AMD Is Falling Further Behind

“AMD is now at a tipping point.” When Bernstein Research issued that note in October, the PC chipmaker Advanced Micro Devices had announced another round of layoffs, changed chief executives, and delivered its latest dim quarterly results. “This is the right step to ensure we prioritize our resources and engineering investments,” said new CEO Lisa Su, adding that AMD would continue to diversify its business away from PC chips. Wall Street analysts didn’t buy it. Bernstein was among a handful of researchers who wondered aloud how much longer AMD would be around. “We cannot help but question the intermediate-term viability of AMD’s client PC and server processor business,” wrote Craig Berger, an analyst at market researcher Hedgeye.

For decades, 45-year-old AMD’s principal business has been desktops and notebooks, and the company’s chips have often been the cheapest and most efficient. It’s never managed to take much more than 20 percent of the chip market away from Intel and has been losing ground in recent years. In its most recent quarter, AMD accounted for 5.2 percent of PC chip revenue, according to researcher IDC. AMD has less than $1 billion in cash on hand for the first time since 2001, and its share price is nearing its low. “AMD has chopped its operating expense spending in half in just five years,” wrote Berger. “That cannot bode well for future product quality.”