AMD sees return to profitability in 2H 2013

The Tech Report listened to AMD's earnings call and reports CEO Rory Read explained the company is undergoing a three-phase turnaround which is expected to take several quarters. It includes a complete restructuring and has the goal to return AMD to profitability in the second half of 2013. Read promised "a new set of powerful products" in 2013 and added that the company will increase its focus to take advantage of high-growth opportunities in adjacent markets where its IP provides a competitive edge.

Among those "adjacent markets" are servers, semi-custom silicon, the embedded space, and ultra-low-power client offerings. (Yes, that includes hardware inside consoles like Nintendo's new Wii U.) AMD has already scored "strong design wins" for embedded and semi-custom APUs, Read said, and products based on them are due out later this year. Overall, the company plans to derive 20% of its revenue from these adjacent markets by the fourth quarter of 2013, and it hopes the figure will eventually increase to 40-50%.

Read also commented on cricitism of the deep R&D cuts at AMD by nothing that the company is moving in a new direction where it focus on using fewer different process technologies and re-use more of its intellectual property:

Read also addressed the concerns of some industry watchers that AMD is cutting R&D spending too deep. He noted that AMD is taking "expense management" steps throughout its entire business, and the R&D cuts involve changes to improve both efficiency and productivity. For example, the company is attempting to use fewer different process technologies and to re-use more of its intellectual property. Such steps ought to help improve yields and shorten product development cycles. Read mentioned that AMD is attempting to focus more on high-volume design wins, as well, because they're more profitable.