the contra Revenue.

Actually $5 is pretty close to the 'pure' manufacturing cost - that is cost to actually operate the equipment, not including any of the capital expenditures or design costs. Which isn't a terribly useful metric really, but it's one of the reasons Intel can get away with it.

And as I'd mentioned in my first post on the subject in this thread (due mostly to your correct point about AMD only being a player in the windows tablet space), according to Intel's Q1 conference call only 10-20% of the 5M Intel tablets during that quarter ran windows, the remainder were all android. Now given that such was before Microsoft changed their licensing costs for tablets that percentage of the x86 tablet market may well have increased... But that fact also underscores the key point with respect to tablets - price. Attempting to twist the fact that Intel's contra revenue which allows OEMs to offer an x86 tablet at a similar price to the ARM Android alternatives into a diabolical Intel once more locking AMD out of a market is simply ludicrous. Without contra revenue it would be the ARM camp that's selling more tablets, not AMD.

 

[AtenRa]

I'll repeat myself--show me any evidence that OEMs were considering x86 Windows tablets (besides maybe high-end Core tablets) prior to Intel's contra-revenue scheme. Everything until that point was for ARM based Windows RT. Unless AMD offered similar discounts to offset BoMs, it wasn't going to be selling anything into tablets.

MSI, Visio, Xolo and perhaps some more where thinking/made Windows Tablets (10 to 11.6") last year with the AMD Temash SoC. Now that Windows are free for sub 9" Tablets AMD could benefit and sell more Mullins SoCs, but because of the Intel Contra Revenue the price difference is enormous between BayTrail and Temash/Mullins, making the Intel SoC the only choice for the OEMs.
How many times do we have to say the same things ?? Even if AMD only Today was interested in sub 9" Windows Tablets they would not be able to sell a single SoC because of that Contra Revenue. This has nothing to do with ARM, we are only talking about x86 Tablets here and as you know there are only two competitors and only one has the Contra Revenue.