The computer chip maker AMD aims to become profitable through a tight focus on increasing the market share of its products, and has no plan to follow its competitor Intel into the mobile phone market, a senior manager at the company said. Last month, Intel, which controls about 80 per cent of the global market for computer central processing units (CPUs), announced a partnership with Nokia, the world's largest maker of mobile phones.
The two companies will work together designing a new generation of hardware and software to power mobile devices, which have historically used a different standard of microchips than those used in personal computers. AMD, of which the Abu Dhabi Government's investment arm, Mubadala Development, holds a 20 per cent stake, sees a future in which the lines between laptops and smartphones will become blurred.
But the company "will be staying on the laptop side of things", said John Taylor, the director of product communications at AMD. "Mobile is not a focus," Mr Taylor said. "If you look at the mobile chip business, there are tonnes of competitors and the margins are much smaller. The volumes are tremendous, but we are not established as a top competitor in that business." AMD has struggled to turn a profit in the past decade, mainly due to the huge costs associated with designing and making computer microprocessors.
It recently spun off its manufacturing system into a new company, Globalfoundries, in partnership with Abu Dhabi's Advanced Technology Investment Company (ATIC). The company will also focus on a small group of products it believes it can produce competitively and profitably. These are chips for corporate data servers, desktop and laptop computers, and graphics processing cards. In each of these markets, AMD competes in what is effectively a duopoly with one other player - Intel in computer chips, and Nvidia in graphics cards. Concentrating on increasing market share in these segments offered the best chance for the company to become profitable, Mr Taylor said. AMD has just 20 per cent of the PC chip business.
Intel's partnership with Nokia sent the strongest signal yet to the technology community that the mobile phones of the future will be driven by the same powerful chips that are found in computers and laptops. But AMD has limits that its larger competitor does not. Intel produces chips in great volumes, generating huge sums of free cash to invest in research and development. "What we need to do as a company is look at where are our best positions are in the marketplace and go for the best opportunities," Mr Taylor said.