Moore’s law no longer applies? Amd made two big moves to chase Intel


Tencent technology news on August 19, Moore’s law is named after Gordon Moore, co-founder of Intel, an American chip giant. Its core content is that the number of transistors that can be accommodated on an integrated circuit will double and the performance will double every 18 months.
Given Moore’s close relationship with Intel, the company has become the biggest beneficiary of this law. Unfortunately, Moore’s law now seems unreliable, as does Intel’s control of the semiconductor industry. For a long time, Intel has always been famous for its microprocessor (the “brain” of the computer), and has been in a dominant position in the competition with AMD for a long time.
But this established order is shaking: Intel is losing ground, while AMD is catching up. Ben Rogoff of polar capital technology investment trust said: “amd used to be like a training companion. Customers gave it enough business to maintain its operation, so Intel would not completely monopolize the whole industry.”
However, Rogoff said that the market has changed now, partly due to the conflict caused by Moore’s law, and AMD’s response is more decisive than Intel.
“Although Moore’s law still applies, all Intel has to do is maintain its leading position in manufacturing,” he explained. As a larger and more profitable company, Intel can always provide the best equipment for factories. But it is becoming more and more difficult to insert more transistors into the chip. Intel’s attempt to maintain the iterative speed has led to production problems. At the same time, amd has solved this problem in two more radical ways. ”
First, instead of trying to make incremental improvements to existing chips, amd has completely abandoned the idea that one chip can do everything. Rogoff said that AMD’s alternative is to combine a group of smaller chips or “chipsets”, which work together to realize the functions of traditional microprocessor chips, which is more suitable for the world of post Moore’s law.
Rogoff added: “not all parts of the chip need to be designed according to the same cutting-edge standards. We can still manufacture some chips according to lower requirements and focus the best manufacturing resources on the chips that need them. The result is better ‘yield’ (i.e. the proportion of chips available in a particular batch) and lower power consumption. ”
The second key to AMD’s success is to outsource manufacturing to TSMC, whose chip manufacturing plant is the best OEM in the world. Rogoff said: “these two changes can be attributed to Su Zifeng, the CEO appointed by AMD in 2014. In the past five years or so, the company has made little profit, and investors don’t believe there will be any change, so we can buy the company’s shares at about $4 for a long time. ”
However, the current trading price of AMD stock has reached $107, and there is still more room for rise. Rogoff pointed out: “the real profit of microprocessors comes from the server market. Operators of big data centers, such as Google and Amazon, will not be controlled by Intel. They will only buy the best chips and are particularly keen to reduce power consumption. AMD’s current share of the server market is only 9.5%, compared with 1% a few years ago. ”
Rogoff continued: “if amd can maintain its technology development trend, there is no reason why the market share can not reach 50%. If server companies want its chips, AMD will also get the key pricing power it has lacked in history. Obviously, pricing power will bring higher profit margin. ”
The “super bull market” in the server market will mean sales of about $25 billion a year. If we assume that AMD can obtain the same gross profit margin of about 60% as NVIDIA, AMD will obtain a profit of about $10 per share. At present, NVIDIA’s share price is about 10 times this figure, while NVIDIA’s P / E ratio is about 50 times.
As we said, this is an extreme situation, but it is not impossible. Moreover, even if the prediction of future sales and profit margin is not so optimistic, AMD’s share price also shows an upward trend. “So we think amd can gain more market share in the next few years,” Rogoff said´╝ł Tencent Technology (reviser / Jinlu)