AMD Challenges Intel With New CPUs

• Posted by Tech Insidr
• on June 20th, 2011

In 2006, AMD shocked the technology world by announcing the acquisition of ATI Technologies, one of the dominant GPU companies and nVidia’s key competitor. The deal stunned some investors, who balked at the $5.4B pricetag and worried that integrating a CPU company with a GPU company would prove to be a difficult challenge.

By 2007, AMD hatched a strategic plan that called for merging the CPU and GPU together, which would give AMD a competitive edge in the marketplace.  Intel was the dominant player in CPUs and nVidia/ATI were the dominant players in graphics. AMD’s strategic plan was to tightly integrate the CPU and GPU into one package, therefore giving them a competitive edge against their rivals.

According to the original roadmap, the first AMD CPU/GPU combo was supposed to be released during the 2008/2009 timeframe, but obviously that did not happen due to delays.  Integrating the CPU/GPU proved to be difficult and the first CPU/GPU combo hit shelves during Q4 of 2010, which was 2-3 years behind schedule.

The past few years have been a difficult road for AMD as the company has gone through a major restructuring and has struggled to compete with CPU offerings from Intel.  However, AMD now has a fighting chance in the CPU market with the release of their new Llano CPUs.

Armed with a new lineup of CPUs, Advanced Micro Devices ($AMD) is mounting a serious comeback and challenging rivals like Intel and nVidia.  The new desktop/mobile CPUs, dubbed “Llano”, are geared towards mid-to-high end mainstream computers and are a part of AMD’s “Fusion” lineup.  Although the desktop CPU’s are important, mobile is definitely the key battleground where AMD has always struggled.

The most lucrative area in the CPU market is definitely the mobile CPU space.  More consumers and businesses are opting to buy portable notebooks, rather than bulky desktops.  AMD has long struggled to maintain competitive with Intel in this space. Intel’s mobile products (Core 2 Duo, Core i3/i5/i7) have continued to dominate in the mainstream and high-end segment, offering the best-in-class performance with above-average battery life.  As a result, AMD has only been able to capture the low-end mobile market, with sub-par products like Turion.

However, the balance of power in mobile has definitely changed with the release of AMD’s new Llano platform.  AMD now has an array of mobile 32nm CPU’s equipped with integrated Radeon GPUs and compelling power consumption features.

For the first time in many years, AMD is finally able to offer battery-life that is competitive with offerings from Intel.  The new AMD chips have roughly 3X improvement in battery life over their previous platform.  It may sound trivial, but battery life is actually one of the major factors that was holding back AMD in the past.  Consumers place a huge emphasis on battery life and AMD is finally competitive in area.

As far as the graphics capabilities, the Llano CPU/GPU combo chips offer performance that is on-par with expensive discrete GPUs.  As you can see from the benchmarks, AMD has done an amazing job eeking out every ounce of GPU performance from these chips.  According to Anandtech.com, the Llano GPU’s are up to 167% faster than the Intel’s HD3000 integrated graphics.

AMD now has the leadership position in integrated graphics and Intel is playing catchup.  The Intel HD3000 graphics are O.K. for business use or some light multimedia content, but the AMD GPU solution can handle anything from 1080p content to high-end gaming.  It took longer than expected, but the CPU/GPU combo looks like a very attractive value proposition and AMD’s future roadmap looks brighter than ever.

When we heard about AMD’s CPU/GPU integration roadmap back in 2007, we never thought it would take until 2011 for products to appear, but better late than never. With the new Llano mobile platform, AMD has really innovated and brought a compelling platform to the market place.  With roughly 3X the battery life of their previous platform and amazing GPU performance, AMD finally has a mobile CPU that can go head-to-head with Intel.

The combination of these features finally enables AMD to compete with Intel for the mainstream and high-end notebook design wins.  OEMs are already hot on this new CPU lineup, with HP unveiling an new lineup of Llano-based notebooks.  Watch for other OEMs like Acer, Toshiba, and Dell to follow HP’s lead.

Finally – a platform that can earn design wins in mid-to-high end notebooks.  This is a big inflection point for AMD.  Instead of fighting for design wins in the $450 notebook, AMD can now feasibly get design wins in $700+ notebooks.

[At the time of publication, Rob was long AMD and NVDA.]

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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