System Builders: AMD Faces Strategic Choice Whether To Adopt ARM Processor Designs

British chip design firm ARM is trying to convince AMD to adopt its low-power processor architectures instead of the traditional x86 platform -- a logical move for ARM according to several system builders, but a significant, risky shift in strategy for AMD.

In an interview with EE Times on Monday, ARM chief executive Warren East laid out the rationale for an ARM-AMD partnership. ’AMD is a successful company selling microprocessors,’ East reportedly said. ’ARM is in the business of licensing microprocessor designs. It is perfectly natural that we should have been trying to sell microprocessor designs to AMD for about the last ten years. Hitherto we haven't been successful."

It appears as though East isn’t done trying. AMD spun off its fabrication division into standalone Globalfoundries in 2009 -- a separation AMD finalized earlier this year. Meanwhile, ARM’s entire business model, the strategy behind its sudden rise in the mobile market, is to provide architectures to semiconductor firms like AMD whose solutions emphasize energy and cost-efficiency.

According to the report, East said AMD is re-considering its x86 strategy -- while ARM actively pitches its platform as an alternative. "AMD has signaled they are going through a rethink of their strategy, and that must provide a heightened opportunity for ARM,’ East said. ’They might use ARM microprocessors in the future and you've got to expect that we would be trying to persuade them of that."

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As if to signal a possible rapprochement, AMD on Wednesday said John Davies, ARM’s vice president of technology, Media Processing, will deliver a keynote at its upcoming AMD Fusion Developer Summit, as part of AMD’s ’heterogeneous computing’ message centered on OpenCL. But while AMD has stated its intention to offer an industry standard API that supports multiple hardware platforms, system builders said AMD’s potential adoption of ARM’s core architecture in its chipsets represents significant opportunity as well as significant risk.

’I think that adding an ARM core to their Fusion APU design would be a very interesting move for AMD,’ said Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder. ’The ability to do so highlights one of the great extensible features of a multicore chip design and would allow AMD to possibly play in the smartphone and tablet markets. However they’d also amass another set of competitors such as Marvell, Freescale, Qualcomm and even NVIDIA.’

Each of those chipmakers licenses designs from AMD in mobile, small form factor solutions -- and has been doing so for some time. However, as similar architectures migrate to more traditional PC segments -- including expensive, power-consuming data center systems -- there may be new supplemental market opportunities for ARM’s architecture as well.

’We are also seeing a great interest in low-powered servers from our customers,’ Kretzer said. ’So I can see this type of move paying dividends in that space for both ARM and AMD.’

Next: AMD's Position

Some system builders say a partnership between ARM and AMD in which the former provides core designs for the latter to build around is clearly more advantageous for ARM. Tim Ulmen, principal at Midwest IT solutions group, a Wichita, Kan.-based system builder, said AMD’s spin-off of Globalfoundries is a step towards the company’s business contraction that could turn AMD into a firm merely known for CPU marketing, rather than manufacturing.

’If AMD follows up spinning off their foundries with this partnership, they become a glorified marketing company,’ Ulmen said. ’There are already a lot of Nvidia resellers that use ARM reference designs in their chips. Those companies don’t necessarily manufacture their own cards.’

Ulmen said the model that companies such as EVGA and Gigabyte follow is geared toward smaller companies who design integrated chipsets or whose core competency lies in the mobile handset market. If AMD moves away from the traditional X86 CPU arena, Ulmen said, Intel is likely to capitalize on the opportunity to emphasize its foundry business, its investments in manufacturing in the U.S., as well as its technical innovations.

’AMD is kind of outsourcing their technologies,’ Ulmen said. ’There’s a certain amount of pride in saying ’we develop our own technology.’ I think Intel will jump all over that. One thing they keep saying is how much they keep spending on R&D, and how it amounts to more than their competitor has in sales.’

If, however, AMD chooses to limit its dealings with ARM to OpenCL and the creation of a heterogeneous, multi-platform software ecosystem, Ulmen said they will benefit from a growing market driven by consumer demand for smartphone and tablet apps. Another system builder, who spoke on condition of anonymity, said AMD, must maintain its support for x86 regardless of its strategy with regard to ARM, or run the risk of losing its share of the x86 market to perennial rival Intel.

’If AMD drops the x86 platform, that would leave Intel with a monopoly on that market,’ the source said. ’I have to think that that would not be good for the marketplace.’

On the other hand, the source said, if the ARM platform can somehow still run x86 programs then both ARM and AMD could be looking at an opening in their dual-front competition with Intel. ’A mashup up with AMD could breathe new life into the marketplace,’ the source said. ’AMD has always been David to Intel’s Goliath, so anything that could prop them up would be a good thing in general. I favor CPU competition.’

Next: ARM's position

Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based system builder said that ARM will benefit from AMD’s adoption of its platform in the short-term -- at least as far as industry perception and momentum is concerned. ’I would imagine that having AMD introduce an ARM processor would help make the ARM brand more visible,’ Tibbils said. ’I’m not really sure if that benefits ARM in terms of generating more sales because the device gets the credit for the functionality and the device is the brand, not the processor or at least that seems to be the current situation in this market segment.’

As for the value proposition of leveraging ARM’s designs in its products from AMD’s perspective, that would constitute a major shift for AMD, and would require significant investments -- including in the one area in which, as a result of Globalfoundries’ formation, AMD is less resourceful than it once was.

’For AMD it means they need to develop a complete business strategy of how to get their ARM processor embedded in these mobile devices,’ Tibbils said. ’It’s not as simple as just dedicating a FAB line to produce the product; AMD needs to be able to create a competitive advantage for companies to use their processor. I’m sure that is what they are evaluating.’

In the end, it’s up to ARM to convince AMD to make that switch, another system builder who spoke on request of anonymity said. And if AMD were to agree, that could create a good deal of uncertainty for its channel partners -- as well as its own employees.

’ARM is trying to convince more chipmakers to use their architecture and become a bigger player in the processor market,’ the source said. ’Depending on how AMD plans to integrate the ARM architecture into its processors, it may or may not be of much impact to both Intel and AMD’s system builder partners. Using ARM would also mean that AMD is planning to discontinue some of their own processor architectures and layoff some of its engineers, which I am not sure if AMD is willing to do at this point. Therefore, I do understand AMD’s reluctances in using ARM.’

One reason for AMD to seriously consider ARM’s proposition is the reality that just as ARM seeks to prevent Intel’s expansion onto its territory in mobile devices by venturing into the server space, their partner in that effort, Nvidia, can leverage its new growth against its main rival in the graphics space -- AMD. But while AMD is certainly aware of ARM’s recently announced partnership with Nvidia and its challenge to Wintel, it may not see the same potential for its own business growth that Nvidia saw when it chose the ARM platform.

Next: Nvidia's Position’The ARM architecture is a good fit for Nvidia because Nvidia does not have too many processor choices to begin with, and Nvidia is also trying to gain a larger market share in the processor market,’ the source said. ’Nvidia may be also trying to become less dependent on Intel’s CPUs for some of its products.’

As long as ARM does not partner with Intel in developing CPUs to compete with Intel, and as long as AMD does not share Nvidia’s reliance on the leading CPU maker for its chipsets, a partnership with ARM might not be necessary. But with so much change in the mobile segment these days, the opportunity to partner with ARM and enter new device segments just might justify AMD re-fashioning itself completely.