New York (NY) - At a conference with analysts held today, AMD acknowledged problems of bringing its quad-core processors to market and said that it the introduction of the chip has been a disappointment so far. The company described 2007 as a year “not to get excited about”, but believes to be able to return to profitability in 2008.
Not surprisingly, the company’s chief operating officer Dirk Meyer was upfront with analysts about the questions surrounding the slow rollout of the Barcelona quad-core processors. While he confirmed that the company will be shipping "hundreds of thousands of processors" this quarter, the "quad-core product" has not been delivered according to plan: "We’ll make good on our promise to deliver hundreds of thousands of quad core processors, but we’re disappointed," Meyer said.
Meyer as well as executive vice president Mario Rivas told analysts that AMD is on its way to "fix quad-core". Volume shipments, typically referred to as "millions of chips", are now scheduled to begin in the first quarter of this year. In contrast to the earlier promise that Barcelona would be announced when the product is actually available in volume, Rivas confirmed that this actually did not happen and that the company "let down" its customers: "That must not continue," he said.
Chief financial officer Bob Rivet echoed preceding speakers and tried to create a "the glass is half full" rather than a "the glass is half empty" scenario. He acknowledged that the company "had a terrible first quarter", but has been making progress since then. And while he said that "the world would look a lot different if [Barcelona] had launched in the first half of this year", he noted that the company maintains its Q4 financial guidance. Rivet believes that 2008 will bring further financial improvements to the point where the company will post an annual profit. "In 2007 we have been living on some old stuff. 2008 will be all new," he said.
Interestingly, AMD said that its manufacturing capabilities are working well. In fact, Doug Grose, senior vice president of Manufacturing & Supply Chain Management at AMD, noted that "design is the issue with Barcelona, not manufacturing": Quad-core yields are actually higher than originally expected. In a very rare event, AMD also offered some detail on its output capabilities. For 2007, AMD’s CPU manufacturing (own plus partner fabs) is estimated at just under 100 million dies. In 2008, AMD believes this number to be going up to about 110 million, in 2009 to 120 million and in 2010 to about 140 million.
Grose mentioned that 45 nm development is "on track": Fab36 in Dresden, Germany is scheduled to be shipping 45 nm processors in the second half of 2008. For the next generation, the company claimed to have 32 nm SRAMs working right now.
The roadmap of future processors apparently has not been impacted by the Barcelona hiccup: The Shanghai quad-core is still scheduled for a mid-2008 release, while Montreal (quad- and 8-core) is expected in 2009.
On the ATI side, AMD recently revealed in a recent SEC filing that it has over-estimated the value of the graphics and chipset company and will be forced to take a substantial write-down in the current quarter. In the filing, AMD wrote that the write-down "will be material, but the Company has determined that, as of the time of this filing, it is unable in good faith to make a determination of an estimate of the amount or range of amounts of the impairment charge."
But not all of ATI is bad for AMD, of course. On another step towards the Fusion processor, the company said it will introduce "hybrid graphics" in the first quarter of next year. Targeted at the entry-level and mainstream market, this concept will give customers multi-GPU graphics capability consisting of integrated graphics and discrete graphics: Rather than throwing out the capability of the integrated chipset when installing a stand-alone graphics card, AMD will be able to combine the feature sets with the introduction of the RS780 chipset.
The benefits of "hybrid graphics" will range from performance improvements, up to 50% with low-end graphics cards, according to senior vice president Rick Bergman, as well as power consumption enhancements (by allowing customers to use only the lower-power chipset). Minimum requirements to take advantage of hybrid graphics will be 3450/3470 graphics cards in the 3000-series as well as 2400 graphics cards in the 2000 series.