PCs, Not Profits, Drive Chip Companies

SAN FRANCISCO—A worldwide decline in PC market revenue and shipments is not news—Gartner and IDC reported approximately 10% decrease in PC shipments in the second quarter of 2015—and the forecast isn’t bright. 2016 shipments are expected to be flat, while growth in 2017 will be minimal.

Despite a less-than-stellar forecast for a matured market, major chipmakers keep driving on with new products for this segment. Advanced Micro Devices (AMD) hopes to turn around a series of poor performing quarters with its Carrizo processor for PCs, while Intel expects its Skylake SoC architecture to increase PC shipments. Several analysts questioned whether the PC market will pick up steam again.
“We’ve been sort of stuck in a mold where there’s a lot of legacy and a certain model of how you build a PC. It’s gotten more integrated and lower power but…the little additions haven’t made as big of a difference,” said Kevin Krewell, a principal analyst with Tirias Research. “A lot of the more interesting stuff we can do is with either tablets or smartphones because we can carry them everywhere.”
Skylake has received mixed reviews—the new architecture has security enhancements and an integrated processor and sensor hub, but few updated performance metrics—and AMD is hoping for a big design win with its Carrizo Pro processor inside HP’s EliteBook 705 G3 series for enterprise. Carrizo Pro has “excavator” cores running up to 3.4 GHz, a Radion R7 GPU, and ARM Trust Zone technology for hardware level security.
A design win with HP is essential to AMD’s success, because while Carrizo may have performance advantages with embedded security and a smaller footprint that would allow for more DRAM, AMD does not have “the thick margins of Intel,” Krewell noted. Until recently, the PC market accounted for 90% of AMD’s sales.
“AMD needs a more stable business and they’re not in a position where they can compete on a low price point. Intel’s Atom is very competitive, and AMD’s parts perform much better than Atom, but that’s not where AMD can afford to go,” he said.
As a result, AMD is banking on enterprise sales and laptop refreshes to drive revenue. Poor-performing corporate desktops and laptops will be replaced, while workers in developing nations will continue to come online. The bring-your-own-device (BYOD) trend could also increase sales as employees require their personal devices to have more productivity.
“No one thing will turn the pie for AMD. They need to grab some more share of the graphics market; they need a rebound in some commercial PCs with [Carrizo] Pro,” Krewell said, adding that he hopes to see Zen (an x86 CPU microarchitecture)-based servers in late 2016.
“Intel is very in tune with efficiency and low power, but it would take some major change to that to put Intel behind the curve,” Krewell continued, noting that Intel has more than 90% share of the PC market. “The biggest thing AMD could do is catch IP and become a more competitive alternative supplier with performance and lower power.”
Although AMD has relied heavily on PCs shipments and is acutely feeling the after effects of the market slowdown, Krewell isn’t concerned for the future of the company.
“AMD’s had quite a few near death experiences throughout the years and always found some way of getting out of it. They’re sort of a Houdini of fiscal crises,” he said.

http://www.eetimes.com/document.asp?doc_id=1327833