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1 Is AMD On The Brink?
Sunnyvale, Calif.-based Advanced Micro Devices Inc. had a rough 2007, losing hundreds of millions of dollars each of the three quarters it has reported earnings for this year.
AMD CEO Hector Ruiz doesn't expect profitability until the third quarter of 2008. So, the question becomes, can AMD survive any more setbacks? Some on the panel fear that if all doesn't go well, the company could be broken up in 2008 or 2009.
"If AMD is not able to compete in the server space, it would be devastating to [its] recovery," said IDC analyst Shane Rau. "If AMD misses a Q4-Q1 cycle, we're going to be looking at Q4 '08-Q1 '09 for the next big opportunity."
Joe Toste, vice president of marketing at Minneapolis-based Equus Computer Systems, said the irony is that the industry needs a strong AMD. "But this is the year that Intel shifts their paranoia from AMD to Nvidia. [Intel CEO Paul] Otellini was really upset that Apple notebooks went to Nvidia."
2 Intel's Game Of Monopoly
The world's biggest semiconductor company continues facing lawsuits and antitrust proceedings in a number of venues worldwide. Intel denies all charges and allegations in these cases.
F. Scott Kieff, a law professor at Washington University in St. Louis, who specializes in antitrust regulation in the technology sector, said Intel is "getting unfairly beaten up" on antitrust matters and could face stiff penalties this year. But he also contends that assorted rulings against Microsoft show that you can penalize a market dominator and scarcely cause it to break stride.
"Most people think the actions against Microsoft cost Microsoft a lot of money, but they didn't change the market much," Kieff says. "Meanwhile, if AMD were to go away, the logic of EU regulators would make them look even harder at Intel."
3 Consolidation
The panel believes Nvidia is the major client player with the best likelihood of entering the M&A sweepstakes. The Santa Clara, Calif.-based graphics maker could use a CPU presence to reduce its somewhat parasitic relationship with CPU makers. If Nvidia does make a move, a number of panelists mentioned VIA Technologies Inc., the Taiwanese maker of ultra low-voltage x86 chips for ultra-small PCs, as a possible acquisition. Then there's the blockbuster a few panelists dare to predict: An Nvidia-AMD merger.
Rahul Sood, CTO of Hewlett-Packard's global gaming business, said, "Nvidia should probably get into the business of making CPUs, or pushing hard on GPU computing. Who knows? Maybe they'll look to buy VIA, or perhaps they are watching AMD closely. Either way, they could seriously turn this industry upside down."
Dean McCarron, president of Mercury Research, Cave Creek, Ariz., doesn't agree. "I don't think acquisitions will be a big story in 2008. But a lot of eyes will be on AMD changing their manufacturing arrangements. Are they going with an asset-light strategy? Fabless or limited ownership?"
