This article refers to the semiconductor manufacturer. For the Armenian dram, see Armenian Dram (AMD)
Advanced Micro Devices (NYSE: AMD) is a leading semiconductor producer that makes microprocessors for a variety of computing products, including personal desktop and notebook computers, servers, gaming consoles, and other consumer electronics. Along with market leader Intel, AMD dominates the semiconductor space.
AMD has split from being a chip designer and semiconductor foundry into just a chip designer when it spun off its manufacturing business.
Microprocessors are typically rated on a number of characteristics that measure their performance. These measurements are the most important factors for determining the success of a specific line of products, and as such they are the focusing points for creators of these chips. Some lines of chips will focus more on one factor than another in an attempt to predict what the market prefers (i.e. faster chips vs. more energy efficient chips, etc.)
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The demand for products that use AMD's processors is a significant factor in the success of AMD. Demand for computers has been decreasing growth since the mid 1990s, and as a result, microprocessing companies have seen decreasing growth in profits.
With the acquisition of ATI Technologies in October 2006, AMD was able to begin supplying 3D graphics, video and multimedia products for all types of computers, as well as products for consumer electronics. Before this acquisition AMD was unable to compete with Intel in platform technologies. AMD has developed a notebook platform, called Puma. This platform is designed to be compatible with consumer, business, and high end notebooks, making it a very attractive platform for OEM's. The high end graphics provided by ATI gives AMD's platform a significant advantage over Intel's competing platforms. However, this advantage comes partly from the fact that Intel has had problems with the graphics aspect of its platform, known as Montevina. If Intel can get this chip working then the competition for AMD would increase.
AMD competes directly with Intel (INTC). Intel has been in the microprocessor industry longer than AMD and has a significant lead in market share, but AMD has been able to gain some of this market share.
With the acquisition of ATI Technologies, AMD hoped to increase its ability to compete with Intel on all levels. However, with the loss of Spansion, AMD's flash memory subsidiary, there are even more areas in which Intel has the outright advantage.
Intel has an enormous amount of power in the microprocessing industry and as a result is able to leverage its market share to gain more customers. This has been a difficult obstacle for AMD to overcome in the past. However, AMD does boast a reputation for better service, making it popular among certain groups of consumers. Lower price points also make certain AMD products preferable to Intel's equivalents. But these recent price wars between the two competing firms have proven to be costly for AMD. Because Intel is so much larger than AMD, it is able to cut costs more effectively and as a result the losses in profit margins (from price cuts) does not affect Intel as severely.
There is another market where AMD has yet to develop a processor. Greater demand for mobility drove the increase in notebook popularity, and now that trend has sparked the rise of netbooks (aka Mobile Internet Devices, or MID's). Intel has released its Atom processors for this market and NVIDIA has released a competing processor called the Tegra. AMD is currently developing a competitor by the name of Ontario.
In the graphics chips world, the major competitors are Intel and Nvidia. AMD's Radeon line of graphics processors have turned out to be better than expected and are delivering stiff competition to Nvidia in the high end market. AMD executed a differentiating strategy for its high end graphics cards by developing mid range chips but then bundling those chips into its high end graphics cards. Nvidia, on the other hand, generally develops a high end chip and then move that chip down the value chain over time. Intel currently only sells low end graphics chips. AMD's strategy poses possible execution problems over time because it requires advanced inter processor communications, but the design is able to dramatically decrease power consumption. AMD has a dual processor graphics card, named the HD 4870 X2. The card is aimed at gaming customers and is capable of 2.4 trillion operations per second.  This card marks an important step in gaining market share from leading graphics producer Nvidia.