AMD unit catching windfall business from Intel blunder

- Friday, February 11, 2011

AMD unit catching windfall business from Intel blunder

Business for the Mexico, Central America and Caribbean division of US chip manufacturer AMD (NYSE: AMD) has picked up since archrival Intel's (NYSE: INTC) announcement of major chip flaws, division general manager Manuel Sáenz told BNamericas.

Late last month, Intel disclosed that it had discovered a design flaw in its recently released Intel 6 Series chip, and that the company would consequently incur a US$300mn revenue loss and US$700mn in repair costs.

The AMD unit expects the windfall business generated by the flaw to translate to an extra 1-2% chip market share gain in the short term, according to Sáenz.

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"We are seeing opportunities not only in terms of our product expectations, but also in shipments that our competitor cannot carry out," he said. "Our partners that sell to retail... want to look at the possibility of replacing certain configurations that they had with our competitor with our products."

SECURITY BOOST

Intel caused waves last year when it said it would acquire US software security firm McAfee (NYSE: MFE) for US$7.68bn. Sáenz said AMD has been advancing globally on plans to land a counterpunch.

"There are a lot of McAfee competitors that have approached AMD to develop strategies together. This is something that's already being worked on in the company. We are overflowing with offers from McAfee competitors to release alternative solutions," he said. "I know of Kaspersky as one example, but I know that a few others have also approached us."

Still, when questioned about conversations between the two firms, Kaspersky's VP of sales for Latin America and the Caribbean, Alejandro Musgrove, told BNamericas that he had not heard of such engagement.

DIVISION RESULTS

AMD's Mexico, Central America and Caribbean unit saw sales increase 30% last year, and it expects revenue growth to come in closer to 20-25% this year.

"We started to do business with new players with which we hadn't done any work, such as Sony," he said. "With Toshiba, we increased our participation significantly and, together with them, we won the biggest PC deal for teachers last year. It involved more than 140,000 units in Mexico."

Sáenz said the division will increase emphasis on mobility and retail sales this year. HP (NYSE: HPQ) represents one of AMD's most important partners, but the executive expects his division to continue benefiting from additional diversification of partnerships.

"We're going to grow with new players such as, for example, Samsung, Asus and ASI, which are starting to act in the laptop sphere."

Globally, AMD posted a 35.5% increase in net profits last year, with the final figure topping out at US$471mn. Sales during the same period rose 20% to US$6.49bn.