IBM/Chipsets/Market Share

FiringSquad: At the beginning of this year, AMD and IBM announced an agreement to jointly develop more advanced chip-making technologies. When will we see the first products from this deal and are both your companies also working on new technologies (features) that may one day be found on processors from both your companies?

Henri Richard: Well if you look at our technology agreement with IBM it really covers core technology, not processor development. So what you’re going to see is the transistor that is used by IBM and by AMD it could be that that transistor technology could be used in the IBM products or the AMD products. There’s no joint development of processors, so IBM has its own strategy when it comes to processors and AMD has its own and they’re going to continue to be separate.

Clearly IBM is also a customer of AMD from an Opteron perspective, but that’s a different story.

So at the technology level we’re basically joint development in terms of manufacturing and core transistor technology but we don’t have right now, any sort of effort to go and merge some of their products, some of their microprocessor development in ours.

FiringSquad: Are AMD’s days as a chipset manufacturer (albeit limited) officially over?

Henri Richard: Well I don’t think that us as a chipset manufacturer will ever be over but we have to…Basically a couple of things, it’s important for us to have chipsets available at launch based on new technologies and so I think we’ll continue to be probably the first guys out there when a new processor comes in, just to make sure you can do a reference platform, and, you know, it’s working on our new technology.

We believe strongly in the virtual gorilla, the open ecosystem, the fact that there are more good ideas in five or six companies than in one, so we don’t want to be perceived as competing with our customers.

There are some great chipset vendors out there, we have a great relationship with them and we see it that way.

Now in certain markets, very specific segments, where we don’t see enough momentum in some of our chipset partners and we see that their needs to be an AMD solution then we’ll continue to have development in place to make sure that we can service those markets. We’re not trying to become a big chipset manufacturer but we’re not trying to exit the chipset business either.

FiringSquad: In your opinion, what will it take for AMD to regain some of the market share it has lost to Intel?

Henri Richard: Well first we really haven’t lost better share…we’ve decided to walk away from some business and that turns into unit share. I would contend to you that although if you’re taking our share as compared to AMD versus Celeron plus Pentium, you’d see a unit share decrease.

If you were to look at how much of the real business, the real interesting business which is Pentium business (Editor’s Note: We may have heard this incorrectly) we have probably gained share, and that’s been reflected last quarter in the fact that our revenue grew faster than Intel’s as a percentage. Obviously there’s a tendency to track units, but at the end of the day what matters is dollars, and we have a strategy to continue to try and outpace Intel from that perspective and that means a shift from lower end products to higher end products. So maybe we’ll continue to see a decline in unit share but I certainly expect to see a strengthening in terms of dollar share.