AMD CEO remains confident after foundry partner shift

Despite historically impressive stock performance this summer, AMD is faced with a pair of news items that might get some investor attention. One of the partners that AMD was working with on its transition to 7nm technology has announced today that it would no longer be pursuing so-called “leading edge” silicon manufacturing. As a result, AMD must now depend on a single production source, the same used by NVIDIA, Apple, and Qualcomm.

Also, the company announced that Senior Vice President Jim Anderson, previously responsible for overseeing the entirety of the client compute business, would be departing for a career move to Lattice Semiconductor.

I was able to chat with CEO Lisa Su this afternoon about both of these items and it appears all is still well at AMD. In fact, things may pan out better in the long term as a result of the changes.

Maintaining execution to 7nm

The move to 7nm process technology is a big one for AMD. It bet heavily on this transition and its ability to give the company a leadership position over Intel and performance parity with GPU-rival NVIDIA. Until today, plans for 7nm product releases utilized both TSMC and GlobalFoundries. But GlobalFoundries announced this afternoon that it was putting its research and engineering of 7nm on “indefinite hold” as it instead refocused on its current production capabilities. There is another story on that angle I will touch on in a future story.

For AMD this has several side effects. The negatives include a reduction in potential silicon production capacity: having two facilities building 7nm chips for CPUs and graphics means higher throughput. Not only that but pitting TSMC against GlobalFoundries created an opportunity for AMD to select the best process technology for the best designs, matching the proficiencies of one fab to one chip. And of course, there would be the cost advantages of having a dual source option, bidding, etc.

But in reality, this move can focus AMD, making it stronger and more prepared for the dramatic technological changes that come with 7nm. Rather than spending engineering time and talent on developing chips on competing process nodes (you cannot simply take a design built for TSMC and move it to another foundry, for example), AMD now knows that all of its leading-edge products will be built with the Taiwanese foundry. This saves money in R&D and allows the teams to be diligent with design characteristics.

We already knew through well-timed leaks that the first 7nm graphics chip and the first 7nm server processor were going to be built with TSMC, leading those of us that follow the field closely to understand who the leader in the clubhouse was in terms of design readiness and executive confidence inside AMD.

Su admitted that was the case. As it relates to AMD, there will be no impact on roadmaps, product release schedules, or customer commitments. If that seems nearly impossible considering the company lost one of only two possible sources for 7nm production, Su said this was a “testament to the work done [by AMD] to ensure access to leading edge technologies.” Basically, AMD was smart to hold positions with both silicon providers.

AMD’s relationship with GlobalFoundries won’t disappear. It is still building the current crop of processors based on its 14nm and 12nm and Su said that will continue for the foreseeable future. When I asked if we might see some new products built for 14/12nm rather than the 7nm technology for some markets that don’t need the pinnacle of performance, I only got a “maybe” response. “Malta [the location of GlobalFoundries 14/12nm fab] will remain a large part of our volume,” Su stated.

Competing for the same production space

Now that AMD will need to compete with the likes of NVIDA, Qualcomm, and even Apple for access to the 7nm product lines at TSMC, how confident can we be that AMD has the pull to not get squeezed on inventory? There might be some concern, but despite AMD being a smaller player than NVIDIA and Apple, it already does significant work with TSMC on semi-custom designs that wind up in the Microsoft Xbox or Sony PlayStation.

AMD is also one of the earliest players with the biggest drive to get 7nm out early, making them a great target for TSMC to utilize to help the process develop. TSMC would love nothing more than to get out from under the shadow of the waxing and waning smartphone and tablet space, and partnering with AMD allows the foundry to expand its own addressable market and improve its production diversity.

In the end, Su told me that the move from GlobalFoundries to halt 7nm development “is not a bad thing” for AMD. It allows the company to simplify IP development, refocus resources, all without changing the roadmap or affecting the future execution milestones that AMD’s recent stock surge has been built on.

Leadership change in the compute group

The announcement that Jim Anderson would be stepping down as the SVP of the client compute group came as a bit of a surprise to me. Anderson has been at the helm during the rebirth of the AMD and Ryzen brands for mobile, desktop, and workstation markets, so it’s hard to not see this as a loss for the company. Anderson is taking up the CEO role at Lattice Semi, a US-based company that builds programmable logic devices, most recently in the news for having a Chinese purchase blocked by President Trump.

AMD CEO Lisa Su called the move part of a “normal career progression” and said she was supportive of the transition for Anderson.

Anderson’s replacement, Saeid Moshkelani, has been working under and reporting to him since early in the year, setting up a contingency for something like this. Moshkelani previously led the company’s semi-custom business and was responsible for growing it from nothing to a multi-billion-dollar business.

Su admitted that the competitive landscape for talent in this field was tough. She said AMD has a “very strong bench” and that the company purposefully grooms talent for senior positions.

When asked if there were any changes coming for the Ryzen brand or product lines with the leadership adjustment, Su said absolutely not. “There is no change in the roadmap. We are very bullish on Ryzen moving forward,” she told me.