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In 2015 AMD’s stock was less than 2 dollars per share.
The company was bleeding money. Their CPUs were getting destroyed by Intel. Their GPUs were losing to Nvidia. There were talks of bankruptcy.
Fast forward to today. AMD’s stock is near 450 dollars. They have arguably the best consumer CPUs.
AMD controls 30 percent of the consumer CPU market. Their server chips are taking share from Intel in data centers too.
Their GPUs still trail Nvidia but the gap is closing. The latest version of AMD’s upscaling technology is pretty good for most of us out here and FSR5 is going to be even more exciting.
People used to say AMD GPUs are not stable enough but today every major gaming console from Playstation, XBOX to handhelds like the Steam Deck, all use AMD GPUs.
And the next generation of consoles are also going to use AMD. Valve has confirmed that for their upcoming Steam Machine.
Meanwhile PlayStation and XBOX have leaks that they’re working with AMD for their next consoles.
This is the story of how AMD refused to die despite being smaller, poorer, and less powerful than both of their competitors.
It is also the story of one of the biggest comebacks in tech history. And why that comeback still might not be enough.
AMD Before Lisa Su
AMD’s story of the last decade revolves around her current CEO who took charge back in 2014.
She has been so instrumental in the company’s success that I think it’s best to see AMD as the one before she took over and after she became CEO.
AMD was founded in 1969 by Jerry Sanders.
Sanders was a former Fairchild Semiconductor executive who got pushed out in a corporate shakeup.
The company started in Sanders’ living room in Santa Clara with eight employees. The plan was simple. Make copies of other companies’ chips under license.
Back in the 1970s big companies did not want to depend on a single chip supplier. So AMD became a second source manufacturer.
They made Intel 8080 processors. They made more unknown chips. They made whatever customers needed them to make.
This worked for a while. AMD went public in 1972. In 7 years, their revenue hit 100 million dollars.
But they were always a follower, never a leader and Sanders knew this.
In a famous quote Sanders said “Real men have fabs” meaning that serious chip companies needed to own their own manufacturing.
So AMD built fabs. They invested in R&D. And in the 1990s they started designing their own x86 processors.
The K5 launched in 1996. It was AMD’s first internally designed CPU. It was not very good. Intel’s Pentium was faster.
The K6 in 1997 was better. AMD partnered with NexGen whose technology formed the basis of the K6. It competed well with Intel’s Pentium II in the budget segment.
But the real breakthrough came in 1999 with the Athlon.
Athlon Joins The Chat
The Athlon was the first x86 processor to hit 1 GHz. AMD beat Intel to that milestone by a few months.
More importantly, the Athlon was genuinely fast. In many benchmarks it matched or beat Intel’s Pentium III. Suddenly AMD was not just the budget option. They were competitive.
AMD’s revenue grew to 2.8 billion dollars in 1999. Then 4.6 billion in 2000. The company was on a roll.
Then came the Athlon 64 in 2003.
The Athlon 64 was AMD’s most important chip ever. It introduced 64-bit computing to the x86 platform.
Intel was pushing Itanium as their 64-bit solution. Itanium was not x86 compatible. It required all new software.
Nobody wanted that. The industry wanted 64-bit extensions to x86 so old software would still work.
AMD delivered exactly that with AMD64. Intel eventually had to license AMD’s 64-bit extensions and rebrand them as Intel 64.
From 2003 to 2006 AMD had the better product. The Athlon 64 used less power than Intel’s Pentium 4. It ran cooler. And in many workloads it was faster.
Intel’s Pentium 4 architecture was deeply flawed. Intel had bet everything on clock speed. The Pentium 4 hit 3.8 GHz but it achieved that speed through a very long pipeline.
The Pentium 4 was fast on paper but slow in practice for many tasks. The Pentium 4 also consumed massive amounts of power.
Intel’s Pentium 4 could hit 115 watts at load. That is more than many GPUs.
AMD’s Athlon 64 consumed around 90 watts and was often faster. Enthusiasts and gamers loved it.
AMD’s market share hit 25.3 percent in Q4 2006 according to Mercury Research. That was AMD’s peak.
Then Intel struck back.
Intel Strikes Back With Core 2 Duo
In July 2006 Intel launched the Core 2 Duo. This was a completely new architecture. Intel had basically admitted the Pentium 4 was a mistake and started over.
The Core 2 Duo was everything the Pentium 4 was not. It was power efficient. It had excellent performance per clock. It scaled well with more cores.
And it destroyed AMD’s Athlon 64 in benchmarks.
By late 2006 Intel had regained the performance crown. AMD’s market share started dropping. Revenue peaked at 5.6 billion in 2006 then declined.
Intel also had way more money to spend. In 2006 Intel’s R&D budget was 5.9 billion dollars. AMD’s entire revenue was 5.6 billion.
AMD could not compete with Intel’s spending power. They needed something to change the game.
The ATI Acquisition
In July 2006 AMD announced they were buying ATI Technologies for 5.4 billion dollars.
ATI was Nvidia’s main competitor in graphics cards. They made the Radeon GPU series. They were roughly equal with Nvidia in market share at the time.
AMD’s vision was to combine CPUs and GPUs on the same chip. They called this an APU or Accelerated Processing Unit.
The idea made sense. Graphics were becoming more important for computers. Games needed GPUs. Video playback benefited from GPU acceleration.
If AMD could integrate a decent GPU with their CPU they could offer better value than Intel whose integrated graphics were terrible.
But the acquisition was a disaster from a financial perspective.
AMD paid 5.4 billion dollars. They paid 2.5 billion in cash and took on 2.5 billion in debt. The remaining 400 million was in stock.
This was AMD’s entire cash reserve plus massive new debt. And the timing was terrible.
2008 Financial Crisis
The 2008 financial crisis hit. PC sales collapsed. AMD’s revenue dropped from 6.0 billion in 2007 to 5.8 billion in 2008 to 5.4 billion in 2009.
AMD was burning cash. Their debt was ballooning. They had to pay interest on billions of dollars while losing money too.
In 2009 AMD lost 1.2 billion dollars. In 2011 they lost 1.8 billion. In 2012 they lost 1.2 billion again.
The company was slowly dying.
To survive AMD had to sell assets. The biggest sale was their chip manufacturing business.
In 2009 AMD spun off their fabs into a separate company called GlobalFoundries. The deal was structured as a joint venture with a company from Abu Dhabi.
AMD got 700 million dollars immediately and another 500 million later. This gave AMD cash to survive. But it also meant AMD no longer controlled their own manufacturing.
AMD went from being an integrated device manufacturer like Intel to being fabless like Nvidia and Qualcomm.
They had to rely on GlobalFoundries to make their chips. From the looks of it, they lost the ability to optimize manufacturing for their designs.
However, this is something that is going to flip the table as you read on.
Meanwhile on the product side things were getting worse. AMD’s CPU designs were falling further behind Intel. And their GPU designs were competitive but not winning against Nvidia.
AMD needed a new CPU architecture. Something to leapfrog Intel. They bet everything on a new CPU architecture from the ground up.
The CPU Architecture That Nearly Killed AMD
Bulldozer was supposed to save AMD. Instead it nearly killed them. The irony lol.
