AMD Plays Leapfrog With NVIDIA, Intel

Every Intel (Nasdaq: INTC  ) investor knows that the company's latest and best manufacturing process is the 45-nanometer node. The chip giant got there months before rival Advanced Micro Devices (NYSE: AMD  ) could make the same jump, and should get to the 32-nanometer mark ahead of AMD, too.

This is a major competitive advantage in the chip-making business, because smaller chip traces allow designers to cram more functionality into smaller spaces. You get more chips out of every silicon wafer, and these processors run cooler and on less power than the old tech.

So, you might be surprised to hear that AMD is using a 40-nanometer process for its latest graphics chips, making a jump from the 55-nanometer processor employed in most other graphics processors. Taiwan Semiconductor Manufacturing (NYSE: TSM  ) has finished vetting its fanciest process, and the ATI Radeon HD 4770 is one of the first products to make use of it.

Intel doesn't care a whole lot about the discrete graphics products market. The company is doing just fine with the low-end graphics you'll find included on many Intel-based motherboards, leaving AMD and NVIDIA (Nasdaq: NVDA  ) to kill each other in the high-end market. And AMD's Athlon and Opteron chips weren't designed with the peculiarities of TSMC's 40-nanomter tech in mind, so this leapfrog move is strictly for the graphics chips.

Independent reviews of the 4770 are probably provoking cold sweats at NVIDIA, though. At $99 for a fully decked-out graphics card, this thing competes very well with far more expensive NVIDIA products -- with the added bonus of running on less of the electric juice. AMD "worked very closely with TSMC throughout the transition to the 40-nanometer process," giving the chip designer a leg up on the competition.

Decoupling manufacturing from chip design has given AMD the power of choice. If the brand-new Global Foundry operation can't get the next process node into gear on schedule, well, AMD might go to TSMC or United Microelectronics (NYSE: UMC  ) with its upcoming 12-core and 16-core designs. On the flipside, Global Foundries might end up making chips for NVIDIA, ARM Holdings (Nasdaq: ARMH  ) , and other fab-less designers if everything goes according to plan. That way, AMD would make some money from the competition's sales, too.

That's delicious.

Further Foolishness:

ARM Holdings and NVIDIA are Motley Fool Stock Advisor selections. Intel is a Motley Fool Inside Value recommendation. The Fool owns shares and covered calls of Intel. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in TSMC and AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (13) | Recommend This Article (18)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 01, 2009, at 1:42 PM, dividendhound wrote:

    Not a big fan of Nvidia. I want to like them, I do, but I have two 8800 GT's in SLI, and they came to me unable to even speed up their own fans when they overheated. Plus some manufacturing difficulties with some of their chipsets didn't help their reputation. These sorts of things shouldn't happen.

    They also went crazy with increasing the number of parallel cards and the resulting heat and weight didn't help them. When Nvidia started cranking out quad SLI that weren't much faster, that was their peak. AMD has an opportunity to make some advances.

  • Report this Comment On May 01, 2009, at 4:34 PM, CityWealth wrote:

    Nvidia is a good company from an engineering perspective, AMD caught them off guard by targetting the widest market : Low price cards.

    Nvidia went the other way: Extravagant high priced add in cards.

    It's good that Nvidia has some competition with AMD. Nvidia must be sweating a little with AMD's engineering talent and years of experience taking on the intel Behemoth, they can apply that expertise to GPU's.

    Needless to say this fall and the next few years is going to be interesting. AMD has always usually had to settle for 2nd place in the CPU race because of the enormous capital expenditure's required for manufacturing processes, so much expense that they had to spin off their foundry.

    The big markets are low cost chips for small devices and consoles. Nvidia and AMD better get some design win's for next generations consoles, as well as trying to get into the mobile phone and gadget space.

  • Report this Comment On May 01, 2009, at 5:35 PM, SnarfJabroni wrote:

    Your title is puzzling...how did AMD "leapfrog" Intel with a process shrink, for a product you state that Intel "doesn't care much about"...but failed to mention, THEY DON'T MAKE AT ALL....discrete graphics.

    I also have a pop quiz for you, AMD fanobi - you said Intel beat AMD to 45nm by "months". Do you know HOW MANY MONTHS?

    If it is more than a year, would you still use the term MONTHS?

    Hint: Intel was selling over a DOZEN 45nm SKUs in Nov 2007.

    AMD announced "widespread availability" of their very FIRST 45nm, Shanghai, in November 2008.

    Months....LMFAO.

  • Report this Comment On May 01, 2009, at 10:25 PM, jac2009 wrote:

    Anders -- What is your background? Again, simply don't seem to understand a lot about this industry.

    Intel is ahead of AMD by a generation to a generation and a half in process technology for HIGH VOLUME MANUFACTURING (which in this industry is all that matters)....Intel are similarly ahead of Taiwan, Inc as well. There is a reason companies like Applied Materials test their most advanced equipment with Intel first -- they are the best at quickly taking CPUs from design to pre-production to high volume production.

    Also, the graphics comment is silly. With Larrabee, Intel will incorporate high end graphics into multicore CPUs. This is part of a long established strategy of integrating other discrete functions on a "motherboard" to increase the overall value of Intel silicon.

    Please go get smarter on the industry you write about -- perhaps doing a little more work than reading press releases or talking with a companies PR department would help. It seems your goal simply to create "buzz" online. This is part of the reason I won't pay for an upgraded Motley Fool subscription are posts like this.

  • Report this Comment On May 01, 2009, at 10:28 PM, jac2009 wrote:

    A note to ALL comment readers -- I am not an Intel employee. I retired from Intel over 8 years ago, I just know a lot about the industry. Motley Fool should consider hiring some people that have real content knowledge, but who aren't "too nerdy". Cheers!

  • Report this Comment On May 01, 2009, at 10:59 PM, TEBuddy wrote:

    Youre all too biased and Intel lovers pissed at losing all your money when they dropped in half.

    AMD is a better engineering and design house, Intel has brute force tactics to keep ahead, and not a whole lot ahead.

    AMD has a better potential for growing from this point on, as a small cap stock compared to Intel.

    You bash this analyst to death and praise the AMD bashers and Intel biased analysts that also don't know a dang thing about the real technology.

    AMD has better chipsets, and graphics, and a better system package with better value. Even Steve Jobs hires from AMD talent.

  • Report this Comment On May 02, 2009, at 4:08 PM, jac2009 wrote:

    TEBuddy -- You are sorely misinformed. So, do you have direct semi experience?

    I have several friends, former Intel people that went to AMD. One ran their digital home efforts and was amazed that AMD had survived so long given how badly managed they are. Please note, he had gone to several other semi companies in senior positions before going to AMD.

    And what difference does it make if it is brute force or not? Intel is and will continue to be the dominate player in the CPU market, period. The design and manufacturing advantage is just too large.

    What Intel does need is AMD to survive and remain weak for anti-trust reasons.

  • Report this Comment On May 03, 2009, at 12:44 PM, TEBuddy wrote:

    Misinformed about what? I could give a darn who you know and what they did, because I know how management is and how little most of them know. I know because I used to be one for design and production.

    Try to tell us what major PC innovation Intel has been the first to introduce in the last 10 years?

    And Intel performance has come on Nvidia's back, with chipsets and graphics.

  • Report this Comment On May 04, 2009, at 1:29 AM, jac2009 wrote:

    TEBuddy -- You are sorely misinformed. So, do you have direct semi experience?

    I have several friends, former Intel people that went to AMD. One ran their digital home efforts and was amazed that AMD had survived so long given how badly managed they are. Please note, he had gone to several other semi companies in senior positions before going to AMD.

    And what difference does it make if it is brute force or not? Intel is and will continue to be the dominate player in the CPU market, period. The design and manufacturing advantage is just too large.

    What Intel does need is AMD to survive and remain weak for anti-trust reasons.

  • Report this Comment On May 04, 2009, at 1:41 AM, jac2009 wrote:

    TEBuddy -- It has nothing to do with who I know, it is what I have done and what I continue to do. So what part of management are you in at AMD? So which group did you work in at AMD? Be specific.

    I am independent of any company, but know how Silicon Valley works.

    For all of you out there: If TEBuddy is a line engineer at AMD, of course he thinks they are "GREAT". The reality is, it is not about one group or even product division, it is about the organization. AMD simply and has NEVER have been a company that is comparable to Intel.

    Reality is AMD's performance over the last 5 years has been embarrassing. After leaving Intel in 2001, I has embarrassed for about 3 years, then Intel got it together again.

    So TEBuddy, be "real", are you an AMD employee, because I am not an Intel employee. I just know the industry.

  • Report this Comment On May 04, 2009, at 12:43 PM, jpanspac wrote:

    This is a curious statement:

    "Decoupling manufacturing from chip design has given AMD the power of choice. If the brand-new Global Foundry operation can't get the next process node into gear on schedule, well, AMD might go to TSMC or United Microelectronics (NYSE: UMC) with its upcoming 12-core and 16-core designs."

    If AMD doesn't use Gobal Foundry to manufacture their chips, how will GF stay afloat? I don't see that AMD has any choice at all.

  • Report this Comment On May 04, 2009, at 9:38 PM, TEBuddy wrote:

    I work for the Government, and own stock in Intel, so if you think I am AMD biased that your call, youre the one that worked for Intel.

    You cant even answer one great PC innovation that Intel has had in last 20 years.

  • Report this Comment On May 07, 2009, at 7:38 PM, SnapDave wrote:

    Based on a quick look at a reputable comparison, I’m underwhelmed at the slight performance difference over similarly priced 55nm nVidia parts. It may be enough to make AMD/ATI some money for now, but it’s hardly earth shattering as this article suggests. What’s more I’m sure nVidia will have 40nm parts shortly, if not from TSM then from someone else. Yes, as far as we know, nVidia will come out with a 40nm TSM chipped card within 6 months.

    Jac, we’ve heard that onboard graphics (part of chipset?) story for years. It hasn’t happened yet. Why is this any different?

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