Tuesday, 03 April 2012 11:48

AMD's Long Decline Started Back in 2006 With the Purchase Of ATi *Update*

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AMD_FX_CPU_LogoOver the course of the last year or so we have watched as a once solid company has started to crumble into a shadow of its former self. Yes we are talking about AMD and although the trip down the path to where they are now started years ago we have to wonder if there was ever a chance to change things and get the company back on track.

Back in mid-2006 AMD announces that it was going to buy ATi for an astounding $5.4 billion. It was money that AMD did not have as ready capital. Because of this plans for moving from 45nm to 32nm were put off by a startling number of years. AMD also lost quite a bit of its marketing and R&D money in the deal which showed in more than a few lackluster products right after the buyout. Although many sites claimed the move was needed for AMD to compete with Intel we wondered at the time if this was true at all. On the one hand AMD would gain a GPU business as well as the ability to manufacture their own chipset (just like Intel does), but in gaining this they were losing too much. Even the most conservative estimate showed AMD would not recoup from the purchase in less than 5 years.

In the end AMD’s purchase of ATI lost them their foundries, a ton of money (AMD operated at a loss until Q4 2010 when a very large Intel settlement put them back in the black), and a staggering number of high level employees including Dirk Meyer (one of the people that helped create the Athlon). Now under the leadership of Ex-Lenovo Exec Rory Read AMD has stopped competition with Intel in the desktop market and are rapidly moving to be little more than a GPU and mobile CPU manufacturer (they are keeping the server and workstation CPU line, but even that is not making them money).

On the employee side AMD has lost more people that we can really keep track of; Damon Muzny (once head of the New Products Marketing Team for CPUs) and very recently both Pat Patala (who was part of the Opteron Executive Team and now works for Samsung) to Godfrey Cheng who left after 12 years with ATi and AMD and worked on everything from the ATi All-in-Wonder to AMD’s new APUs. We do not know what direction Godfrey is taking as his resignation was just announced yesterday (Monday April 2nd).

Is this just AMD cleaning house or a sign of something much bigger? At this time AMD needs   creative minds like Godfrey, Dirk Meyer and even the blunt matter of fact ones like Damon Muzny (who actually knew how to just say tell you no, he was not going to do something). The CPU market actually needs a competitor to Intel, if for nothing else then to keep Intel pushing the limits of performance. AMD’s shift to a mobile and GPU oriented focus is not going to do them any good and will only hurt the market. Perhaps if AMD had not spent millions of dollars trying to sue Intel over the last 10+ years and had worked on the market that had the biggest impact to them financially (the DIY market was and still is much more profitable than companies like Dell, HP or Toshiba) AMD could have kept money to properly build new CPUs. Perhaps if AMD had taken the loss of removing Hector Ruiz as CEO and avoided the AMD buyout, the money hemorrhaging deal with Dell (just to push a few more units) and not alienated the DIY and enthusiast crowd we would have a very different company today.  I almost find myself wishing someone would buy AMD’s CPU business and turn it around so that we can have back the company that challenged Intel and won in the CPU performance arena.

*Update 4-3-2012 12:49PM EST* We forgot to mention that during his tenure as CEO Hector Ruiz was implicated, but never indicted on insider trading charges.

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