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Advanced Micro Devices ( AMD ) is making a play for Intel ’s ( INTC ) Chinese server market — and maybe “Super 7” clients Alibaba ( BABA ), Baidu ( BIDU ) and Tencent ( TCEHY ) — as the No. 1 chipmaker prepares for 12,000 layoffs, MKM analyst Ian Ing suggested Friday. Late Thursday, during AMD’s Q1 earnings call, AMD CEO Lisa Su announced a $293 million joint venture with China’s Tianjin Haiguang Advanced Technology Investment to “help gain share in the fastest-growing region of the server market.” Su might as well have shouted a battle cry. This week, Intel announced a 12,000-layoff restructuring plan, cutting about 11% of its workforce, to “intensify” investments in the Internet of Things, memory and data centers. Intel’s Q1 data center sales rose 9% year over year, vs. 7% for the company overall. AMD’s Chinese joint venture is “(the) best challenge yet to Intel’s server dominance,” MKM analyst Ian Ing wrote in a research report. Last year, Chinese officials announced a plan to curb reliance on foreign chips. Partnering in China gives AMD “access to design and IP resources that are tailored to the China market and significant local field sales and support resources to help win designs at a wide range of customers,” Ing wrote. Intel’s turn from PC reliance — 55% of its total sales in Q1 — could further boost AMD, which might scoop some PC market share, Ing wrote as he upgraded AMD stock to buy from neutral but maintained his price target of 4. For Q1, a 13-week quarter, AMD reported $832 million in sales, down 19% year over year, and a per-share loss ex items of 12 cents vs. a 13-cent loss in the year-earlier quarter. Both metrics topped the consensus of 27 analysts polled by Thomson Reuters for $818.2 million and a 13-cent per-share loss. The consensus’ Q2 sales guidance, calling for a 15% sequential hike, implies $956 million, which would be up 2%. The consensus saw $889 million, Rosenblatt Securities analyst Kinngai Chan noted in a report. AMD stock jump 52% Friday, to 3.99, a 19-month high. Intel stock fell 1%; AMD’s graphics chips rival Nvidia ( NVDA ), a Tesla Motors ( TSLA ) partner, fell a fraction. Scalper1 News
Scalper1 News