AMD Expects PC Processor Market to Expand About 5% This Year

Advanced Micro Devices Inc., Intel Corp.'s main rival in personal-computer chips, expects the market for processors to grow about 5 percent this year.

In the first half of the year, the PC market will experience “headwinds” from shortages of hard-disk drives, Chief Financial Officer Thomas Seifert said today in a presentation to analysts at the company's Sunnyvale, California, headquarters.

PC component makers are still reeling from last year's Thai flooding, which cut production of disk drives and rippled through the industry. AMD said last month that its first-quarter sales would decrease as much as 11 percent from the previous three months. That indicates revenue of as little as $1.5 billion, missing the $1.6 billion predicted by analysts in a Bloomberg survey.

AMD is aiming for a gross margin -- the percentage of sales remaining after deducting the cost of production -- of 44 percent to 48 percent. That target excludes certain costs. The company also said it's readying an “ultra-low power” chip for tablet computers this year.

AMD shares rose less than 1 percent to $6.93 at the close in New York. The stock has climbed 28 percent this year.

Product Shift

Separately, the company said it will shift its strategy to focus on supplying so-called system on chips, or SOCs, said AMD's new chief technology officer, Mark Papermaster.

SOCs are single chips that combine the functions of multiple semiconductors onto one piece of silicon. The new initiative will help speed up the pace at which AMD brings its products to market and allow the incorporation of other companies' technology alongside its own in more customized offerings, Papermaster said in an interview.

While AMD won't produce products designed to push into the crowded smartphone business, it will make processors that need less power, helping it tackle the growing market for tablet computers and thinner, lighter laptops, he said. Future AMD products might include its own processor and graphics components working with a processor based on ARM Holdings Plc technology.

To take advantage of the rapid growth of tablets and new types of laptops, AMD needs to introduce new products faster, Papermaster said.

“We can't play in these opportunities on the pace we were at,” he said.

Papermaster joined AMD in October. He previously worked at Cisco Systems Inc., Apple Inc. and International Business Machines Corp.