Speaking at the Raymond James Technology Investors Conference, AMD CFO Devinder Kumar answered some questions about the upcoming Zen architecture.
Kumar confirmed we'll see Zen in high-end desktop first and then the server market later, he said AMD will announce the Zen tapeout over the next several months, and explained the sampling and validation process will start in the 2016 timeframe. Revenue ramp will start in 2016 with wider rollout in 2017.
I'm not sure if this is good news, the language use is a bit ambiguous many thought the Zen tape out occurred months ago. If AMD isn't going to announce it until a couple of months from now, this may signal a delay of some kind, but the part about Zen being accreditive to 2016 earnings seems to suggest it's business as usual.
Hans Mosesmann - Raymond James & Associates.
Okay, fair enough. Got a few more topics to get to before we end here. So, as Zen, the new x86-based processor; high-end. It's your return potentially into the data center/server area. What's the timing? And what kind of share do you guys…?
Devinder Kumar - Chief Financial Officer
Actually, one of all the things that we are working on, I think that’s one of the more exciting pieces of it. Having AMD for a long time, I’ve seen the success in past years where we had with the Opteron device going back few years that I’m sure you are very familiar with. We captured 25% plus market share. And then the market share eroded steadily over time and today really there’s nothing to speak about. It’s under 1%. So, effectively it’s nothing.
Zen was a clean sheet design that started few years ago. We are in the final figure of executing and the milestone that you want hear us talk about is Zen tapping out, which should be over the next several months. And then putting samples in the hands of our customer and then starting portfolio of revenue in 2017.
And by the way, because we have this reuse approach for cores, you will see us with Zen cores in the high-end desktop first and then the server from our overall products standpoint. But the key is tapping out in the next several months, samples and customers for the validation of the product over the 2016 time frame and then the revenue ramp happening in 2016.
As far as market share is concerned where we are starting from. I think, the latest data shows that the market share has 0.5%, so call it zero and the question is how we execute, what our customer do with it. But from my standpoint with the competitiveness of the product that Mark Papermaster and his team has put into place, it can only go up from there if you have a competitive partner and our customers for their own reasons they have nothing else from a competitive leverage standpoint, would want at least some amount of competition that’s pays because today the pricing and the margins that are commanded by the competitor against our customers are pretty high, right. And for us, is significant higher than where we are sitting today and about 30% gross margin at the corporate level. And where it could be significantly accretive for every dollar of revenue.
And that market today is about $13 billion, $14 billion and we think we’ll continue to grow. And the data center business or market today because of the slower trend of ARM being able to capture market share that is predominantly the data center market on x86 and they are only two companies that can provide the x86 technology for the data center space.
Kumar also reminded investors to tune in to the January earnings call, as that will likely be the moment when AMD shares more specific about the FinFET products it taped out a couple of months ago. These products should be on the market around 12-14 months from the time of the tape out:
Devinder Kumar - Chief Financial Officer
We haven’t given the specifics but you know they taped out in the last few months and typically what happens on the product depending on when you taped it out it can be 12 to 14 months from the time you tape out the products to when you start shipping the products but we haven’t been specific about you know exact timeframe and I think maybe in the January earnings call when we announced Q4 results you could expect it to be more specific in terms of FinFET product shipments in 2016.