Analysis: AMD bets graphics will give edge against Intel

By Noel Randewich

SAN FRANCISCO (BestGrowthStock) – Advanced Micro Devices Inc is betting that powerful graphics in its upcoming microchips will give it a shot at regaining ground lost to industry leader Intel Corp.

While details on performance and cost of the computer chips have not been released, some analysts say AMD’s strategy of emphasizing graphics processors gives it an advantage as Intel prepares to launch its own new family of chips in 2011.

Both companies’ upcoming lineups combine graphics and traditional processing power — components that are normally separate inside computers — in a bid to improve performance at a low cost.

But Intel’s strength, central processing units (CPUs), will remain the backbone of its upcoming lineup, code-named Sandy Bridge, while AMD’s Fusion chips will emphasize graphics processing units, called GPUs.

“The future of computing is going in this direction,” said Hans Mosesmann, an analyst at Raymond James. “It’s a huge way of not only improving performance but doing it more efficiently.”

Features that consumers increasingly enjoy on their devices, like high-definition movies, crisp photo resolution and fast-paced games, mean computers ought to be designed from the ground up with graphics in mind, AMD says.

Increasing use of animation and video on the Internet may also add to the need for graphics horsepower.

“AMD made this bet several years ago and now it’s being laid on the table that the GPU to the consumer experience going forward is at least as important as the CPU,” said John Taylor, in charge of marketing AMD’s upcoming chips.

The new version of Microsoft’s Internet Explorer Web browser shifts the rendering of graphics and text to the GPU from the CPU, accelerating speed and visuals.

Nvidia Corp, another graphics chip designer, is developing GPUs for smartphones that work alongside energy-efficient central processors made by ARM Holdings. It is also encouraging scientists to use GPUs to build supercomputers for running simulations in physics and other math-heavy tasks.

The inclusion of graphics in Sandy Bridge shows that Intel recognizes the increasing importance of graphics processors and that it intends to quickly stake out its own territory.

“Sandy Bridge represents the largest increase in computing performance in our history,” Intel Chief Executive Paul Otellini told analysts during a conference call last week.

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AMD has lost ground to Intel in recent years, and the sluggish economy has added to its troubles, making the success of Fusion all the more important.

Technical problems with a lineup of server chips in 2007 threw AMD’s production off schedule and reversed gains it had been making.

“Fusion represents the best opportunity for AMD to regain market share from Intel,” said Real World Technologies analyst David Kanter. “Their eventual goals are very similar, perhaps even the same, but the paths they’re taking to get there are very different.”

Consumer demand for computers has stumbled in recent months and sales across the microchip industry are expected to grow only 5 percent next year, according to market research firm iSuppli.

Intel and AMD have been tight-lipped about the specific speeds of their upcoming chips and it is unclear how they will be priced as they compete for customers like Dell and Acer.

While CPUs are designed to make huge calculations very quickly, one after another, GPUs excel at carrying out several small calculations at the same time, which makes them good at tasks like processing high-resolution video games.

AMD’s bet on GPUs started with its acquisition of Canadian high-end graphics company ATI Technologies in 2006, and last year it spun off its manufacturing operation to streamline capital costs and focus on research and design.

This week, AMD launches a new line of high-end graphics cards for gamers, which will give a glimpse of the graphics power that will find its way into later versions of Fusion chips.

(Reporting by Noel Randewich; Editing by Steve Orlofsky and Matthew Lewis)

Analysis: AMD bets graphics will give edge against Intel