Demand for new chips boosts AMD profits

Advanced Micro Devices, number two in PC microprocessors to Intel, reported first-quarter profits ahead of Wall Street expectations as it saw strong demand for its first generation of “Fusion” chips, combining a video engine with general computer processing.

Both AMD and Intel are moving this year to processors that handle both video and general data on the same chip. AMD’s “Brazos” platform featuring these “accelerated processing units” (APUs) sold well in the first quarter and the Silicon Valley company said it expected the higher end Llano platform to be widely available in systems in the current quarter, offering improved graphics and all-day battery life in notebooks.

“APU unit shipments greatly exceeded our expectations and we are excited to build on that momentum now that we are shipping our Llano APU,” said Thomas Seifert, chief financial officer and interim chief executive, in a statement.

However, he acknowledged during an analyst conference that there has been “continued softness” in AMD’s server business, where it has lost market share to Intel’s processors.

But he said he expected to see market share gains in the second half, with AMD introducing a new “Bulldozer” chip design in servers in late summer.

Mr Seifert took over the chief executive role in January from Dirk Meyer, who left after a disagreement with the board over strategy. The chief financial officer said the board was “actively interviewing” for a permanent successor.

AMD said its graphics chip business appeared to gain some share from its chief rival Nvidia during the quarter and it said it had picked up business from Apple, where its chips featured in the latest MacBooks.

Overall revenues of $1.61bn were in line with analyst expectations, while underlying profits of 8 cents a share topped Wall Street estimates of 3 cents. AMD said it expected second-quarter revenues to be flat to slightly down, again in line with analyst figures of $1.59bn.

AMD shares fell 0.5 per cent in after-hours trading on the news to $8.67.

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