Over the last year AMD has started pulling back on launching new products in both the CPU and GPU world. They have been a little more active in the APU world, but in many cases the “new” products do not have enough improvement to make them really beneficial to manufacturers. Because of this demand for AMD products has dropped off. As this demand drops the new release cycle is also impacted. Why would you make millions of parts if there is no one that is buying them? If you cannot sell inventory then you make less at the end of the quarter… you get the picture.
We have seen indications of this decline including the lack of a real GPU release for 2014-2015. AMD allowed NVIDIA to widen the performance gap in addition to simply having something new to offer their customers (manufacturers and end users alike). Now we are hearing that AMD is reducing the number of processor orders with Global Foundries without an increase to another foundry. In the simplest terms is means that AMD does not have the demand to meet the cost of producing the processors they typically order. The fact that the decrease (of about $200 Million) appears to be across the board to Global Foundries.
What makes things more interesting is that sales of custom-built processors like those found in the Xbox One and PS4 are expected to increase. This could be an indication that the more mainstream products are seeing a decline in demand… well ok it is not an indicator, several partners have indicated that sales of AMD based products are not doing as well as they should so new orders are not likely to happen. Once again, this is due to a lack of anything really new from AMD. We heard this comment more than once during CES this year and we are still hearing it from AMD partners.
Again none of this is unexpected. AMD has to start pulling in expenses somewhere. Especially so they can have some money for R&D on new products. If this means not buying as many wafers, then that is what it means. Still this type of move can hurt AMD in the long run. The GPU/CPU market is all about what you have now. They do not want to wait two years to see something new from you, if that is what happens then you run the risk of losing customers to the other guys.
We are not going to say that the bell it tolling on AMD, but they cannot continue to operate like this. They have to put out a block buster GPU/CPU soon or they could end up being just another page in the CPU history books like Nex Gen, Cyrix, and others. This would be a shame too since it would leave almost no competition for Intel making the CPU market that much more stagnant.