Ruiz: Barcelona will help AMD rebound from Intel hits

IDG News Service - Advanced Micro Devices Inc. may have fallen behind rival Intel Corp. in manufacturing efficiencies, but product innovations will help the chip maker rebound, said Hector Ruiz, AMD's chairman and CEO, at the company's annual shareholder meeting Thursday.

In remarks to shareholders at an event in San Jose, Ruiz acknowledged that AMD is sometimes two or three quarters behind the larger Intel in improving manufacturing capabilities. For instance, Intel is already manufacturing 45-nanometer chips, while AMD only recently moved to 65nm and won't get to 45nm production until mid-2008. The smaller the chips, the greater the yield from each silicon wafer from which the chips are cut.

Sunnyvale, Calif.-based AMD is working to close the manufacturing efficiency gap with Intel, he said, but what it may lack in efficiency it makes up for in product innovation. The new quad-core Barcelona chip is due in the second half of this year, and new mobile computing processors are in development as a result of AMD's 2006 acquisition of graphics processor company ATI Technologies Inc.

"We don't want to spend an inordinate amount of energy focusing on [manufacturing] alone when we know that the innovation that we bring to the market... far outweighs any two- or three-quarter disadvantage we could have in manufacturing," Ruiz said, in response to a shareholder's question.

AMD made a serious run at Intel when it introduced the Opteron dual-core processor in 2003 and won new business from server and desktop computer manufacturers. But Intel responded with its own dual-core processors and by cutting the price of its products to force AMD to lower its.

The price competition was among the factors leading to an AMD net loss of $547 million in the fourth quarter of 2006, followed by a net loss of $611 million in the first quarter of 2007. During the last 12 months, AMD's stock price has fallen from $35 to $13.66 a share today.

"There is no way to sugar-coat our performance," said Ruiz. "It was a disaster and unacceptable."

Ruiz outlined initiatives for AMD going forward aimed at returning the company to profitability: An increased emphasis on graphics processors given the new graphics capabilities in Microsoft Corp.'s Vista operating system; more focus on energy efficiency, such as quad-core processors that deliver better performance per watt than dual- or single-core models; and market opportunities in developing nations.

Ruiz touted AMD's 50-15 initiative to help deliver computing capabilities and Internet access to 50% of the world's population by 2015. The government of the African nation of Uganda, he noted, recently revised its rules to allowAMD to bid on government IT contracts.