Supply chain ready for AMD's quad-core debut
By Colleen Taylor, Contributing Editor -- 9/11/2007
At an evening event hosted Monday night in San Francisco that had for weeks been promoted breathlessly by the company as "the most anticipated premiere of 2007," Advanced Micro Devices Inc. (AMD) officially launched its Barcelona quad-core processor family, dubbing it “the greatest product launch in its history.” But semiconductor industry watchers, a group not easily rendered star struck by marketing buzzwords, may well be asking more practical questions about AMD's debut on the quad-core scene: How will this impact the larger electronics supply chain? How will this affect the long-running rivalry between AMD and longtime chip making leader Intel Corp.?
Although the industry has indeed seen its share of supply chain inconsistencies in the past year -- as issues stemming from excess chip inventories affected semiconductor segments from foundries, to memory chip makers, to consumer electronics and PC makers -- analysts say that AMD's Barcelona chips do not stand to contribute to major gluts or crunches in the coming months.
Rob Lineback, a senior analyst with market research firm IC Insights, said that while the multi-core debuts are bound to be buzzed about, the impact from one company's launch of such a relatively niche product is not likely to have a serious impact that reverberates throughout the actual supply chain. "Quad core, and maybe, the 8-core and 16-core chips of the future, are always going to grab headlines -- but not really change the marketplace," Lineback told Electronic News. "The reality is that the bulk of the market is well-served by dual core. In the near future, at least, things are not going to change that much when it comes to supply and demand."
In fact, Lineback said, the ability for quad-core to ramp to a position where it could actually have a stronger pull on the electronics supply chain of the larger industry has more to do with software than with hardware. As it stands, software is not primed to completely maximize the use of all that quad-core chips like the ones AMD just launched. "What's really going to drive that is whether the software can take advantage of having multiple devices on a package," Lineback said. "It's really a software issue more than it is a hardware issue. Existing applications don't really take advantage of multicore."
And despite hiccups that have undoubtedly impacted the supply chain in recent months, Del Prete went on to express confidence in the stronger ability of the industry as a whole to navigate changes that in the past may have caused crises of over- or under-supply. "The supply chain is far tighter than it was five years ago," Del Prete said. "Of course, people still make mistakes; you do end up in sits of oversupply. But anymore, that usually comes from just two scenarios: When a company goes on a 'market share tear' to make a lot of product to quickly up its sales, or when someone massively mispredicts demand. Right now, with AMD's quad-core release, I don't see either scenario in the industry."
For its part, AMD has also agreed that the supply chain has become easier to navigate in recent years, and it is assured that the company has significantly prepared itself to avoid any snags with its Barcelona launch. "Ensuring that there is no oversupply or undersupply has actually become a very easy process," Pat Patla, director of AMD's server workstation segment, told Electronic News. "It's quite easy, now, to get forecasts on those things."
But that's not to say that AMD's entry into the quad-core realm is not making a splash. Being that Intel first debuted its own quad-core design in November 2006—which AMD on Monday night dismissed as an "opportunistic play" wherein Intel "delayed the real design work" in order to enjoy a "window of exclusivity" on the multicore playing field—all eyes are now on AMD, Intel's chief rival, to see how its long-awaited quad-core chips will shake up the marketplace.
"AMD will work hard to win back market share, which will put pressure on Intel," IDC’s Del Prete said. "Success for AMD will come down to their ability to execute."
Del Prete also said that this launch was unique for AMD due to the cachet that it has garnered within the chip industry in the four years since the company first launched Opteron, its native 64-bit x86 processors. "Unlike when Opteron was announced, AMD is now viewed as a credible supplier in very demanding, critical workloads. This means that as they execute, they should be able to win back share and pressure Intel for more than they have over the last nine months."
AMD certainly has its work cut out for it in the coming months, going up against industry giant Intel, which controls some 80 percent of the microprocessor industry's market share and won’t give up even 1 percent without a fight. "It's clear that Intel is stepping up the pace as AMD rolls out its quad-core chips," IC Insights’ Lineback said. "It's going to be very difficult for AMD to go toe-to-toe with Intel just based on technology.
"Whether AMD can keep up with that is a major question on the table," Lineback added. "But if there's one thing we've learned in the past few years, it's to not count AMD out. Intel's dominance is by no means a slam dunk."
And, regardless of who comes out on top, that's good news for the market as a whole. "Competition between semiconductor companies is always good for consumers," Lineback said. "To have AMD be as aggressive, and as good, at competing with Intel as it has been, is just good for the market."
For more on Barcelona, see:
Podcast: Electronic News one-on-one with AMD VP Randy Allen on the Barcelona launch
AMD emphasizes efficiency with Barcelona
AMD officially launches Barcelona
AMD: Praying for a triple, hoping for a home run
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