WSJ article on why Dirk Meyer resigned.

It seems the board was upset since early 2010 about Dirk Meyer not focusing on tablet and smartphone processors. I remember reading articles like this where Dirk Meyer is quoted as saying,

I do not foresee that day [when AMD competes with ARM is] coming in the near term. First of all, when we consider which areas to approach, we look at markets, we look at the technology capabilities we have, and we try to find an intersection point that really represents really big opportunities. By far the biggest business opportunity we have got is in PCs and servers. The market for silicon processing content is bigger than the smartphone market. […] The other thing we really like about our core market is that there aren’t that many competitors […]. I would rather focus on the big market, where there’s a small number of competitors,

Supposedly, the board was upset that he wasn’t devoting more resources in low-power processors, and even more upset because he kept on stating publicly about his desire not to compete in the low-power market.

When I read the article back in August 2010, I completely agreed with Dirk Meyer that there’s not as much opportunity in the low-power market as many people would think. The volume might be tremendously high, but there is so much cost-cutting competition between companies that the margin is razor-thin compared to the PC and server market. Even the high-end smartphone processors are usually sold at less than $30, whereas even the cheapest desktop/server processors are sold at over $150 and can get up to $1000. Also count the fact that there are a bunch of established players like TI, Qualcomm, Samsung and Renasas fighting for market share. Even if AMD succeeds in getting a slice of the pie, that might come after a bloody war that will cost them a lot of investment and time. Even a company like Intel whose market cap is 20x larger than AMD can’t quickly get into the smartphone market. Even if they succeed, I doubt they would be the same old Intel racking in cash using their dominance in a high-margin market. They would be just one of the many companies selling smartphone processors at pretty cheap prices. At that point, would they be able to earn enough money to invest in their billion dollar fabs? If not, they will lose their sole differentiator from other processor companies, which is early access to cutting edge process technologies.

My point is that the smartphone processor market might not be that lucrative as it seems. I agree that smartphones and tablets look like the next big thing (maybe the big thing right now), and it seems like a really bad bet to ignore the whole market. However, considering that AMD has been losing money and hasn’t really announced a new processor for the last several year, I think AMD should first learn how to become a company that doesn’t lose money, and then think about long-term visions or whatnot. It’s ridiculous to ask for “a visionary CEO” when you don’t even have the money to execute crazy, wild ideas that could payoff in the future. They should devote all their resources in getting out the Fusion lineup they had planned when they acquired ATI, especially since this is the only advantage they have over Intel.

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