AMD APU Highlights

• Has combined CPU, GPU and North Bridge components in APUs
• Cuts power consumption from 84W to between 35W and 45W
• Enables ‘all day’ battery life
• Has launched a wide range stretching from embedded, through ultra-thin to mainstream laptops and desktops
• Focuses on Graphics, while Intel focuses on Computing in its APU
• Encourages ISVs to use DirectCompute and OpenGL/CL
• 150 new notebook and desktop design wins to date
• Dramatically changes the separate focus of PC chip design on CPUs for Entertainment and GPUs for gaming

AMD launched its A Series APU chips last week in Berlin. This was a high profile event attended by journalists, distribution partners and a handful of market analysts from around EMEA. Alberto Bozzo, the company’s regional head, led the presentations, which also included a partner panel with Microsoft, Lenovo and HP. Leslie Sobon (Corporate VP of Marketing) was very keen to talk up strategy, suggesting that we’ll remember the day ‘when the computing industry changed’.
We know our readers are interested in finding out how these announcements are likely to affect the success of the PC form factor, AMD and its competitors.

Putting CPU, GPU And North Bridge On A Single Chip

AMD is combining CPU, GPU and Northbridge components on a single chip – resulting in PCs fine-tuned for fast graphical performance, lower system power consumption and longer ‘all day’ battery life. We show a schematic of the new chip in Figure 1, which shows that AMD has cut the chip dimensions from 374mm² to 228mm² and power consumption from 84W to between 35 and 45W. The A series is part of a range of APUs, which stretch from embedded and tablet products with screen sizes of 10” to 11” (G and C models) and ultra portable laptops (E models). In the process it is also catching up with Intel in producing its first 32nm chips.
As in 2003 when it introduced x64 servers and abandoned the bottleneck of North Bridge/South Bridge system designs, AMD is starting on a journey Intel will have to follow: now, as then, its advantage will last until and when its competitor catches up. If it enjoys huge demand AMD will be able to test GLOBALFoundries ability to ramp up production faster than in the days when AMD manufactured its own chips. It will certainly be able to overcome the types of supply constraints AMD had when Opteron sales were growing rapidly.
AMD believes it has a strong competitive advantage against Intel, because its combo Sandybridge chip favours CPU over GPU and its graphics capabilities are far in advance of Intel’s. AMD of course makes CPU, while nVIDIA does not. However AMD has a number of challenges if it is to turn its technical lead into a market advantage. In particular:

• Consumers must see a significant difference between these new machines and both Intel’s latest offerings and their currently used PC; while superior resolution is certainly an important differentiator, it is probably more of an advantage on PCs with larger screen sizes
• The upsurge in Smart Phone and Smart Tablet purchasing needs to continue to be for ‘additional’ (as opposed to ‘alternative’) products; the squeeze on household budgets in emerged countries due to debt-reduction austerity measures and the potential for emerging country purchasing to leap-frog the PC form factors both threaten future PC shipments
• As a smaller player AMD needs to work hard to communicate its technical advantages successfully; while AMD needs to be better than Intel, Intel’s success depends more on its new chips being better than its old ones

AMD’s PC strategy is based in providing users with better graphics. It is too small and chip design phases too long for it to have a ‘Plan B’.

AMD’s Competitive Position In Discrete Graphics and x86 CPUs

AMD acquired the Graphics specialist ATI in 2006. Along with nVIDIA these are the only manufacturers of PC graphics cards worldwide. While in the Graphics market nVIDIA is significantly more successful (according to our research in Figure 2), the possession of both x86 and discrete chip designs gives it a big advantage in being able to address balanced computing.
If it succeeds with its new integrated approach, AMD’s own discrete graphics card business will almost certainly decline, even though it makes the valid point that, by adding an external card to the APU, the new systems will provide even more superior graphics performance.

ISVs And OEMs Embrace AMD’s APUs

AMD’s emphasis in Berlin was about putting graphics at the heart of future PC form factors. It reports that there are over 150 new notebooks and desktop designs for its APUs and it has the endorsement of most OEMs. We saw demos of many machines in Berlin and will give more details when we can.
It has also worked closely with its ISV partners to make sure its technical advances are accommodated in their new programmes. These include ArcSoft, BaoFeng, Corel, CyberLink, DailyMotion, Microsoft, MotionDSP, Sony Unlimited Realities, Viewdle, ViVu and VUDU. Hardly surprisingly most of these are focused on graphics handling and use new chip features provided by the incorporated video trans-coder on the APU. Some mainstream applications (Microsoft Office 2010, Internet Explore 9 and others) can take advantage of the GPU via DirectCompute and OpenCL. It also provides a post-editing feature allowing jittery videos to be stabilised. These chips also enable 3D video and much faster transcoding for those users involved in video production.
AMD also argues that APUs will help to bring graphics from consumer to business markets, because software developers will no longer have to write programmes for the CPU and GPU separately. For the future its encouragement for OpenGL will help to standardise the way graphics are added to applications.

AMD’s Opportunities Beyond PCs

A number of products continue to encroach on the PC market. In particular:

• In 2011 virtual desktops are finally being adopted strongly by large companies using VDI techniques offered by companies such as Citrix, Microsoft, VMware and Red Hat; emulating an acceptable graphical workplace is necessary the acceptance of streamed applications for users
• Smart Phones and Smart Tablets have been going through a sustained period of significant growth, with Apple taking a strong lead; these devices are strongly dependent on ‘apps’ tied in with Cloud and other remote server support, favouring consumer rather than producer users; they are also almost exclusively powered by ARM (non-x86) CPUs
• Dedicated gaming consoles continue to be adopted by (typically younger) users and are becoming increasingly relevant as Internet clients, despite Sony and Sega’s recent problems

But there’s no reason why AMD’s APU approach shouldn’t be successful in non-PC form factors (especially in Smart Tablets and Embedded systems for which it has designed APUs). As an alternative player in a market dominated by Microsoft and Intel, it can pursue a strategy less tied to the PC form factor than those competitors at least. Looked at from a processor market point of view we believe PC, Server and Graphics chips will be out grown by embedded and phone/tablet offerings (see Figure 3 for our forecast to 2016).

Some Conclusions – APUs Will Change The PC Market And Fuel The Alternatives

Up until now the all PC chip development was separated – powerful CPUs for entertainment verses powerful GPU cards for gaming. AMD is now addressing both worlds at the same time with its APUs. It is important in the creation of a balanced architecture, which will be accelerated by ISVs migrating to DirectCompute and OpenGL/CL. AMD’s production of the APU is momentous, but not earth shattering (sorry Leslie). It is important in a number of ways. In particular in providing:

• Another approach to vertical integration
• A step-up in terms of graphic performance and battery life
• Some competitive advantages as long as users harmonise with AMD’s strategy and it concentrates on execution

It has done a great job of getting the right ISVs involved and winning significant OEM involvement. We expect it will win PC market share, although its technical lead is not as strong as it was with the Opteron chip – Intel is walking more closely behind it already.
Gaming Console and Smart Phone/Tablet manufacturers no not currently use x86 chips, relying rather on RISC derivatives of IBM’s PowerPC and ARM’s respectively. These products are less ‘general purpose’ than the PC, allowing their creators to build much more efficient – virtually ‘turn key’ – designs. By integrating discrete components onto a single chip AMD is closing the gap – so much so that it should be able to become a significant supplier of APUs to embedded and ‘smart’ device markets in the medium term. If it gets its timing right this will make up for falling sales of PCs, as that market reaches its peak in a handful of years reach its peak in the next few years.

ITCandor Acronym Buster

APU – Advanced Processing Unit
CPU – Computer Processing Unit
GPU – Graphical Processing Unit
ISV – Independent Software Vendor
OpenCL – Open Computing Language
OpenGL – Open Graphics Library
RISC – Reduced Instruction Set Computing