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Will AMD be bankrupt by 2020?

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AMD

AMD hasn’t been doing well, and it’s something we’ve addressed before. Nvidia has a complete stranglehold on the desktop GPU market – and even the release of the upcoming R9 390X isn’t likely to change that. Rumours have abounded that the chip-maker could be gobbled up by Samsung – which as I’ve said, would probably be a good thing seeing as they otherwise have close to no research budget. The situation is bad. And according to one analyst firm, it’s going to get worse.

Analysts at Kerrisdale Capital Investments have predicted that chipmaker AMD will file for bankruptcy in 2020.

They say that the company’s perpetual losses and negative trends within the industry means Team Red may soon be Team dead.  Here’s what KCI says about AMD.

“We contend that Advanced Micro Devices, Inc.  one of Silicon Valley’s semiconductor success stories, will file for bankruptcy by 2020. Since 2008, this legacy company has survived by slashing operating expenses, spinning off its manufacturing business and transitioning away from its core PC business to “growth markets”. While it may be succeeding in marketing its turnaround narrative to the market, we see AMD at a point of no return.

We identify a toxic combination comprising an uncompetitive product portfolio, technological leap forwards by competitors, several structural challenges, poor positioning due to an ineffective strategy and a worsening balance sheet. While it is bagging some wins, the clock is ticking and AMD will be unable to drive profitability in industries where product leadership, rather than merely pricing, determines success.

That’s a bold, and terribly grim predication for AMD. New CEO Lisa Su seems to have realised that AMD needs to be more competitive – not just on price, as it always has been, but also in terms of technology and high end performance. It could, however, be too little too late at this point.

“It’s extraordinarily important to ensure that we have competitive, high-performance cores,” she said. “We have reduced our low-end PC exposure. When you look at AMD’s historical business, we were very, very heavily concentrated in consumer, low end PCs that was actually our speciality.

But a new attitude probably isn’t enough. In conclusion, the report paints a terribly picture for AMD’s future.

“Time is missing for a successful transformation. With an uncompetitive product portfolio, several structural challenges coupled with poor positioning (resulting from an ineffective strategy), little hope is left for AMD given its worsening balance sheet.

you can read a follow up to this article, here. 

Last Updated: May 26, 2015

60 Comments

  1. Kensei Seraph - Terran Ghost

    May 26, 2015 at 13:36

    As someone who has mostly been a Green Team supporter (I owned 1 Red Team graphics card but it was faulty and had to be sent away) I can honestly say that I would like AMD to stick around for a long time to come.
    This forces Nvidia to be more innovative and keeps them struggling to stay on the top of the market thus leading to better graphics cards being developer.

    Reply

    • Josh Morland

      May 27, 2015 at 08:00

      Translation: “I won’t buy AMD products or support the company at the moment but I want them around so nGreedia doesn’t release a $500 GTX 1050ti.”

      Reply

      • Kensei Seraph - Terran Ghost

        May 27, 2015 at 08:50

        Pretty much.

        Reply

        • davidcianorris

          August 20, 2015 at 08:41

          Thats plane silly… how do you think they can possibly compete if they don’t have any cash incomes… Ultracapitalism is a descending spiral for many and a skyrocket for few.

          Reply

  2. Admiral Chief's Adventure

    May 26, 2015 at 13:36

    Ag deksels!

    I really hope they can turn it around

    Reply

    • Hammersteyn

      May 26, 2015 at 13:40

      *Thinks of this song

      Reply

      • Admiral Chief's Adventure

        May 26, 2015 at 13:43

        Sad thing is, I remember that song
        #MasehareImOld

        Reply

  3. Blood Emperor Trevor

    May 26, 2015 at 13:38

    I hope that’s not true, or I may just buy a console come 2020 instead of a new PC because I won’t feel like being price-gouged by Intel & Nvidia.

    I’ll be pedantic as well by wondering how seriously I should take their report seeing as Geoff had to fix their ADM typo.

    Reply

  4. Hammersteyn

    May 26, 2015 at 13:40

    So consoles will get Nvidia cards? Or will they finally die out?

    Reply

    • Admiral Chief's Adventure

      May 26, 2015 at 13:53

      You sound excited?

      Reply

      • Corrie

        May 26, 2015 at 13:58

        I’d love to hear that consoles will meet a grim fate, no more people nagging as to why their 10 year old console won’t be getting anymore games and that that little bit of 256mb of Ram will provide an eternity of joy and glee and that those evil console makers are just clever and just want you to upgrade to their new console.

        I’m not lying that is people’s actual words -_-

        Reply

        • Trevor Matrix

          May 26, 2015 at 14:01

          Console “gamers” like that must believe masturbation will cause hands to grow out of their hands or something similiar like that…

          Reply

          • Corrie

            May 26, 2015 at 14:13

            xD

        • lygamnt

          May 26, 2015 at 16:06

          Yeah I hate it that My turbo Duo and Intellivision aren’t getting the new call of duty or Witcher 3. evil money grubbing Console makers.

          Reply

        • chimera_85

          May 26, 2015 at 16:21

          Hahaha I game on both and both have their pros and cons

          Reply

      • Hammersteyn

        May 26, 2015 at 14:07

        meh

        Reply

    • HairyEwok

      May 26, 2015 at 13:56

      Looking at how Nvidia is pricing their tech I would say the odds of Consoles dying out is more a reality than there being cards placed within a console.

      Reply

      • Lord Chaos

        May 26, 2015 at 13:56

        Or they would move back a generation just to be affordable.

        Reply

        • HairyEwok

          May 26, 2015 at 14:12

          PS4 V2.0 now with Nvidia PhysX and Hairworks.

          Reply

      • Matthew Holliday

        May 26, 2015 at 15:13

        locally, Id disagree, tech costs are crazy high.

        but internationally, US specifically, i could not justify buying a console…

        Reply

    • CypherGate

      May 26, 2015 at 15:48

      There could be possibly one more generation of consoles before they die out I think. The next gen console could come much much sooner as a last blow out to the console generation. Thats just my 2cents worth of predictions right there! If they should do that then Sony NEEDS to go balls deep into tech that would make us think back years down the line on how powerful the last console was.

      Reply

      • Hammersteyn

        May 26, 2015 at 16:19

        True, but they cant make it too expensive

        Reply

        • CypherGate

          May 26, 2015 at 16:31

          Thats also true. I think they would end up pricing it roughly to the current gen consoles or possibly R500 – R1000 less than when the PS4 & X1 launched. That should be fair if you consider the amount of tech that would be included into the console. Maybe say a custom 980TI type of GPU with something like 16gig of GDDR5 memory and a 1.5TB drive. Hell they would possibly even implement a custom AMD GPU Based on there upcoming R9 390X with possibly a latest AMD custom CPU as well. Nvidia and Intel would charge too much for their GPU’s and CPU’s I think. I think at launch they would possibly charge like R5000 – R5500 for a console which isnt bad if you consider a really beefed up spec. In the High end PC range.

          Reply

    • lygamnt

      May 26, 2015 at 16:02

      Hey now don’t go putting consoles in the grave. AMD have been down before they’ll get back up. And after what NVidia did to microsoft over the original Xbox pretty much ends any hope of an MS/NV relationship. CONSOLES ARE FOREVER (Until the next gen comes out). Yet I did play time pilot on Coleco Vision and K.C Munchkin on Odyssey 2 for like 5 hours last night so VIVA LA CONSOLES!

      Reply

      • Hammersteyn

        May 26, 2015 at 16:18

        XD

        Reply

    • Wesley Fick

      May 26, 2015 at 16:14

      Consoles will remain in AMD’s circle for now. Unless Intel somehow manages to jump the gun on AMD in the graphics race in the next five years (possible, but unlikely given their current setup in the GPU department), the only threat to AMD’s semi-custom business for consoles is Nvidia’s Tegra – and ARM processors aren’t quite packing the punch needed to compete against something like the PS4.

      Then again, a lot can change in two to five years. It will be interesting to watch.

      Reply

      • Hammersteyn

        May 26, 2015 at 16:18

        True, very true

        Reply

  5. Lord Chaos

    May 26, 2015 at 13:53

    Whooot, one meeting canceled.

    *Adds good news to bad article

    Reply

  6. Kevin

    May 26, 2015 at 13:54

    It surely wouldn’t be a good thing with Nvidia and Intel being the only marketleaders.

    Reply

  7. Trevor Matrix

    May 26, 2015 at 13:59

    Many moons ago I ran on AMD hardware for my PC. It was, by far, my favourite period in gaming ever on that machine. It would be sad to see AMD go.
    As Alien Trevor said: Getting shafted by Intel and Nvidia price wise is not coo!

    Reply

    • Ranting Raptor

      May 26, 2015 at 14:05

      Agreed. AMD is needed to keep Intel and nVidia prices in check. Without them it would be disastrous.

      Reply

  8. Ranting Raptor

    May 26, 2015 at 14:03

    Ok. I’m a team greeny. I dig my better color option. It’s far more cool looking and doesn’t seem so angry.

    However, No AMD would be a very, very very bad thing. You need competition in the market. Without it you end up with prices that border on insane because only 1 company has the market. That is never a good thing.

    I am seriously hoping AMD can turn their business around and start coming back a little stronger.

    They need to work on their timing of releases I reckon. Each time they release something is just when nVidia releases something that has the market more excited and AMD seem to fizzle in to the background noise.

    AMD need more presence at shows like E3 as well.

    Honestly, as a team green I can’t believe I’m saying this but PLEASE AMD GET YOUR SOCKS PULLED UP AND DO SOMETHING GREAT!!!!

    Reply

  9. Kikmi

    May 26, 2015 at 14:09

    Red is a piece of shit. The worst driver sets, stupid needless API’s and not really moving anything forward anywhere. That being said. The industry will suffer massively should they not be part of it in the future. Competition is healthy for all companies, and this will only lead to a more static and stagnant arena. What a shame.

    Reply

    • Lord Chaos

      May 26, 2015 at 14:25

      You’re doing it wrong… 😛

      Haven’t had a single days worth of crap with RED, and I’ve been solidly there for 8+ years

      Reply

      • Kikmi

        May 26, 2015 at 14:48

        I’ve fiddled with x3, x1, 4***,6***,7*** variants and they’re all utter shit. Driver compatibility issues with (PnP) monitors. Artifacts and graphical glitches. Massive drops in performance with no indication or tool set able to identify why the issues are occurring (usually a driver issue). Stuttering images. Tearing with syncs on and off. Shittest AA I’ve ever seen in my life. Colour saturation issues. Native support for older software is almost non existent.

        TL;DR
        I’ve fucked around with the last 12 years of AMD/ATI and its all kak dude. Both flagships and low ranges. I’ve yet to personally experience any joy out of them.

        Reply

        • Lord Chaos

          May 26, 2015 at 15:34

          Have a friend who feels the same, even after giving him my old 7970.
          All I can say is AMD/ATI has never disappointed me.

          Reply

        • Wesley Fick

          May 26, 2015 at 22:22

          If anyone follows Kikmi on Twitter they would know that his energy is so great that its entirely possible that his chakra is the reason why technology acts up around him. 😛

          Reply

          • Kikmi

            May 27, 2015 at 10:52

            AMD’s takeover solved quite a bit of the day one bullshit the guys were infamous for. That still doesn’t change the fact that I’ve struggled many times more with ATI than Nvidia.

  10. Sayan Sen

    May 26, 2015 at 14:32

    amd will never die .. mark my word !!

    Reply

    • Amateur Micro Devices

      May 28, 2015 at 13:25

      I s already dead

      Reply

      • Sayan Sen

        May 28, 2015 at 17:25

        in ur dreams.. 😛

        Reply

  11. Matthew Holliday

    May 26, 2015 at 15:11

    they were always the one that provided the better cheaper options.
    now that nvidia are providing the bigger bang for your buck, AMD has lost their appeal.

    they need to stop competing with team green directly and work on what made them good befor. fill a niche and dominate that market, provide competition by filling in the gaps that nvidia are missing.
    their 4850 was a thousand times better than nvidias 8600gt at a similar price point.
    andwhile their 5770 didnt perform as well as the nvidia 460 options, it was 25% cheaper and was still playing the latest games up till last year(albeit on low settings)
    but since their 6xx0 range, theyv been a non-factor, with only brief success from their 7850 and R9 290x, which were top of the line cards at the time, with the 7850 being comparable to the nvidia 550ti which was a much cheaper option and was maxxing out all games at the time anyway…

    same with their CPU options, they still provide the cheaper options, but they simply dont perform well enough at those lower price points.
    my AMD 2400+ cpu used to wreck way back when and the phenom II x4 series from 2009/10 was far cheaper than the intel i5s and performed pretty much on par.
    but instead of following that trend, they came out with APUs that were a waste of time and let their best CPU range fall off the table to be replaced with the FX series that was powerfull, but not as good as the i5s, which were now at a similar price point.
    instead of following up with their hexacores to provide a cheaper alternative to the i7 and their phenom series which were a cheaper alternative to i5s.

    intel, keeping their i5/7 series by going sandy bridge etc etc etc has allowed their cpus to become an institution, while AMD have been flipflopping all over the place.

    Reply

  12. lygamnt

    May 26, 2015 at 15:53

    Isn’t AMD making bank off every console maker right now. It would seem odd for them to not turn a profit on making millions of the processors in every home gaming console. I am an AMD guy as it were. The build products you can really push the hell out of if you know what your doing. Also I read they are drastically shrinking the die size of their GPU’s CPU’S and APU’S And I would think that the smaller less power hungry APU’S could become a player in the Windows tablet market pretty soon. Face it their SOC graphics ability’s blow Intel onboard graphics out of the water. I hope the “experts” are wrong.

    Reply

    • Wesley Fick

      May 26, 2015 at 16:08

      As far as consoles go, their profit margin is in the low double digits. By 2017, they might increase that to 15% or so and by 2020 20% sounds reasonable, but its not a high-volume market like others are. AMD is handling just about everything for the manufacture of those chips, even down to the fabrication agreements with TSMC/Global Foundries. Other deals like the custom FirePro GPUs for the Mac Desktop, the Radeon R9 370X for the 2015 MBP Retina, are all low-margin parts. Semi-custom silicon is fast becoming AMD’s focus, but they have to scale massively to have it make sense.

      High-Bandwidth Memory is also something that will affect their business positively, but they’re not going to be making a lot of money off it for the next year or two.

      Reply

      • lygamnt

        May 26, 2015 at 18:31

        Good points. AMD might shrink but as long as they keep their custom silicon business going, With more and more platforms needing chips that don’t rely on major cooling systems like for Tablets, ALL in Ones, and certain phones. With Skipping 20nn to 16nm for their GPU’S as is rumored to come out at the end of this year it could help them get a little more leverage in the mobile market (If the smaller chips run efficiently as planned).

        Reply

  13. chimera_85

    May 26, 2015 at 16:19

    Wow that’s sad and that being said, my PC I got last week has no AMD parts haha

    Reply

  14. Wesley Fick

    May 26, 2015 at 16:25

    As with any discussion about AMD’s future, this graph showing their desktop GPU market share over the years speaks volumes about their current position in the market. They can make a return to ~40%, perhaps even ~50% of the market share, but it will be a long run for them and they must consider their options carefully.

    Reply

  15. Judge_Chip

    May 26, 2015 at 19:45

    2020!? AMD doesn’t have a snowball’s chance in hell to last that long, with Rebranded Watt Sucking GPUs, IPC Cripple CPUs/APUs and Massive Debt AMD will be lucky to see 2016.

    While AMD was wasting time and money on fusion delusion, mantle malware, seasickmicro, and many more half baked, lame brained, cash burning gambles the competition was taking massive market share with Superior Chips making big bucks.

    Verdict: AMD in BK re-org within a year from now.

    Reply

  16. Ztitch Developer

    May 26, 2015 at 19:48

    PC gamers around the world would be screwed if AMD goes bankrupt, while NVidia laughs its way to the bank as gamers have no choice but to buy NVidia cards. Expect less generation leaps that pushes the envelope of graphics technology, and expect more expensive, rebranded cards.

    Reply

  17. Lothy

    May 27, 2015 at 09:53

    I wonder where it all went wrong for AMD/ATI. At one point, the GPU/CPUs were amazing beating NVidia/intel. then suddenly the CPU race started tapering off and now it seems the GPUs as well. I have been a long time supporter of team red, but when its time for my next upgrade I might be forced to go to “greener” pastures.

    Reply

    • Sayan Sen

      May 27, 2015 at 12:35

      stupid intel / nvidia fanboys happened to amd … they crap on abt how hot amd gets n how bad amd drivers r …
      bt they r brain-dead n dnt realise that without amd their beloved intel / nvidia is goin to f**k them hard in the @$$ …

      Reply

      • Lothy

        May 27, 2015 at 12:45

        lol rage less bud 😉
        I think AMDs last really good range of cpus was the K7 series. For some reason it went south after that. Similar with the gfx, the HD5xxx series was awesome, then poof… I think ppl are more driven by whats top at the moment, so the tables could have easily be reversed and a lot of the “NVidia fanbois” probably would have been in AMDs corner. The company has the ability to produce good products, but either through poor management or planning lost their way.

        Reply

        • Sayan Sen

          May 27, 2015 at 13:47

          i m not denying bt dat intel / nvidia fanboys exaggerate these things to a gr8 extent ……….

          Reply

  18. Guy

    May 27, 2015 at 16:38

    One thing that could save them (though will invoke missives of RAGE!) would be Apple to buy them. It’s essentially what their did for their mobile products (design their own ARM processor) and would allow them to not be beholden to Intel and remain in the X86 camp (yet another processor change similar to 68K->PPC->X68 could kill some of the momentum they have with the Mac) and have their own CPU/GPU design group to optimize OS X for.

    Besides processors for the Mac, they could (but probably wouldn’t) still keep selling AMD/ATI chips to everyone else. Apple has the cash and this could be a good fit for them

    Reply

  19. SuperBeautifulNoise .

    June 1, 2015 at 02:31

    if AMD goes under prices for both CPU’s and GPU with skyrocket. We need AMD to keep Intel and Nvidia from making PC gaming something only rich people can afford! I owned two AMD 64 CPU’s and they where great, it would be a shame to loose AMD, their problems are tragic.

    Reply

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