AMD’s High-End Market Comeback Raises Investor Optimism

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Part 8
AMD’s High-End Market Comeback Raises Investor Optimism PART 8 OF 16

Will AMD Be Able to Keep Ryzen Alive for 4 Years?

Ryzen’s life cycle

Advanced Micro Devices (AMD) plans to do a hardcore launch of its Ryzen products for desktops, notebooks, and servers throughout 2017 in order to gain market share in the CPU (central processing unit) space.

Unlike Intel (INTC), AMD plans to keep its Ryzen architecture alive for the next four years. At CES (Consumer Electronics Show) 2017, AMD’s chief technology officer, Mark Papermaster, told PC World, “We’re not going tick-tock. Zen is going to be tock, tock, tock.” In Intel’s tick-tock model, “tick” referred to the manufacturing node and “tock” referred to advancements in architecture.

Will AMD Be Able to Keep Ryzen Alive for 4 Years?

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From Papermaster’s comment, we can infer that AMD will likely continue on the 14nm (nanometer) node in the coming four years, bringing advancements to the architecture in the form of power efficiency and clock speed. This strategy falls in line with AMD’s goal of retaining a new architecture for three to four years. AMD retained its Opteron and Athlon architectures from 2003 to 2007 and its K10 architecture from 2007 to 2010.

There are rumors that after 2020, AMD will jump from the 10nm node directly to the 7nm node.

Intel and AMD’s product strategies

As processing technology becomes more complex with each new node, Intel has scrapped its tick-tock model and brought its strategy more in line with AMD’s model. Instead of launching two architectures per node, Intel has launched three for its 14nm node: Broadwell (tock), Skylake (tock), Kaby Lake (half tock), and Coffee Lake (half tock). For desktop processors, Intel may skip the 10nm upgrade and directly jump to 7nm.

This change in Intel’s product strategy could bode well for AMD’s Ryzen. Intel is unlikely to be affected much by AMD’s entry into the desktop market, as Intel has shifted its focus away from the falling desktop and laptop segments toward the growing two-in-one and ultramobile segments.

However, AMD could benefit by gaining market share in the desktop space, which would help its computing and graphics segment to turn a profit. Next, we’ll see what earnings AMD is likely to post for 4Q16 before Ryzen and Vega make their way onto the earnings scene.

You can invest in Intel through the VanEck Vectors Semiconductor ETF (SMH), which has holdings in 26 semiconductor stocks, including 13.8% in INTC.


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