AMD - Case Study

Résumé du document

The semiconductor market, which include microprocessors, motherboard chipsets and graphics processors is dominated by the two California-based companies Intel and AMD (Advanced Micro Devices). The growth of the computer industry in the late 1990's has enabled Intel to become the major supplier of microprocessors for PCs. During this monopoly, Intel imposed its rules with aggressive and sometimes illegal practices.

In 2003, the launch of "Opteron", a new microprocessor, has redefined the rules of the microprocessor market as well as the new strategy of customer-centric approach adopted by AMD. In order to maintain its market shares and defense its market position, Intel decided to strike back by launching new generation of chips in 2006. This technological and strategic war raised some questions to know if AMD was able to compete with the world's largest manufacturer of semiconductors.

Extraits

[...] How can the success of Opteron in the server segment be leveraged to other segments? AMD has launched “Opteron” in 2003, considered as a new innovative and disruptive product line. The great success of this new product range in the server segment has been immediate and lead AMD on the top of the market, in front of its eternal competitor, Intel Corporation. For a long time, Intel Corporation was the leader of the microprocessor market thanks to technological innovations followed by strong marketing campaigns. [...]

[...] That's why AMD will not yield innovations dramatically different from those Intel develop. The launch of “Opteron” has allowed Intel to realize that there were new needs, new expectations from the customers in the semiconductor market. The new situation is the position of AMD as a serious challenger since 2006 with efficient products and customer-centric approach but with low resources. The difference between those two companies can be played on partnerships with providers that could allow AMD to access innovations and resources (joint-venture). [...]

[...] Will they hamper AMD's growth plans? Even with the launch of Intel remains the main player in the microprocessor industry. Intel wants to “strike back” to regain market shares and renew its product line. That's why in March 2006 they announced to launch of a new generation of chips based on Intel's new core architecture, designed to increase performance while decreasing power consumption. It's the response to AMD's offensive. Meanwhile, products from both AMD and Intel tend to get the same efficiency, features (architecture, bits, clock speed, customer segment, form factor segment; see Exhibit 1 Product Lines) and prices (see Exhibit 15a Average selling prices). [...]

[...] This shift in strategy is very risky for AMD as it requires a huge amount of money. AMD does not have the financial situation to get alone into a new approach of the market. If they want to make these changes, AMD should maybe find a partnership with a great provider such as IBM, Dell of Microsoft. To conclude, customer-centric approach remains nevertheless an innovation in the microprocessor industry as a reliable partnership with customers to develop solutions which fit perfectly the demand and the needs. [...]

[...] It will require AMD to adapt its manufacturing process to the demand of the microprocessor market in a very flexible approach. Question 4 Will AMD's customer centric approach be a source of advantage over Intel? The microprocessor industry is defined as “customer-centric”, but in fact, it's not. Microprocessors manufacturers constrain consumers to adopt the technological innovations that they create. This strategy aims to fulfill the customer needs with more efficiency and more performance. The customer-centric approach is the opposite view of the market, that is to say it consists in creating needs according to the customer's demand. [...]