CRN Interview: Hector Ruiz, AMD

Ruiz took the reins as president and CEO of AMD on April 25 after being selected for the job by his predecessor, co-founder and chairman Jerry Sanders. Ruiz spoke with Senior Editor Edward F. Moltzen earlier this month, before the company announced plans to cut 2,000 jobs and take a charge of between $300 million and $600 million against profits for the fourth quarter.

CRN: You became CEO at a challenging time, not just for AMD but also for the high-tech industry. Has it been difficult taking over the company at the time you did?

RUIZ: The industry is competitive to begin with,I would say really competitive. It's been a combination of three things that have never occurred in the history of the industry. Demand has not been there the way we had hoped. There has been a recessionary period. You look at what companies had in their supply chain, and there's not a lot of innovation out there. All of that has created a very challenging environment.

CRN: In terms of AMD's organization, what ideas do you have to make the company more efficient so it can be better positioned to capitalize on opportunities?

RUIZ: This is an interesting question, because most people don't have the time or attention span to listen to the answer. We're literally between a rock and a hard place. There was a fellow, whose name was Rock, who predicted,and it turned out to be true,that the cost of capital equipment was going to double every four years. It's actually slightly ahead of that. The cost of equipment is just growing so rapidly. Let's take a Hammer chip, for example. It has 100 million transistors. Let's take a nice, round number and say you can sell it for $1,000. The transistor cost is fractions of a penny. So on the one hand, you have capital equipment costs going up, and on the other hand, you have transistors that don't cost anything. We need to have a business model at AMD that relies less on capital equipment and more on connecting things. We have to work with customers a lot closer, and we have to do it in a way that is much less capital-intensive.

CRN: How important was AMD's business PC deal with Hewlett-Packard, unveiled last summer? Could that deal help convince large systems vendors to see AMD as a viable alternative to Intel?

RUIZ: Our win with HP was very important and a milestone. For us to reach our dream of being the kind of company we want to be, we have to succeed in the business space.