AMD moves beyond PC, faster chips no longer key

Reed Stevenson

LAS VEGAS: Advanced Micro Devices Inc. said it would embrace a strategy of developing processors for a wider range of products outside computers and called on the industry to focus on user needs rather than creating "technology for technology's sake."

"We have become interdependent on each other for success," Hector Ruiz, AMD's President and Chief Executive, said in a speech at the Comdex trade show in Las Vegas. "I urge you to demand that those companies who are currently serving you today begin developing technology not for its own sake, but in line with what you are really trying to do," Ruiz said.

AMD, which has fought a losing battle in recent quarters against Intel Corp. for the top spot in processor speed and performance, said that making semiconductors smaller, cheaper and faster was no longer the key for an effective strategy. In a shift away from the slowing personal computer industry, where Intel and AMD have significant stakes, AMD said it would begin working with a wider variety of companies to sell its products.

Ruiz brought out executives and representatives from Gibson Guitar Company, George Lucas' JAK Films and supercomputer company Cray Inc. to illustrate the technology that Sunnyvale, California-based AMD was delivering outside personal computers. Ruiz also projected a new role for the PC, saying that "the time is fast arriving when we will see the PC as the central hub of the home," a scenario that software giant Microsoft Corp. is hoping to achieve.

The focus on "customer-centric" technology also echoed the $400 million advertising campaign launched by Hewlett-Packard Co. on Monday that aims to portray the computer maker as a one-stop-shop for computing services as well as hardware.

AMD's strategy shift came on the same day that Standard & Poor's downgraded the chip maker on concerns about its ability to boost profits and weather soft demand, only hours after AMD said it would raise $300 million in a convertible note issuance. The rating cut took AMD's corporate credit rating down one-notch to "B-minus," its sixth highest "junk" grade, from "B," and rated the notes "CCC," two notches below "B-minus."

In response, AMD shares fell more than 12 percent to $5.72 on the NYSE.

© Reuters