Processor Whispers: About assumptions and acquisitions

by Andreas Stiller

The PC market is in a tailspin and many companies have to announce very poor results – and yet, we also have some winners. AMD is definitely not among them, mass layoffs loom on the horizon. And, again, takeover rumours are circulating.

According to the market research institute Gartner, the PC market contracted by 8.3% (8.6% according to IDC) in the September quarter compared to last year. PC leader Hewlett Packard, who had to report a catastrophic profit collapse (nearly $9 billion of losses) this summer, sold 16% less and therefore might have lost its pole position to Lenovo, if you trust Gartner's numbers over the ones from IDC at least. The latter sees HP a fraction ahead of Lenovo, with 15.9% compared to 15.7%.

Also the notebook, a long-time driving force in the market, seems to be losing its momentum. According to Digitimes Research, the sales in units in the current third quarter are 11% below the figures from the year-ago quarter. Only Apple is swimming against the current, the new notebook generation released in June saw a 30% increase compared to the previous quarter. Additionally, Apple is now making lots of money from its iPhone 5 sales, so that the quarterly figures, which fell well short of expectations in the previous quarter, should turn out much better again this autumn. And, of course, there's the compensation of one billion dollars that Apple is to receive from competitor Samsung Electronics by order of the court. Samsung hasn't given in, however, and is bombarding Apple with legal complaints of its own, complaints which now also involve the iPhone 5.

Whichever way it ends, the Korean giant can pay these compensation peanuts out of the petty cash. In advance, Samsung proudly announced the assumed quarterly figures. With a record turnover of roughly 51 trillion Won (about $47 billion), Samsung Electronics reinforces its leadership in the IT business, and the expected quarterly profit amounting to the equivalent of $7.3 billion doesn't look bad either, even though Apple will probably surpass the latter by far.

Poor Forecasts

Others, in contrast, have to significantly scale down their expectations. Intel had to lower the turnover forecast in September and finally ended with a 5% loss in revenue and 14% in income. AMD has now followed up with even greater losses of 10% and with more severe consequences. AMD intends to reduce costs through another mass layoff in the region of 15% of its staff. It looks really bad for AMD: urgently needed new developments, like Steamroller, will probably get delayed even more and the launch of the tablet processor Hondo (Z-60) didn't live up to expectations. In particular, it had been assumed that a significant partner for Hondo would be announced. After all, the devices are scheduled to hit the market in mid-November. Pricing should be a difficult topic as well – Acer, it's said, plans to sell tablets in the US with Intel's Clover Trail Atom from as low as $499.

It is just as well for AMD that apparently there are still some "misunderstandings" between Intel and Microsoft; it wouldn't be the first time, after all. At an internal staff meeting in Taiwan, Intel boss Otellini grumbled about Windows 8 not really being finished yet. Microsoft countered that Windows 8 is the most thoroughly-tested operating system "ever" and an unknown "person with knowledge of the matter" told Bloomberg that Microsoft hasn't even been able to certify the Atom tablets because Intel's power management software is not ready yet. A sham – says scene insider Charlie Demerjian of semiaccurate.com. According to his information, the drivers in question have long been certified.

AMD at Bargain Price

With AMD's ongoing crisis, the plunging stock prices and a remaining market value of a mere $2 billion, rumours about an acquisition are spreading wildly again – next to Samsung, which has been regarded as a possible candidate for a long time, Qualcomm is now being mentioned again and again. The South Californian company is doing well: its turnover is three times as high as AMD's figures and it is earning billions. In 2008, Qualcomm acquired AMD's mobile graphics branch Imageon for $65 million. Now it appears that the company also plans to join AMD's HSA initiative, the heterogeneous system architecture that is meant to merge AMD technology with hardware from external parties on a chip.

With 7.1 billion transistors, NVIDIA's Kepler GK110 currently is the biggest chip on earth. At the SC2012 in Utah, it will meet its new rival, the Xeon Phi from Intel.
Source: NVIDIA But why should Qualcomm want x86? Its ARM-based Snapdragon processors are doing much better. Maybe AMD's ATI segment, which AMD once bought at the excessive price of $5 billion, would be interesting for Qualcomm.

Speaking of acquisitions brings Texas Instruments to mind. While the company makes lots of profit with analogue technology, the wireless branch, which includes the OMAP processor, has lately been seeing increasing losses. Now, the Israeli business magazine Calcalist has reported that Amazon is considering entering the chip technology business and plans to buy the OMAP department from TI – the Kindle Fire tablet houses an OMAP 4 from TI. It's also said that Amazon wants to enter the Android smartphone market. And who knows, maybe Amazon is also planning something else entirely. The Cortex A15 inside the OMAP 5 still uses 32 bits, but it provides extensions that are also interesting for servers, such as virtualisation and large page address extension, which allows for up to one terabyte of memory to be used.

With lots and lots of those, you could even build a supercomputer. In that market, there is still no crisis in sight. Here, competitors NVIDIA and Intel are preparing themselves for the big showdown at the supercomputer conference SC2012 in Salt Lake City in mid-November, where both will show off their new accelerator cards that are supposed to manage more than one teraflop with double precise calculations. NVIDIA is eagerly equipping the Titan of the Oak Ridge National Laboratory with Tesla K20 cards while Intel is providing the Stampede at the Texas Advanced Computing Center with Xeon Phi cards.

Certain specifications, like clock speed, memory, energy consumption and prices are meant to remain undisclosed until then, but that doesn't really work – after all, the partners will have to start their marketing efforts soon. And so, the final specifications for the Tesla K20 have already leaked: 2496 compute cores with 1.17 teraflops of peak double precision performance at a GPU clock of 705MHz, 5GB of memory and 225 watts for close to 3000 euros (about $3900). So Intel knows what it's up against.

(djwm)