The Radeon RX 480 gains support
In the previous part of this series, we saw that Advanced Micro Devices (AMD) launched its first Polaris GPU (graphics processing unit), the Radeon RX 480, at the very appealing price of $199. This attracted many PC (personal computer) makers, such as Dell, HP (HPQ), and Lenovo, which have been struggling with declining PC sales. The advent of VR (virtual reality) has raised new hopes among PC makers.
According to NVIDIA (NVDA), only 1% of PCs in use support VR. A consumer has to spend $1,000 to update their PC and another $500 on a GPU as most PC OEMs (other equipment manufacturers) do not integrate $500 GPUs. AMD, with its cheap Polaris GPU, is targeting these PC OEMs as they are the ones that will lead to the success of the GPU at a commercial level.
Rumors: Polaris GPU in Apple’s Mac
WCCFTech reported that Apple (AAPL) may use AMD’s Polaris 10 for the iMac and Polaris 11 for the MacBook Pro. The rumor was supported by the fact that Apple’s current high-end Macs use AMD GPUs.
MacBooks and iMacs are benchmark setters. Even when global PC shipments fell 9.6% YoY (year-over-year) in calendar 1Q16, Apple’s PC shipments rose 1% YoY, according to Gartner. An early product review by VideoCardz.com states that, in terms of performance and cost, AMD’s Radeon RX 480 competes with the Radeon R9 Fury, and outperforms NVIDIA’s GTX 980.
Impact on AMD’s earnings
Apple is a key customer for AMD, which is struggling with declining revenues and widening losses. In a quarter, Apple sells between 4 and 5 million Macs. The Radeon RX 480 is priced at $199. As these are bulk sales and Apple has strong bargaining power, AMD may sell these GPUs for about $40 to $50. This would bring a quarterly revenue of $250 million for AMD from one customer alone.
Even Apple could see higher margins. AMD’s Polaris GPU offers performance similar to that of NVIDIA’s GPUs, but at half the price. The lower price would reduce Apple’s cost of sales and improve its margins. While price is the key factor increasing AMD’s share in the discrete GPU space, it is also reducing NVIDIA’s chance to win back some Mac orders from Apple. Nevertheless, NVIDIA may not be impacted significantly, as it has several strong businesses and has been shifting away from PCs towards the data center and automotive businesses.
AMD’s Polaris-based Radeon RX 480 is also receiving support from software makers such as Ubisoft and VR headset manufacturers such as HTC and Facebook’s (FB) Oculus.