For a technology industry person, I am not much on gadgets. I've played with an iPhone and it just made me want a bigger screen. If I shell out cash, it tends to be for better business functionality. I am not a traveling salesman. I work out of my home office. So I do like big, affordable screens. Currently I have a two-screen set up, both Acer screens, one 17", one 19". My graphics card is an ATI Radeon X1200, which a gamer would scoff at, but which is fine for business applications.
Apple (http://www.apple.com/) has been mainly about mobile trends for over a decade now. After blowing much of their consumer loyalty back in the late 1980's, they regained some of it with their portable computers, or notebooks, during the 1990's. Apple became important in the pocket-sized mobile space with the iPod introduction in 2001. Then, a couple of years ago, they took on the cell phone market with the iPhone. With their high-margin model, they have made a very successful business.
Their desktop computers, however, have continued to have low market share, if not as bad of a share as they had five years ago. The Steve Jobs magic spell just has not worked out very well there so far. The last time I had a moment of Apple computer envy was way back in the decade when a friend was working on an Apple desktop with a nice big screen. It made me want a Windows computer with just as big of a screen.
So what do I want, when my business capital budget can afford it? What I really want is an Eyefinity display.
An Eyefinity display consists of one of the newest AMD/ATI graphics cards and as many as six screens. Basically, absorbing your whole visual field. The technology is in its early days, and can only get better. I expect by the holidays of 2010 you will be able to buy integrated computer systems, with graphic cards and screens, at major retailers. Also, it is not a system you want to add to a single-core processor system, or even a dual-core system. It is a good reason to upgrade to quad-core. (I'm still at dual core, myself, using Windows Vista).
Unless Apple has decided to leave the desktop space to wilt on the vine, I can't imaging that Apple won't respond to Eyefinity. The sanest response would be to simply add Eyefinity to a Mac. Since the secret is the graphics card, Eyefinity can be added to Intel processor based systems. Right now Apple uses Intel processors with NVIDIA graphics. And certainly NVIDIA will eventually have a response to Eyefinity. So maybe Apple will just wait for that. I don't see Apple coming up with its own proprietary competitor. The choices seem to be do it AMD's way or do it NVIDIA's way.
Samsung and AMD demonstrated both three and six panel Eyefinity displays at CES earlier this month, with suggested prices of $1,899 and $3,099 for the displays. Eyefinity capable graphics cards currently include the 5970, 5870, 5850, 5770 and 5750, at a wide range of price points and capabilities. There is also a validation program to help consumers identify products that are Eyefinity compatible.
My AMD analyst conference summary page
Showing posts with label ati. Show all posts
Showing posts with label ati. Show all posts
Wednesday, January 20, 2010
Monday, August 25, 2008
AMD Divests TV Unit to Broadcom
Today Broadcom (BRCM) announced it would buy AMD's - consumer television chip division for $192.8 million. AMD had announced that this division was up for sale, and was being treated as a discontinued operation, at its July 17, 2008, Q2 AMD analyst conference (summary).
This segment was acquired when AMD bought ATI in late 2006. It is difficult to make direct value comparisons because this particular line has not been singled out by AMD or ATI. For the quarter ending May 31, 2006 ATI reported its consumer segment revenues, which included more than the TV chips, were $143 million, but it also had quarter revenues of $652 million and was heading into a steep overall revenue decline even before AMD acquired it. By the time the acquisition was complete, reporting for Q3 2007 (see AMD analyst conference summary for Q3 2007), AMD was reporting consumer revenue of only $97 million, and that also included more products than the television chips.
Broadcom, by the way, provides chipsets for AMD's Opteron server motherboards, so they have a prior relationship.
AMD paid almost $5 billion for ATI, a major overpayment in retrospect, since NVIDIA (NVDA) was about to capture much of ATI's business. AMD desperately needs cash as it continues it's David and Goliath game with Intel. But it is important to note that at one point AMD management was calling video chips for large-screen TVs a growth area.
You hear that sort of thing all the time at technology companies: our sorry asses will be saved because we are into the next big thing. Forget that we failed at the last big thing. How many technology companies were going to make a mint for investors by plunging into wireless Internet (WiFi & etc.) back in 2004? How many actually did? As usual, the companies that won the last round, like Cisco, mostly won the new round.
That said, I think AMD is wise to focus on its core competency, computation, including graphics computation. It wisely shed its memory chip division before it picked up ATI's graphics expertise. Some things are going right for AMD now: quad-core Opterons are performing impressively, Intel's upcoming Nehalem chips don't appear to be anything great, and the ability to have high-end graphics and high-end CPUs is pulling customers away from both Intel and NVIDIA. On the other hand AMD's stock price is in the swamp, and both Intel and NVIDIA have been happy to compete with price drops when they could not compete with AMD's advanced technologies. AMD needs to start generating cash from operations in Q3; the cash infusion from the Broadcom deal and last quarter's sale of fabrication equipment is needed just to help balance the debt from the ATI acquisition. If AMD can't sell enough chips at a profit, Intel wins by default no matter. Intel's legal problems won't come into play in a meaningful way until 2010 or even 2011. Even then, paying a few billion dollars to AMD will be worth it to Intel; it will have been a small price to pay for stopping AMD in its tracks in 2004-2005, when ordinary competion could have led to Intel's overthrow.
AMD is a very risky stock, but I like the fighting spirit of the AMD team, believe the stock is currently undervalued, and own the stock.
But keep diversified.
More data:
www.amd.com
My AMD main page
www.broadcom.com
www.intel.com
My Intel main page
www.nvidia.com
My NVIDIA main page
This segment was acquired when AMD bought ATI in late 2006. It is difficult to make direct value comparisons because this particular line has not been singled out by AMD or ATI. For the quarter ending May 31, 2006 ATI reported its consumer segment revenues, which included more than the TV chips, were $143 million, but it also had quarter revenues of $652 million and was heading into a steep overall revenue decline even before AMD acquired it. By the time the acquisition was complete, reporting for Q3 2007 (see AMD analyst conference summary for Q3 2007), AMD was reporting consumer revenue of only $97 million, and that also included more products than the television chips.
Broadcom, by the way, provides chipsets for AMD's Opteron server motherboards, so they have a prior relationship.
AMD paid almost $5 billion for ATI, a major overpayment in retrospect, since NVIDIA (NVDA) was about to capture much of ATI's business. AMD desperately needs cash as it continues it's David and Goliath game with Intel. But it is important to note that at one point AMD management was calling video chips for large-screen TVs a growth area.
You hear that sort of thing all the time at technology companies: our sorry asses will be saved because we are into the next big thing. Forget that we failed at the last big thing. How many technology companies were going to make a mint for investors by plunging into wireless Internet (WiFi & etc.) back in 2004? How many actually did? As usual, the companies that won the last round, like Cisco, mostly won the new round.
That said, I think AMD is wise to focus on its core competency, computation, including graphics computation. It wisely shed its memory chip division before it picked up ATI's graphics expertise. Some things are going right for AMD now: quad-core Opterons are performing impressively, Intel's upcoming Nehalem chips don't appear to be anything great, and the ability to have high-end graphics and high-end CPUs is pulling customers away from both Intel and NVIDIA. On the other hand AMD's stock price is in the swamp, and both Intel and NVIDIA have been happy to compete with price drops when they could not compete with AMD's advanced technologies. AMD needs to start generating cash from operations in Q3; the cash infusion from the Broadcom deal and last quarter's sale of fabrication equipment is needed just to help balance the debt from the ATI acquisition. If AMD can't sell enough chips at a profit, Intel wins by default no matter. Intel's legal problems won't come into play in a meaningful way until 2010 or even 2011. Even then, paying a few billion dollars to AMD will be worth it to Intel; it will have been a small price to pay for stopping AMD in its tracks in 2004-2005, when ordinary competion could have led to Intel's overthrow.
AMD is a very risky stock, but I like the fighting spirit of the AMD team, believe the stock is currently undervalued, and own the stock.
But keep diversified.
More data:
www.amd.com
My AMD main page
www.broadcom.com
www.intel.com
My Intel main page
www.nvidia.com
My NVIDIA main page
Sunday, August 17, 2008
Shaking Up Tech: NVIDIA, AMD, and Intel
Technologies may come and go, but technology powerhouses can be much more durable. IBM, the champion of mainframe computing, is still around today and generating lots of profits for its investors. The mainframe also rans mostly did not make successful transitions to new technologies and business models.
The last three years have been rough for investors in the dominant computing technology, the PC. The funny thing is that PCs are more powerful than the mainframes of the 1980's, and many of them are not really personal; they are the servers of datacenters, internet web farms, and local networks.
Companies that dominate the end PC market like Dell and HP are dependent on the makers of the semiconductor chips that are the building blocks of the PC. Some components have multiple sources, but when it comes to the core, the Central Processing Unit (CPU, or just "processor"), there are only two AMD and Intel (symbol: INTC). In the graphics department at the high end we have only AMD (symbol: AMD) and NVIDIA (symbol: NVDA), but Intel competes in the low end of the market where graphics are integrated into motherboards.
Six years ago the picture looked remarkably like it does today, at least superficially. Intel dominated the CPU market. AMD made CPU's, but not profits, largely using technology licensed from Intel and allowed just enough market share by Intel to keep Intel from be accused of monopolizing the market. NVIDIA led the discrete graphics chip market, with ATI sometimes having substantial market share, but basically always in the number 2 position.
AMD is responsible for shaking up that picture two times in the past 6 years. Realizing that Intel's roadmap for future processors was not what PC makers really wanted, AMD came out with its Opteron server chip design, and with the Athlon equivalent for PCs. The Opteron and Athlon introduced 64-bit (as opposed the the prior standard 32 bit) computing to mass markets, integrated the memory controller on the chips, and were designed to save energy (Intel's roadmap was basically use the old design, keep running it faster and hotter). Despite a great deal of resistance for a complacent PC industry, and some hardball tactics Intel used to minimize the erosion of its market share, suddenly AMD looked like it might actually eventually overtake Intel. But Intel had a lot of money, lowered its prices, and even changed its chip design, then used its marketing power to push back at AMD.
AMD also bought ATI. They paid about $5 billion for ATI, more than the value of AMD today. NVIDIA and Intel both executed well at the same time, and AMD looked to be in risk of bankruptcy.
NVIDIA is also shaking things up with its CUDA technology. Let's just say it uses the graphics chip for general computing, and that endangers both CPU makers, Intel and AMD.
The second quarter of 2008 was one of the most interesting of this decade, and Q3 and Q4 are looking to be just as interesting. Both NVIDIA and Intel screwed up, and AMD's plan to sell better designed CPUs, graphics chips, and chip sets (the "glue" chips that go on the computer motherboard) seems to be getting some traction.
You can get a very good idea of the financial states of NVIDIA, AMD, and Intel, as well as hearing what their respective managements have to say about their current and upcoming technologies, by reading my summaries of their Q2 analyst conferences [See NVIDIA Q2 2008 analyst conference summary; AMD Q2 2008 analyst conference summary; Intel Q2 2008 analyst conference summary]. Note that NVIDIA's quarter ended July 27, 2008, and is their fiscal Q2 2009.
NVIDIA's disaster month was July. It was revealed that NVIDIA chips were melting down, particularly in certain Dell and Apple notebooks (Apple, as usual, denies that its products have any problems). NVIDIA took a $196 million charge to deal with the expected costs of replacing or fixing the notebooks. That is bad, but it is the kind of thing that happens from time to time, and should not affect NVIDIA very much unless the problem gets repeated.
Worse for NVIDIA, they had to drastically lower their prices in July. After about 3 years of offering no competitive threat to NVIDIA, ATI (now a division of AMD) had brought out some great graphics chips and prices them very nicely.
Which does not mean AMD is back in the money. Intel's primary weapon against Intel in 2006 was lowering prices to the point that AMD could not match. It is a monopoly tactic that is tried and true. Force out the competition with ruinous pricing, then jack prices back up to highly profitable levels when the competition is done in. The only difference with Intel is that if they had actually forced AMD out of business, they would then clearly be a monopoly. So they just pushed AMD to the brink, gained back some lost market share, and then raised prices again when they introduced their Core Duo technology.
NVIDIA is also far more profitable than AMD, but they have nowhere near the muscle of Intel. They have not yet tried to chase ATI/AMD out of the market with pricing muscle. Instead they have a long tradition of competing (and winning) with better technology. So the price cuts were necessary to their own survival, and will hurt their financial position in the short run more than they hurt AMD.
AMD stock is practially free these days. While AMD has a respite, it is going to have to struggle just to stay alive. It has not made a profit, even on a non-GAAP basis, in years. Its new notebook technology (a combination of CPUs and graphics chips) is very competitive and has had some good design wins, but Intel's (which suffered a delay in introductions) is certainly competitive. AMD is finally producing quad-core Opterons that are being lauded by end users, but they came out over a year late, giving Intel time to up the ante.
I own AMD stock, and it has been the worst-performing stock in my portfolio. Hope springs eternal, so I bought more AMD recently. NVIDIA stock is also dirt cheap; I am keeping an eyeball on it. Intel is a safe bet, but I don't feel it is a great bargain at the current price.
More data:
http://www.intel.com/
http://www.amd.com/
http://www.nvidia.com/
The last three years have been rough for investors in the dominant computing technology, the PC. The funny thing is that PCs are more powerful than the mainframes of the 1980's, and many of them are not really personal; they are the servers of datacenters, internet web farms, and local networks.
Companies that dominate the end PC market like Dell and HP are dependent on the makers of the semiconductor chips that are the building blocks of the PC. Some components have multiple sources, but when it comes to the core, the Central Processing Unit (CPU, or just "processor"), there are only two AMD and Intel (symbol: INTC). In the graphics department at the high end we have only AMD (symbol: AMD) and NVIDIA (symbol: NVDA), but Intel competes in the low end of the market where graphics are integrated into motherboards.
Six years ago the picture looked remarkably like it does today, at least superficially. Intel dominated the CPU market. AMD made CPU's, but not profits, largely using technology licensed from Intel and allowed just enough market share by Intel to keep Intel from be accused of monopolizing the market. NVIDIA led the discrete graphics chip market, with ATI sometimes having substantial market share, but basically always in the number 2 position.
AMD is responsible for shaking up that picture two times in the past 6 years. Realizing that Intel's roadmap for future processors was not what PC makers really wanted, AMD came out with its Opteron server chip design, and with the Athlon equivalent for PCs. The Opteron and Athlon introduced 64-bit (as opposed the the prior standard 32 bit) computing to mass markets, integrated the memory controller on the chips, and were designed to save energy (Intel's roadmap was basically use the old design, keep running it faster and hotter). Despite a great deal of resistance for a complacent PC industry, and some hardball tactics Intel used to minimize the erosion of its market share, suddenly AMD looked like it might actually eventually overtake Intel. But Intel had a lot of money, lowered its prices, and even changed its chip design, then used its marketing power to push back at AMD.
AMD also bought ATI. They paid about $5 billion for ATI, more than the value of AMD today. NVIDIA and Intel both executed well at the same time, and AMD looked to be in risk of bankruptcy.
NVIDIA is also shaking things up with its CUDA technology. Let's just say it uses the graphics chip for general computing, and that endangers both CPU makers, Intel and AMD.
The second quarter of 2008 was one of the most interesting of this decade, and Q3 and Q4 are looking to be just as interesting. Both NVIDIA and Intel screwed up, and AMD's plan to sell better designed CPUs, graphics chips, and chip sets (the "glue" chips that go on the computer motherboard) seems to be getting some traction.
You can get a very good idea of the financial states of NVIDIA, AMD, and Intel, as well as hearing what their respective managements have to say about their current and upcoming technologies, by reading my summaries of their Q2 analyst conferences [See NVIDIA Q2 2008 analyst conference summary; AMD Q2 2008 analyst conference summary; Intel Q2 2008 analyst conference summary]. Note that NVIDIA's quarter ended July 27, 2008, and is their fiscal Q2 2009.
NVIDIA's disaster month was July. It was revealed that NVIDIA chips were melting down, particularly in certain Dell and Apple notebooks (Apple, as usual, denies that its products have any problems). NVIDIA took a $196 million charge to deal with the expected costs of replacing or fixing the notebooks. That is bad, but it is the kind of thing that happens from time to time, and should not affect NVIDIA very much unless the problem gets repeated.
Worse for NVIDIA, they had to drastically lower their prices in July. After about 3 years of offering no competitive threat to NVIDIA, ATI (now a division of AMD) had brought out some great graphics chips and prices them very nicely.
Which does not mean AMD is back in the money. Intel's primary weapon against Intel in 2006 was lowering prices to the point that AMD could not match. It is a monopoly tactic that is tried and true. Force out the competition with ruinous pricing, then jack prices back up to highly profitable levels when the competition is done in. The only difference with Intel is that if they had actually forced AMD out of business, they would then clearly be a monopoly. So they just pushed AMD to the brink, gained back some lost market share, and then raised prices again when they introduced their Core Duo technology.
NVIDIA is also far more profitable than AMD, but they have nowhere near the muscle of Intel. They have not yet tried to chase ATI/AMD out of the market with pricing muscle. Instead they have a long tradition of competing (and winning) with better technology. So the price cuts were necessary to their own survival, and will hurt their financial position in the short run more than they hurt AMD.
AMD stock is practially free these days. While AMD has a respite, it is going to have to struggle just to stay alive. It has not made a profit, even on a non-GAAP basis, in years. Its new notebook technology (a combination of CPUs and graphics chips) is very competitive and has had some good design wins, but Intel's (which suffered a delay in introductions) is certainly competitive. AMD is finally producing quad-core Opterons that are being lauded by end users, but they came out over a year late, giving Intel time to up the ante.
I own AMD stock, and it has been the worst-performing stock in my portfolio. Hope springs eternal, so I bought more AMD recently. NVIDIA stock is also dirt cheap; I am keeping an eyeball on it. Intel is a safe bet, but I don't feel it is a great bargain at the current price.
More data:
http://www.intel.com/
http://www.amd.com/
http://www.nvidia.com/
Wednesday, July 16, 2008
Intel Beats; AMD Thursday
Intel (INTC) reported revenues and earnings that beat Street estimates on Tuesday. See my summary of the Q2 2008 Intel analyst conference. AMD will report after the market closes on Thursday, July 17, 2008.
AMD investors are doubtless wondering whether Intel did well because the overall microprocessor end market was strong, or because it took substantial market share from AMD.
AMD preannounced three unusual items, but did not contradict its prior guidance that revenues would be seasonally down in Q2. The big scary item was a $880 million write down from its ATI acquisition, which is actually almost meaningless because it is a non-cash item. It will have a $32 million restructuring charge, which is real. It also sold some old equipment for $190 million, which strengthens its cash position. [See the AMD July 9, 2008 SEC filing]
The most important data to look at Thursday is Q2 revenues. Intel's revenues dropped 2% from Q1 to Q2 (Q2 is typically seasonally slow for microprocessor revenues, with Q3 and Q4 stronger due to back-to-school and holiday sales). If AMD revenues dropped 2 to 4%, I would characterize that as okay. Worse than 4% I would start to worry, even though excessive worry is already built into the stock price. Anything from a 1% drop to positive territory will be cause for celebration.
If you look at past AMD year-over-year and sequential comparisons, or AMD to Intel comparisons, you get a very broad spectrum of possibilities.
AMD Q1 2008 revenues were $1.505 billion, down 15% sequentially from $1.77 billion, but up 22% from $1.23 billion the year-earlier quarter
INTC (Intel) Q1 2008 revenue was $9.7 billion, down 10% sequentially from $10.7 billion in Q4 2007, but up 9% from year-earlier $8.85 billion (Q1 2007). Q2 revenue was $9.47 billion, down 2% sequentially from $9.7 billion, but up 9% from $8.68 billion year-earlier.
Suppose AMD Q2 revenue is up 22% from year-earlier Q2 of $1.38 billion, as it was in Q1. Then Q2 2008 revenue would be $1.68 billion, up 11.6% sequentially. That seems unlikely.
Suppose AMD is down 2% sequentially like Intel. Revenues would be $1.47 billion.
Guidance was seasonally down Q2 revenues. Q2 2007 revenue, however, was up 12% sequentially from Q1 2007.
So it is possible AMD is just being conservative, given that the main factor in their sales is Intel pricing schemes, which are not in AMD's control. However, Intel reported healthy profit margins the first half of this year, so they are not putting as much pricing pressure on AMD as they were in 2006 or 2007.
AMD seems to finally have its quad-core Opteron production ramped up. It may be doing better in its graphics division, and it actually managed to beat Intel to the punch introducing a new line of notebook computer system chips. Computers built around Phenom processors seem to be available from most major retailers.
So a good Q2 would not be a complete surprise. If it is a good Q2, I would like to see an updated roadmap for 2009-2010. Intel is already out selling pitching microprocessors that it is only dreaming of; AMD paused in its wild, rosy roadmap announcements during the Barcelona delays.
I would also want to hear that AMD's 45 nm chips are starting to come off production lines. AMD has done a terrific job closing the gap with Intel on chip manufacturing, but there is still a gap and it does help Intel keep its chips more competitive than they would be otherwise.
I am a long-term investor in AMD.
Keep diversified!
More data:
You can read my summary of the AMD Q2 analyst conference when it is ready on Thursday, or listen yourself from a link on the AMD investor relations page.
AMD investors are doubtless wondering whether Intel did well because the overall microprocessor end market was strong, or because it took substantial market share from AMD.
AMD preannounced three unusual items, but did not contradict its prior guidance that revenues would be seasonally down in Q2. The big scary item was a $880 million write down from its ATI acquisition, which is actually almost meaningless because it is a non-cash item. It will have a $32 million restructuring charge, which is real. It also sold some old equipment for $190 million, which strengthens its cash position. [See the AMD July 9, 2008 SEC filing]
The most important data to look at Thursday is Q2 revenues. Intel's revenues dropped 2% from Q1 to Q2 (Q2 is typically seasonally slow for microprocessor revenues, with Q3 and Q4 stronger due to back-to-school and holiday sales). If AMD revenues dropped 2 to 4%, I would characterize that as okay. Worse than 4% I would start to worry, even though excessive worry is already built into the stock price. Anything from a 1% drop to positive territory will be cause for celebration.
If you look at past AMD year-over-year and sequential comparisons, or AMD to Intel comparisons, you get a very broad spectrum of possibilities.
AMD Q1 2008 revenues were $1.505 billion, down 15% sequentially from $1.77 billion, but up 22% from $1.23 billion the year-earlier quarter
INTC (Intel) Q1 2008 revenue was $9.7 billion, down 10% sequentially from $10.7 billion in Q4 2007, but up 9% from year-earlier $8.85 billion (Q1 2007). Q2 revenue was $9.47 billion, down 2% sequentially from $9.7 billion, but up 9% from $8.68 billion year-earlier.
Suppose AMD Q2 revenue is up 22% from year-earlier Q2 of $1.38 billion, as it was in Q1. Then Q2 2008 revenue would be $1.68 billion, up 11.6% sequentially. That seems unlikely.
Suppose AMD is down 2% sequentially like Intel. Revenues would be $1.47 billion.
Guidance was seasonally down Q2 revenues. Q2 2007 revenue, however, was up 12% sequentially from Q1 2007.
So it is possible AMD is just being conservative, given that the main factor in their sales is Intel pricing schemes, which are not in AMD's control. However, Intel reported healthy profit margins the first half of this year, so they are not putting as much pricing pressure on AMD as they were in 2006 or 2007.
AMD seems to finally have its quad-core Opteron production ramped up. It may be doing better in its graphics division, and it actually managed to beat Intel to the punch introducing a new line of notebook computer system chips. Computers built around Phenom processors seem to be available from most major retailers.
So a good Q2 would not be a complete surprise. If it is a good Q2, I would like to see an updated roadmap for 2009-2010. Intel is already out selling pitching microprocessors that it is only dreaming of; AMD paused in its wild, rosy roadmap announcements during the Barcelona delays.
I would also want to hear that AMD's 45 nm chips are starting to come off production lines. AMD has done a terrific job closing the gap with Intel on chip manufacturing, but there is still a gap and it does help Intel keep its chips more competitive than they would be otherwise.
I am a long-term investor in AMD.
Keep diversified!
More data:
You can read my summary of the AMD Q2 analyst conference when it is ready on Thursday, or listen yourself from a link on the AMD investor relations page.
Friday, February 15, 2008
NVIDIA Q4 Glows; Disses ATI & AMD
NVIDIA (NVDA) posted soaring revenue and earnings gains for its 4th quarter of fiscal 2008 ending January 27, 2008. At the analyst conference on February 13, 2008, management told how this was done and predicted a bright future. For details see my NVIDIA analyst conference summary.
Revenues of $1.20 billion were up 7% sequentially from $1.12 billion and up 37% from $879 million year-earlier. Net income of $257.0 milion was up 9% sequentially from $235.7 million and up 57% from $163.5 million year-earlier. Q1 is expected to be down only slightly, instead of the usual seasonal dip.
Management declared this "the era of visual computing." I agree. NVIDIA has led the charge on ever-better graphics processing and presentation capabilities for personal computers. The chips (GPUs, graphics processing units) they sell today are marvellous, and the chips they promise for the future will be even more capable.
Even though everything reduces to 2 dimensions on your LCD screen, for games and other 3-D applications the math processing power needed to make realistic (detailed and fast-changing) scenes is only now beginning to come online. NVIDIAs GeForce 8800 GT GPU has a larger die size and more transistors than most CPU chips. Because of that there was some extra expense in Q4 trying to get good yields of this new top-of-the-line chip out of the fab.
NVIDIA management believes that for most people it now makes more sense to buy a medium or even low-end CPU and combine it with a high-end GPU in order to get maximum use from their computers. This would be especially true if you mainly use your computer for gaming or viewing videos. On the other hand the ability of programmers to find new uses for any extra CPU processing power is a well known trend that is not likely to break up. Right now programmers are behind the curve created by multiple core processors, but I expect new products in 2009 will bring that more into balance. Of course if you have a CPU that mainly just idles while waiting for you to type, even the CPU's of ten years ago are powerful enough. Still, the trend towards doing more computing on the GPU is a good one that will provide programmers with increased flexibility and power.
As to the competition, which is the ATI devision of AMD, NVIDIA management was not worried about them. On the one hand, to illustrate the new trend towards mid-range PCs with high-quality graphics, management picked the Gateway Effects 7020 desktop PC built with an AMD Phenom quad core CPU and an NVIDIA GeForce 8800 GPU.
On the other hand they thought ATI graphics chips are really competitive only in the low-end market, particularly in the low-end notebook computer market. Management went out of its way to dismiss the new X2 cards from ATI as not fast enough and occupying too much space in a computer. These cards have two HD 3870 graphics CPUs on a single card. NVIDIA favors the one-chip per card design, but hedged a bit by saying that they could produce a two-GPU per card competitor if the X2 design catches on. One analyst was surprised enough by this assertion to ask a follow up question and get the same dismissive answer. CNET reviewers, who I respect but sometimes disagree with, said the X2 outscore NVIDIA's GPUs on many games.
I am not a gamer, so I'll leave it to the pros to decide.
NVIDIA is a great technology company and its stock is cheap right now due solely to the liquidity squeeze and global economic uncertainty. I don't own the stock but have been very tempted to buy it lately.
Keep diversified.
See also my NVIDIA (NVDA) main page
Revenues of $1.20 billion were up 7% sequentially from $1.12 billion and up 37% from $879 million year-earlier. Net income of $257.0 milion was up 9% sequentially from $235.7 million and up 57% from $163.5 million year-earlier. Q1 is expected to be down only slightly, instead of the usual seasonal dip.
Management declared this "the era of visual computing." I agree. NVIDIA has led the charge on ever-better graphics processing and presentation capabilities for personal computers. The chips (GPUs, graphics processing units) they sell today are marvellous, and the chips they promise for the future will be even more capable.
Even though everything reduces to 2 dimensions on your LCD screen, for games and other 3-D applications the math processing power needed to make realistic (detailed and fast-changing) scenes is only now beginning to come online. NVIDIAs GeForce 8800 GT GPU has a larger die size and more transistors than most CPU chips. Because of that there was some extra expense in Q4 trying to get good yields of this new top-of-the-line chip out of the fab.
NVIDIA management believes that for most people it now makes more sense to buy a medium or even low-end CPU and combine it with a high-end GPU in order to get maximum use from their computers. This would be especially true if you mainly use your computer for gaming or viewing videos. On the other hand the ability of programmers to find new uses for any extra CPU processing power is a well known trend that is not likely to break up. Right now programmers are behind the curve created by multiple core processors, but I expect new products in 2009 will bring that more into balance. Of course if you have a CPU that mainly just idles while waiting for you to type, even the CPU's of ten years ago are powerful enough. Still, the trend towards doing more computing on the GPU is a good one that will provide programmers with increased flexibility and power.
As to the competition, which is the ATI devision of AMD, NVIDIA management was not worried about them. On the one hand, to illustrate the new trend towards mid-range PCs with high-quality graphics, management picked the Gateway Effects 7020 desktop PC built with an AMD Phenom quad core CPU and an NVIDIA GeForce 8800 GPU.
On the other hand they thought ATI graphics chips are really competitive only in the low-end market, particularly in the low-end notebook computer market. Management went out of its way to dismiss the new X2 cards from ATI as not fast enough and occupying too much space in a computer. These cards have two HD 3870 graphics CPUs on a single card. NVIDIA favors the one-chip per card design, but hedged a bit by saying that they could produce a two-GPU per card competitor if the X2 design catches on. One analyst was surprised enough by this assertion to ask a follow up question and get the same dismissive answer. CNET reviewers, who I respect but sometimes disagree with, said the X2 outscore NVIDIA's GPUs on many games.
I am not a gamer, so I'll leave it to the pros to decide.
NVIDIA is a great technology company and its stock is cheap right now due solely to the liquidity squeeze and global economic uncertainty. I don't own the stock but have been very tempted to buy it lately.
Keep diversified.
See also my NVIDIA (NVDA) main page
Thursday, August 16, 2007
AMD and Notebook Computer Bottlenecks
I see no reason to doubt that there are now shortages of certain components that are making it impossible for electronics manufacturers, in particular notebook computer makers, to meet demand expectations as we go into the holiday sales season. NVIDIA (NVDA), the graphics chip maker, reported last week (See my NVIDIA Analyst Conference Summary) that their inventories were low and their production capacity was maxed out. Taiwan's Digitimes reported that talks with Acer and other manufacturers were facing shortages of display panels, graphics chips from NVIDIA and AMD, analog chips, batteries, optical drives and even motherboards and some types of capacitors.
Last year AMD acquired ATI, the only credible rival of NVIDIA. AMD has lost bales of money writing off ATI acquisition costs, and ATI was having trouble keeping up with NVIDIA long before it was bought. In the long run AMD believes integrating graphics processing and general purpose processing on a single chip will give in a competitive edge over rival Intel, but even if that is true, it is years away from fruition. Meanwhile AMD/ATI lost market share to Nvidia.
If shortages of other notebook components don't impact the notebook market substantially, this short term situation is to AMD's advantage, as it can probably sell all the graphics chips it can make in Q3 and at good prices. Of course if notebook demand is left unfullfilled AMD leaves not only the graphics chip potential revenues on the table, but its some of its Turion processor revenues as well. It also, through its acquisition of ATI, makes chip sets (the "glue" that interconnects processors with memory and other components). Again, if it can sell all it can make, that is great, but if not enough notebooks can be made, it loses out.
So probably AMDs Q3 will be an improvement over Q2, even above the normal seasonality of the computer market, but it depends on exactly what the component shortages are, and to what extent.
As I speculated this spring, undo caution with inventories at electonronics makers is now causing an upturn in demand for chips and other components that will be difficult to meet. That is good for chip makers, but it may drive up some costs for computer and device makers and it means another round of capital investment for those who have been running too lean. If we are truly entering a video era, as Cisco believes, then there is going to be a big boom in demand for every kind of semiconductor chip that provides the processing power or bandwidth needed for this new paradigm. That includes CPUs, graphics processors, and analog chips.
I own AMD and Marvell (MRVL) stock (an analog chip maker), but not Intel or Nvidia stock. You can access my summaries of analyst conferences for these and other technology stocks at www.openicon.com/confsums/listcos.html
Last year AMD acquired ATI, the only credible rival of NVIDIA. AMD has lost bales of money writing off ATI acquisition costs, and ATI was having trouble keeping up with NVIDIA long before it was bought. In the long run AMD believes integrating graphics processing and general purpose processing on a single chip will give in a competitive edge over rival Intel, but even if that is true, it is years away from fruition. Meanwhile AMD/ATI lost market share to Nvidia.
If shortages of other notebook components don't impact the notebook market substantially, this short term situation is to AMD's advantage, as it can probably sell all the graphics chips it can make in Q3 and at good prices. Of course if notebook demand is left unfullfilled AMD leaves not only the graphics chip potential revenues on the table, but its some of its Turion processor revenues as well. It also, through its acquisition of ATI, makes chip sets (the "glue" that interconnects processors with memory and other components). Again, if it can sell all it can make, that is great, but if not enough notebooks can be made, it loses out.
So probably AMDs Q3 will be an improvement over Q2, even above the normal seasonality of the computer market, but it depends on exactly what the component shortages are, and to what extent.
As I speculated this spring, undo caution with inventories at electonronics makers is now causing an upturn in demand for chips and other components that will be difficult to meet. That is good for chip makers, but it may drive up some costs for computer and device makers and it means another round of capital investment for those who have been running too lean. If we are truly entering a video era, as Cisco believes, then there is going to be a big boom in demand for every kind of semiconductor chip that provides the processing power or bandwidth needed for this new paradigm. That includes CPUs, graphics processors, and analog chips.
I own AMD and Marvell (MRVL) stock (an analog chip maker), but not Intel or Nvidia stock. You can access my summaries of analyst conferences for these and other technology stocks at www.openicon.com/confsums/listcos.html
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