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AMD: Benefiting from Console Gaming & Servers
Posted by: mitu77 (IP Logged)
Date: April 14, 2014 09:29AM

Innovations, feature enhancements and upgraded technology are keys to the success for chip manufacturers in order to survive the competitive market of micro processors. Advanced Micro Devices (AMD) is one such manufacturer that has always been at par with the ever-changing technologies and the need of the market.

The company has been tapping the market of smartphones, tablets, notebooks and various devices by supplying chips as an OEM vendor to the manufacturers of the mentioned devices. Although there are other leading manufacturers in this segment, AMD offers stringent competition to others in the same segment.

The company is now focusing on high-end servers in data centers and servers for cloud enabled services. The console gaming market is also an impetus for the growth of graphics and the visual solutions segment of the company.

The company generated total revenue of $1.59 billion, up 37.6% year over year, and sequential growth of 8.8%. This growth was mainly due to strong sales in the visual and graphics segments, which contributed to 55% of total revenue. The visual and graphics segment recorded a voluptuous growth of over 165% year over year while sequential growth was 28.9%. The strong sales were primarily because of a rise in demand for console gaming platforms and GPUs.

AMD also foresees high revenue from data centers and high-end servers in cloud data centers. The estimated market for this is predicted to be $8.5 billion by 2017. AMD sees bright prospects in ARM servers and anticipates it to be 10% of the server market by 2017, reaching up to 25% by 2019.

AMD is working on its 28nm-64 bit ARM chip branded as “Seattle,” which is supposed to be faster and more powerful as compared to its existing x86 processor. It also consumes less power that makes it widely acceptable in smartphones and tablets. AMD has been one of the leading OEM vendors to smartphones and tablet manufacturers. The ARM based chips can always provide AMD more share in the server processor market and an upper hand over its closest competitor, Intel, that sells 90% of server processors. The 28nm Seattle is based on a Cortex A57 core that is scalable to 16 cores. It also supports 128 GB DRAM with offload engines for higher power efficiency and reduced CPU loads.

The revenue from Seattle is expected to influence the earnings of the fourth quarter for 2014 in a positive way.

Conclusion

The company will be soon posting its next quarter results. The results will be influencing the top and bottom line as AMD is now a chip vendor for Microsoft Xbox One and Sony’s PlayStation 4. The gaming consoles found tremendous response from the market after they were launched. The recently declared quarterly results had a strong impact for top and bottom lines of AMD and will continue to positively impact results. The success story of the gaming consoles would enable AMD to beat market estimates.

As an investor, it is worth considering AMD in your portfolio if we see its recent success story, and the journey seems to continue looking at the gaming console and the server market.



Stocks Discussed: AMD,
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