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AMD pins its server hopes on SeaMicro technology - maybe in APUs

Trying to dance between Chipzilla's pounding reptile feet

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The bad news for Advanced Micro Devices in the second quarter is that server processor sales did not save its financial cookies as they did for archrival Intel. The good news is that AMD doesn't appear to be losing market share or money on server chips and has a new engineering team focusing on longer-term plans to try to give Intel some grief with Opterons and Fusion APUs in the data center while keeping an eye on the ARM collective.

As expected, AMD did not do well in Q2, with sales down 10.2 per cent to $1.41bn and net income down 39.3 per cent to $37m.

The Computer Solutions group at AMD, which makes processors, chipsets, and now interconnects since the $334m acquisition of SeaMicro back in February, had $1.05bn, down 13.3 per cent from the year-ago period and also down 13 per cent sequentially.

AMD shipped its "Bulldozer" Opteron 4200 and 6200 processors last November, and clearly got its bump in sales for these chips in the first quarter. It was then adversely affected by the Xeon E5 launches in March and May from Intel. Even with sales down, AMD was able to post an $82m operating income in the Computing Solutions group. AMD's Graphics group had sales of $367m, flat as a pancake compared to last year, and posting an operating gain of $31m compared to an operating loss of $7m a year ago.

On a conference call with Wall Street analysts after the market closed yesterday, AMD CFO Thomas Seifert said that server processor sales in Q2 were impacted by lower unit shipments compared to Q1 and also lower average selling prices, which he characterized as "slight." Chipset revenues, which includes both PC and server circuits, declined in the quarter as well, mainly because of lower ASPs. That could mean OEM customers going for cheaper SKUs, AMD cutting prices, or both.

Rory Read, the CEO at AMD since late last year, said that AMD "experienced a pause" in its server-related business in the second quarter after a good uptake among supercomputing and other high-performance computing customers earlier in the year and that AMD's focus "has to be on building similar acceptance with mainstream IT buyers" and that AMD believed it could drive "modest share growth" in the near term based on its relative positioning in the server racket against Intel and RISC processor suppliers.

The SeaMicro acquisition, which was done mostly for AMD to get its hands on the "Freedom" 3D mesh/torus system interconnect at the heart of the SM10000 chassis, is also a key to AMD's future, Read reminded Wall Street.

"In the server space, we also see market expansion opportunities with the growing adoption of dense server technology," Read said. "We have a differentiated leadership position in this market as a result of our acquisition of SeaMicro. Our IP foundation allows us to deliver disruptive server products and a technology roadmap that strengthens our long-term competitiveness in this emerging market."

To help AMD do a quantum leap as it did a decade ago with the launch of the first "SledgeHammer" Opteron processors, Read has tapped Lisa Su, formerly CTO at Freescale Semiconductor, to be senior vice president and general manager of AMD's Global Business Units. Three weeks ago, AMD hired Suresh Gopalakrishnan, who was VP of engineering at Exteme Networks, to be vice president and general manager of its server business unit, reporting to Su. And a few weeks earlier it had formed an Embedded Systems Group to leverage its chippery in the embedded space and put Arun Iyengar, formerly vice president at FPGA maker Altera, in charge. Both report to Su.

AMD has not said much about its plans for SeaMicro, and Su did not divulge much yesterday, either. She said the SeaMicro acquisition closed in the first quarter, and that the integration had gone smoothly in the second quarter.

"We have been pleased with the capability and the talents that the team have brought onboard," she said, adding that AMD is still talking to customers about the potential for SeaMicro-based technology (in this case, that means OEM server makers, unlike end user server buyers that SeaMicro was chasing itself) and viewed SeaMicro as a "long-term growth path."

It seems likely that AMD will get a SeaMicro board running its Opteron 3200 out the door before the end of the year, and as El Reg speculated at length back in March, there are all kinds of ways that SeaMicro's tech could be deployed. AMD cannot get ahead of Intel in the wafer baking process game, so instead of cramming components like PCI, SATA, and network controllers on an Opteron chip, it could use the SeaMicro interconnect as a way to lash off-chip components to GPUs - and APUs.

That last bit will probably see some play in the HPC space and in the race to exascale computing. AMD has just received a two grants worth $15.6m from the US Department of Energy to do research in how Accelerated Processing Units, interconnects, and main memory can be glued together in the pursuit of exascale processing. APUs, which carry the Fusion brand, are used on laptops and desktops and put a CPU and a GPU on the same chip; there's no reason why you can't do the same thing with a server chip, provided you make it small enough. The point is, if AMD can't beat Intel on process – and nobody is going to beat Intel on process - maybe AMD can create a better overall system with slicker packaging of individual circuits.

We'll see. ®

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