AMD has capacity for 30% share says tech manager

Stan Beer
Sunday, 25 June 2006 18:34

IT Industry - Strategy

AMD has gone on record saying that the chipmaker is geared up to achieve 30% processor market share by 2008. However, a regional technical manager at the company says the company has the capacity in place to produce 30% of the world’s processors right now.

According to Michael Apthorpe, technical manager, Australia and New Zealand, at AMD, the company’s new fabrication plant in Dresden, Germany, which came on line in October 2005, has already boosted capacity beyond the 30% point.  Athorpe says the planned expansion announced at the beginning June will boost capacity even further.

“On 1 June AMD made an announcement in regard to our new fabrication plant in Dresden, Germany. With that production in play, we’re capable of making over 125 million processors per year,” says Apthorpe.

“At this point in time, we’re more than capable of producing 30% plus of worldwide consumption of processors. Once our new Dresden factory comes on line, we’ll be moving down from 90 nanometre to 65 nanometre later this year and further down to 45. That will obviously increase our production capabilities to take up any slack between our capabilities and the market demand.”

According to Apthorpe, AMD sees the server space as its big opportunity. “Two years ago, we had 0% market share in the server space. Globally, we’ve now got about 50.3%” he says. “We’re delivering product which really gives the customers the advantage in performance and the energy and power reduction that people are starting to look at. When you look at the cost of running a server farm, the actual cost of the hardware installation is minimal compared with the electricity and other infrastructure costs.

“AMD has always been a company of introduction of innovation and what we call a customer centric engineering proposition,” says Apthorpe. “We very much listen to the customer of what they actually want out of a product and design and implement those demands. That’s how we’re getting our market share.”

Apthorpe believes part of the successful erosion of Intel’s market share by AMD in recent times has been due to its dual-core processors. He claims that AMD is the only company that has made a genuine dual-core processor.

“AMD has scheduled the launch of its quad core processors for early to mid-2007,” he says. “Whether we will be first to the market with a product remains to be seen. However, we certainly do believe we will be the first with a quad-core which is a true quad-core processor. Unlike our competitor, it won’t be two single cores stitched together like their dual-core is or two dual-cores stitched like their quad-core will probably be. We will release to the market a true quad-core. That is one physical die with four physical processors with four separate caches all interconnected and operating as a quad-core processor. The advantages is performance and power consumption from our approach are obvious.”

So what effect will getting its foot in the door for the first time as a supplier of processors for the server products of Dell Computer have on AMD going forward?

Apthorpe says: “Dell certainly did certainly did take a while before they signed and adopted our product so they obviously see the value of AMD. The adoption by Dell will certainly help us in regard to an increase in our market share but it won’t be an over night success. We’ve seen from experience with other products at HP and IBM that it’s a slow take-up.”

While 30% market share may be an admirable goal, it’s still a long way from being the market leader. However, Apthorpe claims that this is not on AMD’s list of aspirations. “Do we want to get to 50% and become the monopolist? I don’t think so,” he says. A company that’s content to stay number two. Now that’s something unusual, to say the least.