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Advanced Micro Devices reported financial results today that slightly beat Wall Street’s expectations for the first quarter ended March 31.

Revenues came in at $1.09 billion, down 32 percent from a year ago and a hair above expectations. And the chip maker’s net loss per share (after one-time items) was 13 cents a share, or $94 million, better than expected but down significantly from a year ago.

The Sunnyvale, Calif.-based AMD, the No. 2 maker of PC microprocessors, has had a tough year as it trailed Intel in competitiveness and saw a slowdown in demand as consumers began to favor tablets and smartphones over PCs. Since it wasn’t well positioned for that transition, the slowdown hit AMD harder than others.

Analysts expected a loss of 17 cents a share on revenue of $1.05 billion for the first fiscal quarter ended March 31. AMD had expected a 9 percent revenue drop in the quarter.

In the previous fourth fiscal quarter, AMD saw a 32 percent year-over-year drop in revenues and loss of 14 cents a share. AMD recently restructured and cut 15 percent of its staff. Over time, AMD now plans to focus 40 percent to 50 percent of its efforts in markets that are adjacent to the PC, such as low-power ARM-based microservers.

AMD gets about 80 percent of its revenue from the PC industry. Rory Read [above], the chief executive of AMD, joined the company in 2011. He was formerly the No. 2 executive at Lenovo, which has since been battling HP for the title of the world’s biggest PC maker.

Read said in a statement, “Our first quarter results reflect our disciplined operational execution in a difficult market environment. We have largely completed our restructuring and are now focused on delivering a powerful set of new products that will accelerate our business in 2013. We will continue to diversify our portfolio and attack high-growth markets like dense server, ultralow-power client, embedded and semi-custom solutions to create the foundation for sustainable financial returns.”

In after-hours trading, AMD shares have dropped 5 percent. Patrick Moorhead, analyst at Moor Insights & Strategy, said, “AMD was understandably hurt by the weak PC market and weren’t able to compensate with their custom chips in the Wii U or PS4.  They need to better take advantage of Kabini and Temash on the client side and SeaMicro on the scale-out server side to improve their fortunes.  A win at the new Microsoft Xbox could help, too.”

For some reason, AMD shares shot up in the last 20 minutes before the stock market closed, probably on rumors about the earnings.

AMD said it has completed its restructuring to reduce operating costs. The company said it is on track to hit $450 million in quarterly operating expenses in the third fiscal quarter of 2013. AMD plans on returning to profitability in the second half of 2013.

AMD said its code-named Richland processors shipped in the first quarter. The Kabini accelerated processing unit began shipping to customers in the first quarter. That chip (which combines a microprocessor and graphics on the same chip) targets ultrathin laptops with good battery life. AMD has also begun shipping its first tablet chip, code-named Temash, for Windows 8 tablets and hybrids.

Sony also announced in the first quarter that its PlayStation 4 is using a semi-custom APU from AMD. About 20 percent of sales will come from semi-custom and embedded design wins in the fourth quarter.

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Intel chief executive Paul Otellini said in an earnings conference call today that the world’s biggest chip maker has never been in a better position to address the full spectrum of the computing chip market. But he also acknowledged that smartphone chip sales are not yet generating significant revenues for Intel.

That’s a problem as tablets and smartphones are growing at a fast clip and hurting demand for PCs. Still, Otellini, who is retiring next month, said he remained optimistic about Intel’s competitive position. Intel, after all, is still generating $2 billion a quarter in net income.

“We now compete wherever there is computing,” he said in his last conference call with analysts.

Some of the PC makers that use Intel chips, such as Dell and Hewlett-Packard, have suffered. But Otellini said that some Intel customers are thriving as well. He pointed to Apple and Lenovo as examples of big computer makers that are thriving.

Otellini said that ultrabook (thin, light laptops) prices will drop between $599 and $699 in the fall, while touch-enabled notebook computers could drop even lower to $199 to $499. (Android tablet prices could be half of those prices). These ultrabooks will sport new low-power microprocessors, codenamed Haswell. Later in the second quarter, Intel will begin shipping Haswell chips, which will enable powerful laptops and tablets.

When it comes to chipmaking technology, Intel is still the undisputed leader, Otellini said. He said that Intel has shipped more than 100 million 22-nanometer chips (the lower the nanometer figure, the more complex and sophisticated the chip). Meanwhile, rivals in the industry have yet to ship a single 22-nanometer chip.

“We put more distance between us and the rest of the semiconductor industry than ever before,” Otellini said.

But being able to make the tiniest chips and to fill the factories with orders are two different things. Intel saw a reduction in excess inventory in the first quarter, and it anticipates an expansion of demand in the second half of the year thanks to expectations for a stronger worldwide economy. Enterprise computing sales may grow in part due to the stronger macroeconomy.

At the same time, Intel reduced its risks by cutting capital spending for the year from $13 billion to $12 billion. It did so by reclassifying short-term spending for the long term. Intel anticipates shipping its first 14-nanometer chips in the second half of 2013.

Intel will be able to diversify its manufacturing by adding foundry customers, or outside companies such as Altera that will use Intel’s factories to produce Altera-designed chips. In a “crawl, walk, run” strategy for the foundry business, Otellini said, “We are past crawling.”

Intel had no update to offer on its search for a new CEO. Otellini, 62, is retiring earlier than Intel’s mandatory retirement age of 65.

Otellini said he is “passing the baton.” But he added, “I know Intel’s story is nowhere near completely written.”

Chief financial office Stacy Smith noted that smartphone chip sales are still not moving the needle in the overall revenue picture.

Patrick Moorhead, analyst at Moor Insights & Strategy, said, “Once again, Intel managed to do better than and guide better than expected. This is driven by strength of the scale out data center and HPC server business and from a strong Haswell reception.  Haswell could be the first Intel chip that provides PC performance in a thin tablet form factor. “

Market researcher IDC reported last week that first-quarter PC sales dropped 13.9 percent — the biggest quarterly fall in PC industry history — in the first quarter as consumers shifted their purchases away from PCs to mobile and tablet devices. But Intel said today its PC Client Group sales fell just 6 percent, and it did not revise its future earnings estimates downward.

Intel’s earnings per share were 40 cents (down 25 percent) on revenue of $12.60 billion. Analysts expected Intel to report net income of 41 cents per share on sales of $12.61 billion. And before the results, analysts were looking for earnings of 40 cents on sales of $12.9 billion for the second quarter ending June 30. Intel now expects sales of $12.9 billion, and gross profit margins of 58 percent.

Intel has been expecting low single-digit revenue increases for 2013, with gross margins at 60 percent. Those expectations remain unchanged. Capital spending was previously targeted at $13 billion, but that has now been revised downward to $12 billion.

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Intel reported slightly worse earnings than expected as PC sales took a vacation and tablets gained momentum in the first quarter.

Intel’s earnings are watched closely as a bellwether for the computing ecosystem. The news isn’t so bad for PC makers, who were braced for the worst. Market researcher IDC reported last week that first-quarter PC sales dropped 13.9 percent — the biggest quarterly fall in PC industry history — in the first quarter as consumers shifted their purchases away from PCs to mobile and tablet devices.

Due in part to weak demand for Microsoft’s Windows 8 operating system, first quarter PC sales were a disaster, IDC said last week. But Intel evidently doesn’t believe the PC industry is in such bad shape, and it noted its sales were down only 6 percent for its PC client group. Intel is the world’s biggest maker of microprocessors and the chips that go with them inside a computer.

Intel’s results weren’t so bad in the previous period, when it posted better-than-expected earnings for the fourth quarter ended Dec. 31, as PC sales weren’t as weak as forecast and server chip sales were strong. In that quarter, PC sales fell just 5 percent. Over the past year, Intel’s stock price has fallen 22 percent.

Intel’s earnings per share were 40 cents on revenue of $12.60 billion. Analysts expected Intel to report net income of 41 cents per share on sales of $12.61 billion. And before the results, analysts were looking for earnings of 40 cents on sales of $12.9 billion for the second quarter ending June 30. Intel now expects sales of $12.9 billion, and gross profit margins of 58 percent.

“Amid market softness, Intel performed well in the first quarter, and I’m excited about what lies ahead for the company,” said Paul Otellini, Intel president and CEO, said in a statement. “We shipped our next generation PC microprocessors, introduced a new family of products for microservers, and will ship our new tablet and smartphone microprocessors early this quarter. We are working with our customers to introduce innovative new products across multiple operating systems. The transition to 14nm technology this year will significantly increase the value provided by Intel architecture and process technology for our customers and in the marketplace.”

Intel also has a strong business in server chips, which accounted for $10.7 billion of its $53 billion in revenues last year. In after-hours trading, Intel’s stock price was up 2.17 percent.

In the first quarter, Intel had previously predicted revenue of $12.7 billion, 58 percent gross margins, and MG&A spending of $4.6 billion.

Intel has been expecting low single-digit revenue increases for 2013, with gross margins at 60 percent. Those expectations remain unchanged. Capital spending was previously targeted at $13 billion, but that has now been revised downward to $12 billion.

Intel is shifting to meet mobile device demand. It has created laptop chips that dissipate as little as 7 watts, and its code-named Haswell processor coming mid-year is expected to be even better at power consumption. At the Consumer Electronics Show in Las Vegas, Intel said it was working with seven major vendors of smartphones who have launched Intel-based smartphones in 25 countries. But the revenue from those deals is a drop in the bucket compared to the revenues Intel gets from the PC chip business.

Otellini, 62, is retiring early from his job (Intel’s mandatory retirement age is 65). His successor has not yet been named.

During the first quarter, the PC Client Group’s revenue was $8.0 billion, down 6.6 percent from the prior quarter and down 6 percent from a year ago. Data Center group revenue was $2.6 billion, down 6.9 percent sequentially and up 7.5 percent from a year ago. Other Intel architecture revenue was $1.0 billion, down 3.9 percent sequentially and down 9 percent from a year ago. Gross profit margin was 56 percent, down 2 percentage points sequentially and down 8 percentage points from a year ago. Research and development plus MG&A spending in the quarter was $4.5 billion, in line with expectations of $4.6 billion.

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Advanced Micro Devices chief executive Rory Read said he foresees “continued choppiness” in the PC market for the first half of 2013. In a conference call with analysts, Read said that the company’s fourth-quarter loss was due to a challenging macroeconomic environment and weaker-than-expected PC market.

“As I mentioned on our last earnings call, we are executing a turnaround that will take several quarters,” Read said (pictured above) on the call. “We expect continued choppiness in the PC market in the first half of 2013, and will closely manage the business as we reset, restructure and ultimately transform AMD.”

He said AMD will continue to focus on markets that are adjacent to its PC microprocessor and graphics chip businesses. The specific segments AMD will focus on include dense server, semi-custom, embedded, and ultra-low-power client markets. Those are areas where AMD views Intel, the world’s biggest chip maker, might be vulnerable to competition.

AMD is completing is restructuring, including layoffs of 15 percent of its staff, in the first quarter. AMD said it has its graphics chip in the Nintendo Wii U game console, but it has been mum about rumors that its chips will be used in upcoming consoles from Sony and Microsoft.

Read said that AMD grew sales on Black Friday for AMD-based notebook computers sold at retail. One in three notebooks sold in the U.S. in the fourth quarter had AMD chips, Read said. During the quarter, AMD added TV and PC maker Vizio as a new customer. Vizio’s first AMD products included two touchscreen laptops and a Windows 8 tablet.

During the quarter, AMD began shipping its code-named Richland accelerated processing unit (APU), which combines graphics and microprocessor functions on the same chip. AMD also had design wins for its Kabini APU and ultra=low-power Temash APU. Both of those chips are going through final internal testing and are expected to ship in the first half. Kabini and Temash target the market for notebook computers, tablets and convertibles, which are laptops that can also be used as a touchscreen tablet.

Read said the company will launch strong new APU and graphics chips in the first half of 2013 that will help grow its business.

“This is an unprecedented time in the PC industry,” Read said.

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Advanced Micro Devices reported financial results that slightly beat Wall Street’s expectations for the fourth quarter ended Dec. 29.

Revenues came in at $1.16 billion, down 32 percent from a year ago and a hair above expectations. And the chip maker’s net loss per share was 14 cents, better than expected but down significantly from 33 cents a share a year ago.

Sunnyvale, Calif.-based AMD, the No. 2 maker of PC microprocessors, had a tough year as it trailed Intel in competitiveness and saw a slowdown in demand as consumers began to favor tablets and smartphones over PCs. Since it wasn’t well positioned for that transition, the slowdown hit AMD harder than others.

Analysts expected a loss of 20 cents a share on revenue of $1.15 billion for the fourth fiscal quarter ended Dec. 29.

In the previous third quarter, AMD saw a 10 percent sequential drop in revenues and loss of $157 million. After that report, AMD restructured and cut 15 percent of its staff. Over time, AMD now plans to focus 40 percent to 50 percent of its efforts in markets that are adjacent to the PC, such as low-power ARM-based microservers. AMD had said earlier it was targeting break-even results on $1.3 billion in revenue in the third quarter of 2013.

Reuters reported earlier today that AMD had hired two senior engineers who hailed from Qualcomm and Apple, as an effort to focus on low-power chips. The story said that Charles Matar, formerly of Qualcomm, joined AMD as vice president of system-on-chip development. And Wayne Meretsky, who worked at Apple in the 1990s, was also named vice president of software intellectual property development.  AMD confirmed the hires are part of its effort to move into new markets.

AMD gets about 80 percent of its revenue from the PC industry. Rory Read (pictured above), the chief executive of AMD, joined the company in 2011. He was formerly the No. 2 executive at Lenovo, which has since been battling HP for the title of the world’s biggest PC maker.

Read said in a statement that AMD ”continues to evolve our operating model and diversify our product portfolio with the changing PC environment.” He added, “The investments we are making in technology today are focused on leveraging our distinctive IP to drive growth in ultra low power client devices, semi-custom SoCs and dense servers.  We expect to deliver differentiated and groundbreaking APUs (combo chips with graphics and processors on the same chip) to our customers in 2013 and remain focused on transforming our operating model to the business realities of today.”

In the fourth quarter of 2012, gross margin percentage was 15 percent. Non-GAAP gross margin was 39 percent, up 8 percent from the prior quarter. The company said the gross margin was positively impacted by the sales of higher-priced desktop microprocessors.

For the full year, AMD reported 2012 revenue of $5.42 billion, an operating loss of $1.06 billion, and a net loss of $1.18 billion, or $1.60 a share. That compares with revenue of $6.57 billion, operating income of $368 million, and net income of $491 million, or 66 cents a share. AMD closed the quarter with $1.2 billion. AMD took a restructuring charge of $90 million in the quarter, including costs to layoffs that are taking place in the first quarter.

Revenue in the computing solutions segment were down 11 percent from the prior quarter and up 37 percent from a year ago. Microprocessor unit volume shipments were down from the prior quarter and a year ago. The operating loss was $323 million, due largely to the impact of a “lower of cost or market” charge related to AMD’s manufacturer, Globalfoundries. Average microprocessor prices were up sequentially, but down from a year ago.

Graphics segment revenue was down 5 percent sequentially and down 15 percent from a year ago. That was due to lower unit shipments. Operating income was $22 million, compared with $27 million a year ago. Average graphics chip prices were flat sequentially and up from a year ago. During the quarter, Nintendo launched its Wii U game console with AMD Radeon HD graphics chips.

In its outlook, AMD said it expects revenue to decline 9 percent, plus or minus 3 percent, sequentially in the first quarter of 2013.

“It was a challenging 2012 for AMD resulting in significant financial losses but they made some big bets to better position themselves in the future,” said Patrick Moorhead, analyst at Moor Insights & Strategy. “These bets included the acquisition of SeaMicro for dense servers, announcement of a 64-bit ARM server SOC, and investments into “Temash,” a distinct X86 SOC targeted at fanless tablets.  While AMD is positioning themselves for markets outside of the PC space for the longer-term, a PC market turnaround would really help them right now as it’s the lion’s share of their business and will be in 2013.”

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Intel announced today that it is shipping its first low-power Atom microprocessor designed specifically for a new breed of servers dubbed “microservers.”

These lightweight and efficient microservers, pioneered by startup SeaMicro (now owned by Intel’s rival, Advanced Micro Devices), are aimed at large-scale data centers that serve huge numbers of web pages to Internet surfers.

Intel’s new chip is a 64-bit dual-core Atom processor that operates on 6 watts of power. The world’s biggest chip maker is scaling down from its normal server chips, the 17-watt Xeon processors, in order to attack this low-end part of the market. But it has to engage in a tough balancing act so that the Atom chips do not cannibalize the high-end, more lucrative Xeon processors.

The new server chip, dubbed the Intel Atom processor S1200, has features for servers such as error correction, 64-bit support, and virtualization technologies. It also sells at a lower cost and can be packed more densely into energy-efficient server cabinets.

In this respect, Intel is better prepared for this market than AMD. Intel’s chips were used in SeaMicro’s first microservers a few years ago, but they were not tailor-made for the task. Then AMD bought SeaMicro for $334 million earlier this year and obtained its key technologies, such as a fast-switching technology, that are useful for microservers, beyond the core processing chip.

Intel said more than 20 designs are in the works based on the new S1200 chips

HP said its next-generation Gemini servers, shipping next quarter, will launch with the Atom processors. Software providers such as Oracle and Red Hat are supporting the launch.

“The data center continues to evolve into unique segments and Intel continues to be a leader in these transitions,” said vice president and general manager of Intel’s Datacenter and Connected Systems Group, Diane Bryant (pictured). “We recognized several years ago the need for a new breed of high-density, energy-efficient servers and other datacenter equipment.”

“Organizations supporting hyperscale workloads need powerful servers to maximize efficiency and realize radical space, cost, and energy savings,” said Paul Santeler, vice president and general manager of HP’s Hyperscale Business Unit for Industry-standard Servers and Software. “HP servers power many of those organizations, and the Intel Atom processor S1200 will be instrumental as we develop the next wave of application-defined computing to dramatically reduce cost and energy use for our customers.”

Intel’s next-generation Atom microserver chip, code-named Avoton, will be available in 2013. The S1200 costs $54 in quantities of 1,000 or more.

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Advanced Micro Devices, the second-largest maker of PC microprocessors behind Intel, reported weak earnings for the third quarter that ended Sept. 29. AMD also announced that it would lay off 15 percent of its employees, or 1,700 jobs.

Revenues for the quarter were $1.27 billion, down slightly from the analyst consensus estimate of $1.28 billion. The  non-GAAP loss for the quarter was 20 cents a share, compared to the analyst estimate of a loss of 15 cents a share.

“The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,” said Rory Read, AMD president and CEO, in a statement. “It is clear that the trends we knew would reshape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our break-even point, and enable us to fund differentiated product road maps and strategic breakaway opportunities.”

AMD warned Oct. 11 that its revenues would be worse than expected, down about 10 percent from the previous quarter. Previously, AMD had expected third-quarter  revenue to be down only 1 percent. It blamed the slowdown on weaker-than-expected demand across all product lines caused by a challenging macroeconomic environment.

AMD had expected third quarter gross profit margin of 31 percent, down from its previous expectation of 44 percent, due to a write-down of $100 million in inventory. The profits were also hit by soft demand that brought down average selling prices for microprocessors. (Intel’s quarterly revenues were $13.5 billion).

AMD’s actual earnings were weak like Intel’s. AMD reported a GAAP loss of $157 million, or 21 cents a share, on revenue of $1.27 billion. That compared to a profit of $97 million, or 13 cents a share, on revenue of $1.69 billion a year ago.

But Sunnyvale, Calif.-based AMD has the added problem of being behind Intel on a number of fronts. The warning prompted rumors of layoffs at AMD. The PC market has been losing sales to tablets and smartphones, and consumers are seemingly waiting for the Oct. 26 launch of Windows 8 before buying new computers. AMD had 11,813 employees at the end of the third quarter.

Gartner is also saying that third quarter PC shipments will turn out to be flat compared to the second quarter. Analyst Vijay Rakesh at Sterne Agee expected revenues of $1.27 billion and a loss of 17 cents a share. AMD’s stock market value is down to $1.85 billion at today’s closing price at $2.61 a share. AMD’s stock is up slightly in after-hours trading.

For the fourth quarter, AMD expected revenues to fall 9 percent from the third-quarter level. As for the layoffs, Read said,

“Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results. Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market.”

[Photo credit: Dean Takahashi]

Advanced Micro Devices is taking a shot at Intel today with a new family of combination graphics-microprocessor chips to drive cheaper and faster mid-range PCs.

The chips, code-named Trinity, are accelerated processing units (APUs) that combine graphics and computing functions on a single chip. With the new Trinity-based chip designs, AMD will refresh its entire line of A-series APUs for the first time since it launched the code-named Llano chips in 2011 and since it launched its first generation of Trinity chips earlier this spring. It goes up against Intel’s widely used Ivy Bridge combo chips, and it should hit the sweet spot for gamers who want PCs that have cool 3D graphics and an affordable price.

The chips have four cores based on AMD’s Piledriver core design, along with Radeon HD7000 graphics. The chips have a whopping 1.3 billion transistors, or tiny electrical switches. That enables the high-end quad-core A10 APU to run at a frequency of 4.2 gigahertz, compared to the similarly priced Intel Core i3 2120/3220 processor with two cores running at 3.3 gigahertz, said Adam Kozak, a product marketing manager at Sunnyvale, Calif.-based AMD, in a call with the media.

AMD is also introducing other versions dubbed the A8, A6, and A4 chips at difference performance levels and prices. AMD says the high-end APU can be overclocked, or run at faster than recommended specifications (at a risk of melting down) up to speeds of 6.5 gigahertz, gaining a 68 percent increase in processor performance. The APUs can run games at anywhere from 77 percent to 107 percent faster than the same games running on a system with an Intel HD 4000 integrated graphics chip set.

“This far exceeds the performance of our competitors’ similar chips,” Kozak said. “There’s a lot of graphics performance sitting inside our APUs.”

In another cool feat, the AMD A10 can run the PC game Torchlight II (pictured below) at 32 frames per second, even with all graphics settings turned on, across three connected screens. That’s pretty badass. The products will be available on Oct. 2.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Intel chief executive Paul Otellini reportedly told employees in Taiwan that Microsoft’s Windows 8 operating system is being released before it’s done, according to Bloomberg.

If it’s true, it’s a big “whoops” moment. After all, if Windows 8 is a dud, then Intel’s own chip sales will suffer, as Intel is the world’s largest maker of PC microprocessors. Intel hasn’t commented yet to us and declined to comment to Bloomberg.

Update 2:15pm Pacific: Intel said the report was “unsubstantiated” and posted the following statement:

Intel has a long and successful heritage working with Microsoft on the release of Windows platforms, delivering devices that provide exciting experiences, stunning performance, and superior compatibility. Intel fully expects this to continue with Windows 8.

Intel, Microsoft and our partners have been working closely together on testing and validation to ensure delivery of a high-quality experience across the nearly 200 Intel-based designs that will start launching in October. Intel CEO Paul Otellini is on record as saying “Windows 8 is one of the best things that ever happened to Intel,” citing the importance of the touch interface coming to mainstream computing and the huge wave of exciting new Ultrabook, tablet and convertible device innovations coming to the market.

But the wording of the response is not actually a denial. According to the Bloomberg report, Otellini had said that improvements still have to be made to the software. He spoke to a group of employees at a meeting in Taipei yesterday, the report said. Windows 8 has touchscreen features and is aimed at making Microsoft’s user experience consistent across the PC, tablet, and smartphone. It is Microsoft’s answer to the popularity of Apple’s iPad and iPhone.

Otellini’s comments seem like a rare moment of candor. But Microsoft has said for some time that it will ship Windows 8 on Oct. 26.

“With over 16 million active preview participants, Windows 8 is the most tested, reviewed, and ready operating system in Microsoft’s history,” said Mark Martin, a spokesman for Redmond, Washington-based Microsoft in a comment to Bloomberg.

Sean Maloney, once considered the heir apparent to Intel chief executive Paul Otellini, plans to retire after three decades with the world’s biggest chip maker.

Maloney will retire in January from his positions as Intel executive vice president and chairman of Intel China. Maloney suffered a debilitating stroke in 2010 and was on a leave of absence for several months.

I first met Maloney in the 1990s when I was interviewing then-CEO Andy Grove, the hard-charging executive who motto was “Only the Paranoid Survive.” Grove was showing me a demo, and when it didn’t work, he shouted, “Sean!” Maloney came hobbling out on crutches to help Grove. At the time, Maloney was Grove’s “technical assistant,” a position that up-and-coming young Intel employees used as a way to learn the ropes from top executives and then springboard into executive jobs. Intel software chief Renee James was also one of Grove’s technical assistants.

Prior to leading operations in China, Maloney was promoted in 2009 to executive vice president and general manager for the company’s Intel Architecture Group, the biggest division. Maloney was considered a successor to Otellini. He had a strong sales and marketing background and spent many years traveling through Asia. After Maloney’s stroke, eyes turned to Dadi Perlmutter, who is currently executive vice president and general manager of Intel’s Architecture Group, as Otellini’s likely successor.

Maloney’s recovery process included speech therapy. He gave the keynote address at last year’s Computex trade show. However, after an intense work and travel schedule over the past 30 years, he has decided to retire.

“Through those years I’ve had the honor of working with some of the most brilliant minds in the world, from Andy Grove to Paul Otellini, and on the most cutting-edge technology,” Maloney said in a statement issued by Intel.

Intel’s China operation is currently headed by Ian Yang.

Seifert is moving on to pursue other opportunities, and his departure is not based on any disagreement with the company over its accounting principles, practices, or financial statement disclosures. Devinder Kumar, senior vice president and corporate controller, will serve as interim chief financial officer while a search begins for Seifert’s replacement.  Kumar has served as the company’s corporate controller since 2001 and first joined AMD in 1984.

Update 5:38pm Pacific: AMD’s stock price closed up 2.8 percent for the day, to $4.01 per share. However, after-hours traders have clipped the stock’s wings, taking it down more than 7 percent as of this update.

“We thank Thomas for his many contributions to AMD and for serving as interim CEO in 2011,” said Rory Read, AMD president and chief executive. “Thomas’ personal commitment to the highest standards of accountability and financial integrity has helped define how AMD does business today. Devinder is an experienced financial executive whose financial expertise and semiconductor experience developed during his 28 year tenure at AMD is an asset to the company.”

Seifert will remain with AMD until Sept. 28. The company has missed expectations for financial performance lately, partly due to a slowdown in sales of PCs. Sunnyvale, Calif.-based AMD makes microprocessors that serve as the brains of PCs.

SAN FRANCISCO — When Intel warned about weak third-quarter sales last week, it blamed it on slow consumer and enterprise PC sales. But it said that data center computers known as servers were meeting expectations. The reason is that the explosion of tablets, smartphones, and other mobile devices helps drive demand for servers, said Diane Bryant, the head of data center computing at Intel.

Speaking at the Intel Developer Forum in San Francisco today, Bryant (pictured above) said that for every 120 tablets sold, a server has to exist to handle all of the web-based traffic that their users create. She said that for every 20 digital signs in a shopping mall and other areas, like the flatscreens in your local coffee shop, you need one server. And for every 20 surveillance cameras deployed, you need a server to sort through all of the video data.

Servers are pretty universal computers that are used in connected systems, small businesses, communications infrastructure, enterprises, cloud services, technical computing, and mission-critical computing centers like stock markets. As the era of “big data” arrives, companies must deploy big data centers to process it.

Intel is sampling its next-generation E7 and E5 server chips for delivery next year. The low-power server chips are based on Intel’s Ivy Bridge chip designs, which combine graphics and computing on a single chip.

Low-power Xeon E3 series chips arrive in 2013 and are based on the 22-nanometer Haswell core now in development. But a new breed of lower-power Atom-based servers, known as microservers, are also arriving. These microservers have chips with a third of the usual power consumption and they use Intel’s Atom processors. Next year, Intel will launch the 22-nanometer Avoton version of the Atom chip for microservers.

BMW said it will use a new Open Data Center Alliance data center, fueled by geothermal and hydroelectric energy, at a location in Iceland.

On the security front, Bryant said that Intel is embedding Deep Defender security technology into its Xeon server chips. Intel has also launched trusted execution technology for its ecosystem. Intel entered the server chip market in 1997 and has improved performance 10,000 times.

Big data was a $4 billion market last year, Bryant said, and it is growing at 30 percent a year. The data comes from everything, like social networks or radio frequency identification sensors.

Ariel Kelman, head of worldwide marketing at Amazon’s web services division, which hosts web infrastructure for businesses, said that it is working closely with Intel to transform supercomputing from a tool for the elite to something the masses can tap into. Amazon’s Cluster Compute Eight Extra Large Instances are ideal for big data server solutions. They start at $2.40 per hour. You can configure your own top 500 supercomputer with 290 instances at a cost of $73 per hour.

Yelp uses AWS to analyze all of the data from clicks on its online user reviews. NASA uses AWS to calculate telemetry data for the Mars Curiosity rover.

Six Flags uses Intel servers in its amusement parks to monitor crowd traffic via surveillance cameras in its theme parks. It reallocates its staff to the high-traffic areas based on the data from the cameras.

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SAN FRANCISCO — Intel executives are excited about the next refresh coming for the PC. Kirk Skaugen, the general manager of the PC Client business at Intel, said today at the Intel Developer Forum in San Francisco that “more innovation [is] coming in the next 18 months on the PC than you’ve seen in a decade.

Skaugen, pictured above, said that Intel and IDT have teamed up to produce wireless charging for laptops and PCs, allowing you to charge a device such as a phone (pictured) simply by putting it near a PC.

“Our goal is to eliminate wires from the PC,” Skaugen said.

The refresh is expected to begin on Oct. 26 with the launch of Windows 8, Microsoft’s new touch-oriented operating system, and continue through the next year or so. If it happens as expected, the refresh could generate $200 billion in annual sales for the computer industry.

Kevin Krewell, an analyst at The Lynley Group, said, “A lot of the innovation has to do with the new user interface, with touch, gesture and voice. All of the technologies have been around for a while. We are getting to a critical mass where people are used to touch and voice. The technologies are pervasive around us in things like Apple’s Siri. The PC is a natural place to incorporate those as well.”

He said the moves are clearly driven by concern that the PC is losing ground to tablets and smartphones. “Absolutely,” he said. “The whole platform development of Ultrabooks (thin and powerful laptops) is an attempt to mitigate the damage caused by tablets to the pc infrastructure.” But he doubts people will be excited about convertibles, which incorporate the tablet into a laptop.

Here’s the checklist of innovations coming for the personal computer:

• Windows 8 operating system with touchscreen controls. About 80 percent of people prefer touchscreens to other controls in tests by Intel, Skaugen said.
• Close-range depth tracking from a range of 6 inches to 3 feet, using SoftKinetics’ 10-finger recognition software and camera. Creative and SoftKinetic have created a camera that will debut in 2013 and eventually be built into a PC.
• All day battery life on a laptop.
• Voice recognition from Nuance. You can command your PC with your voice, dictate short sentences, and translate text to speech synthesis.
• 2D/3D augmented reality. Intel worked with Total Immersion to let you do things like try on a pair of sunglasses and see what they look like on your face, even if you’re doing it virtually via online shopping.
• Face analysis. A camera can recognize you and use that as your security password.
• A Perceptual Computing software development kit beta to enable developers to create new apps for the PC taking advantage of the above innovations.
• Intel’s fourth-generation Core microprocessor, code-named Haswell, will debut in the second half of 2013. It will have twice the computing power for the same amount of power consumption of today’s chips. A new version of the Core processors will operate in the range of 10 watts of power dissipation. That compares to 17 watts to 15 watts for Core processors today and 2 watts for Atom processors.
• In the next year, the number of Ultrabooks in the market will double from 70 today to more than 140.
• Convertible laptops, which will double as laptops or tablets, will debut in the near future.
• Better security, including anti-theft technology 2.0, which shows where your lost laptop is and hardware locks it if needed. Intel also has Identity Protection Technology so you can have a more secure social networking experience.
• Near-field communications. A short-range wireless technology allows for communication between a laptop and a mobile phone or tag.
• Support for the next-generation of high-definition video, with 4K resolution.

Intel shaved more than a billion dollars off its expected revenue in the third quarter, sending shockwaves through the PC industry. The shortfall may be based on simple buying logic. Consumers may be waiting for Microsoft to launch its touchscreen-friendly Windows 8 operating system on Oct. 26.

But the toll could be severe throughout the large personal computer ecosystem, where all sorts of dynamics are affecting the big picture. Every computer microprocessor that Intel doesn’t sell impacts the makers of motherboards, peripheral makers, and PCs. So Intel’s status is a bellwether for the industry means that maybe $5 billion in industry sales could be absent during the third quarter.

“When Intel doesn’t sell an extra $1 billion in chips, that’s a big multiplier effect on distribution, contract manufacturers, PC brands, motherboards, and other suppliers,” said Roger Kay, an analyst at Endpoint Technologies.

That could take a toll on the stock prices of not just Intel and Microsoft, but the likes of Hewlett-Packard, Lenovo, Seagate, Foxconn, Toshiba, and Dell. Intel’s stock is currently down 3.73 percent at $24.16 a share. That means that Intel is now worth a fifth of Apple, whose tablet computers (which use Apple-Samsung chips) are selling so briskly that they’re stunting demand for PCs.

Intel lowered its third-quarter sales outlook to $13.2 billion in sales, down from its previous range of $13.8 billion to $14.8 billion. It also shaved its gross profit margin estimate from 63 percent to 62 percent. That means the September quarter revenues will now be below the second quarter revenue of $13.5 billion. Intel blamed the problem on computer makers reducing their inventory ahead of Windows 8, weaker PC demand, and slower growth in the emerging markets of Brazil, Russia, India, and China.

Vijay Rakesh, an analyst for Sterne Agree, said that Intel has multiple challenges in the PC market. Ultrabook sales are slower than expected, as are commercial market sales. Ultrabooks are the thin and powerful laptops that resemble Apple’s MacBook Air. Next week at the Intel Developer Forum, Intel will talk about its real solution for that space, code-named Haswell, a new Atom microprocessor that will ship with Windows 8 software sometime next year.

In the meantime, Intel’s Clover Trail processor is the brains of low-power ultrabooks, and Intel is spending heavily to promote the products. Rakesh said believes Intel might need to ratchet down its spending, and Intel said that its capital spending will likely be below the $12.1 billion to $12.9 billion

Rakesh said that rival chip makers Advanced Micro Devices and Nvidia will likely face headwinds as well. But he hasn’t changed any estimates yet. Nvidia has been pivoting to smartphone and tablet chips in a big way, so it could avoid some of the PC ecosystem slowdown.

One of the big questions is what will happen with Microsoft’s own earnings, as the two industry giants are often referred to as “Wintel.” Microsoft is trying to diversify into tablets with Windows 8 and its own upcoming Windows Surface tablets.

“The fact that they signaled weakness in the commercial segment suggest that this is not just about consumers waiting ahead of Windows 8,” said Kay. “Windows 8 will likely have a gradual pickup over time. The weakness in corporate PCs and the weakness in emerging countries are disturbing.”

In China, for instance, the economy has slowed down and that has hurt PC demand.

“The economy there is inexplicably drying up,” Kay said. “China has been most of what has been sold in the BRIC countries. India and Russia aren’t that great right now.”

Patrick Moorhead, an analyst at Moor Insights & Strategy, said, “Both ARM and now Intel have lowered overall expectations in the marketplace for phones and now PCs.  The good news, if any, is that the new phones, tablets and PCs are compelling in that when the macroeconomic picture improves, demand will get back to normal.”

Kevin Krewell, a senior analyst at the Linley Group, said, “The slow economy in the U.S. and abroad is affecting the ability of businesses and consumers to buy new PCs.  Then there are tablets and smartphones competing for consumer spending. While Intel has positioned Ultrabooks as a way to re-invent and re-invigorate the PC business, it’s still too expensive for the majority of the market. Also, Haswell will offer even lower power and better battery life – but won’t ship until 2013. Of course, there is Windows 8 coming later this year, which could attract consumers to the stores, but the best user experience for Windows 8 will be with a touch display and that will come with a higher system cost.”

After leading the design of Apple’s mobile processors, which have powered the iPhone and iPad over the last few years, chip architect Jim Keller is returning to AMD to head up its microprocessor core design team, the chipmaker announced today.

Keller is an industry veteran who brought plenty of experience to Apple’s mobile processors. He was previously vice president at P.A. Semiconductor, which Apple acquired in 2008 for $278 million, and he went on to serve as a director of Apple’s platform architecture group.

Keller spearheaded the development of Apple’s custom mobile processors — including the A4 in the iPhone 4, the A5 in the iPhone 4S and iPad 2, and the A5X in the new iPad — all of which have managed to keep Apple’s mobile devices on the cutting edge. His departure could be a big loss for Apple, which desperately needs smart chip designers to keep pace with the rapid evolution of mobile processors.

For AMD, Keller’s return is nothing but good news, especially after its recent disappointing quarter. He previously played a key role in the design of AMD’s Athlon 64 and Opteron 64 processors, which were among the last generation of processors where AMD was able to outclass Intel. Keller also co-authored the HyperTransport specification and x86-64 processor instruction set.

In short, he’s kind of a big deal. By taking a leadership role at AMD, Keller could potentially help the chip maker be more competitive against Intel and give AMD a leg-up when it finally decides to enter the mobile processor arena.

Via The Next Web

Read made the statements in a conference call with analysts after the company reported earnings. AMD still generated a profit of $37 million in the quarter, and its graphics chip business performed seasonally well. But revenues were down 11 percent to $1.41 billion compared with a year ago. AMD is the second largest supplier of PC microprocessors, behind Intel. In after-hours trading, AMD stock is down 3.7 percent.

Read pledged the company has not changed its priorities and would “move forward confidently” and take steps to “transform our business.”

Read said, “After a reasonable start, we saw business velocity slow in the latter part of the quarter, driving this revenue miss.”

Desktop microprocessor sales in China and Europe were particularly weak, and an overall soft PC market impacted notebook computer chip sales. AMD quickly reduced its spending in the quarter, allowing it to keep gross margins the same at 46 percent.

AMD shipped too many of its Llano chips in the channel, and the sales of those chips stalled, resulting in higher inventory in the sales channel. There were too many motherboards in the market as well due to a mismatch in what was needed in the channel. AMD will be able to control this in the future, Read said.

“I believe we lost market share in the quarter,” Read said. “I don’t think there is any doubt about that.”

He was optimistic about the future due to the upcoming arrival of the Brazos 2.0 generation of chips and the arrival of the first “ultrathin” notebooks with AMD chips in them. AMD doubled its shipment of Trinity hybrid microprocessor-graphics chips (known as accelerated processing units, or APUs) during the quarter, and it is not supply constrained on those chips. Read is also looking forward to the launch of the Windows 8 operating system in the fourth quarter; Microsoft said it will introduce the operating system on Oct. 26.

Server business increased from a year ago but was below expectations. In graphics, Read said the company recaptured the title of having the world’s fastest graphics chip during the quarter and launched a number of new graphics chips for workstations. For the full year, Read said AMD processor unit sales would grow in the low single digits.

Read said AMD would continue to focus on low-power chips, disruptive server technology such as its Sea Micro server platform, and cloud-based computing.

AMD closed the quarter with 11,737 employees, compared with 11,599 a year earlier.

Advanced Micro Devices reported relatively weak second-quarter  earnings as it suffered more than its share of headaches from a softening personal computer market.

The chip maker, which is a perennial No. 2 to Intel in PC microprocessors, reported net income of $37 million, compared with $61 million a year ago. Revenues were $1.41 billion, down 10 percent compared with $1.57 billion last year. GAAP earnings per share were 5 cents a share, cmpared with 8 cents a share a year ago. Non-GAAP earnings were 5 cents a share.

Analysts were expecting non-GAAP net earnings of 7 cents a share and revenues of $1.41 billion for the quarter. For the year, revenue is projected to roll in at $6.12 billion. In after-hours trading, AMD stock is down 3.7 percent.

The results aren’t great for Rory Read, who became chief executive of Sunnyvale, Calif.-based AMD in August, 2011. He replaced prior CEO Dirk Meyer with a promise of more consistent performance over time. But, like Intel, AMD is suffering from worldwide economic headwinds and tough competition for PCs from Apple’s iPad.

“Overall weakness in the global economy, softer consumer spending and lower channel demand for our desktop processors in China and Europe made the closing weeks of the quarter challenging,” said Read in a statement.  “We are taking definitive steps to improve our performance and correct the issues within our control as we expect headwinds will continue in the third quarter as the industry sets a new baseline.”

He added, “We remain optimistic about our core businesses as well as future opportunities with our competitively differentiated next-generation Accelerated Processor Units (APUs).  Our recently launched Trinity APU continues to gain traction with customers. We are committed to driving profitable growth.”

Earlier this month, AMD had warned that revenues would be down 11 percent sequentially from the first quarter, in contrast to its previous forecast for a 3 percent revenue increase. Some analysts downgraded their estimates after the warning.

AMD said its Computing Solutions segment revenue decreased 13 percent sequentially and year-over-year. The sequential decrease was driven primarily by lower desktop channel sales in China and Europe as well as a weaker consumer buying environment impacting sales to PC makers.

Patrick Moorhead, analyst at Moor Insights & Strategy, said, “AMD had a challenging quarter driven primarily by product transitions and weakness in the do-it-yourself (DIY), or “channel” business in China and Europe. The good news for AMD in Q3 is they will have most of the Trinity and Brazos 2 transition complete and Windows 8 uptick in Q4.”

Intel beat analysts’ expectations for its earnings for the second quarter today, reviving hopes that the PC isn’t dead. But the company also cut its revenue guidance somewhat for the third fiscal quarter, citing a challenging macroeconomic environment.

Intel is the world’s largest chip maker and the largest maker of PC microprocessors, making it a bellwether for the computer industry. The Santa Clara, Calif.-based chip giant has been busy launching its Ivy Bridge hybrid microprocessor-graphics chips that are the heart of Ultrabooks, or the thin and fast laptop computers that are the industry’s best attempt to hold off tablet sales.

Revenues for the quarter was $13.5 billion, compared with $13.1 billion a year ago. Net income was $2.8 billion, compared with $3.2 billion a year ago. Earnings per share were 54 cents, matching what they were a year ago. Analysts had expected Intel to report a profit of 52 cents a share.

Intel also said it expects revenues to be $14.3 billion for the third quarter, plus or minus $500 million. The midpoint for the guidance is $200 million lower than what analysts expected. Research and development cost in the third quarter is expected to be $4.6 billion, and gross margin percentage is expected to be 63 percent to 64 percent, plus or minus a couple of points.

“The second quarter was highlighted by solid execution with continued strength in the data center and multiple product introductions in Ultrabooks and smartphones,” said Paul Otellini, Intel president and chief executive, in a statement. “As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment. With a rich mix of Ultrabook and Intel-based tablet and phone introductions in the second half, combined with the long-term investments we’re making in our product and manufacturing areas, we are well positioned for this year and beyond.”

Intel said that PC Client Group revenue was $8.7 billion, up 3 percent from the prior quarter. Data Center Group revenue was $2.8 billion, up 14 percent sequentially. Other Intel Architecture Group revenue was $1.1 billion, up 3 percent.

In the first quarter, Intel’s revenues were $12.9 billion and earnings were $2.7 billion, or 53 cents a share. In after-hours trading, Intel’s stock price fell 1 percent a share. It has previously closed at $25.38 a share.

Analysts believe the quarter was affected in part by slowing growth in the PC market, which has been hurt by sales of tablets.  During the quarter, Intel shipped its first chips for smartphones in an attempt to assault ARM’s empire in mobile chips.

The world’s biggest microchip maker is not only making faster chips. It is also making them more power efficient, and that is allowing Intel chips to move into mobile devices where low power usages yields longer battery life. It is also moving deeper into the data center and communications infrastructure, as well asinto cars and retail kiosks. For competitors, there is nowhere to hide.

“We’re delivering experiences across the compute continuum,” Otellini said.

In particular, Intel sees growth in thin laptops known as Ultrabooks, mobile devices, and data center chips. The annual Intel analyst day is useful for providing perspective on Intel’s operations. Last year, Intel generated $54 billion in revenue, up from $35 billion two years ago. Its operating income was $17.5 billion, up from $5.7 billion two years ago. Otellini noted that Intel now gives a dividend of 90 cents a share each quarter. Over the past 10 years, Intel has given back $80 billion to shareholders. And while Intel focused on a 100-million unit PC market in 1995, it now focuses on a broader computing market with the potential for billions of units.

Web-connected data centers are creating huge demand for Intel’s server chips. One of the inexorable trends helping Intel is the huge growth of data that is uploaded to the cloud. Seven exabytes of data are created every day, Otellini said. That’s equal to 17,000 high-definition movies uploaded every second. In one minute, 60 hours of data are uploaded to YouTube.

The tectonic plates are changing around computing. In 2011, the U.S. was the No. 1 market for PCs, followed by China, Germany, Japan and Brazil. In 2011, China surpassed the U.S. and Brazil passed Germany and Japan. By 2016, the top five will be China, the U.S., Brazil, Russia and India.

Otellini noted how fast Intel has moved on Ultrabooks, or the high-performance, thin laptops that resemble Apple’s MacBook Air. In the middle of last year, Intel set up a $300 million investment fund for Ultrabooks. It is now kicking into high gear shipping chips based on its code-named Ivy Bridge design, which combines graphics and a microprocessor in the same chip.

Those 22-nanometer Ivy Bridge chips are the heart of the new Ultrabooks and enable them to operate on low-power levels that give the laptops all-day battery life. Intel is expecting 110 Ultrabook designs coming to the market by the end of 2011.

“We are on track to meet our goal of 40 percent of the consumer notebooks this fall being Ultrabooks,” Otellini said.

The Ivy Bridge chips will be shipping at 2 million chips a week by the end of this quarter, and they will exceed the predecessor Sandy Bridge chips by the end of this year.

Otellini said in mobile that “we’re just getting started here.” Intel has been criticized for failing in mobile device chips before, leaving the market to ARM-based rivals.

Intel’s first chip for the new generation of smartphones, the Intel Atom Z2460, is getting good reviews. Intel partnered with Google last fall on Android, and it followed that up by scoring deals with Orange, Lenovo, ZTE, and Motorola. All of those partners will use Intel’s chips, and Intel has a mobile payments deal in place with Visa. Otellini said that Intel-based tablets will take off with the launch of Microsoft’s Windows 8 operating system this fall.

Over time, Intel will move at twice the rate of Moore’s Law (the idea that the number of transistors on a chip doubles every couple of years or so) as it improves its Atom chips. It will move further with miniaturization of its Atom chips as it does with all of its product lines, but it will also move them from older manufacturing processes to the most advanced ones. By 2014, Intel will move to 14 nanometer chips where the circuits are 14 nanometers apart (a nanometer is a billionth of a meter).

Moore’s Law, articulated by Intel chairman emeritus Gordon Moore in 1965, has delivered chips that are 4,000 times more powerful than Intel’s first 4004 microprocessor in 1971. The chips use 5,000 times less energy per transistor and are 50,000 times cheaper per transistor. Meanwhile, the cost of factories are skyrocketing. With 200 millimeter wafers (the pizza-dish-size disks that are processed and then sliced into chips), factories cost $1 billion. Now they cost $5 billion. By the time the industry shifts to 450 millimeter wafers, they will cost $10 billion.

With the costs rising, inventions for new ways of making chips are becoming more important. Intel launched such an innovation with “tri-gate” transistors that make use of vertical space. Otellini argues that its rivals will become less competitive in terms of manufacturing chips with economic and volume scale. Otellini foresees a “golden age” for companies that can afford to make their own chips.

Otellini said that chips that are embedded in kiosks or robots or terminals will become smarter, so Intel is labeling this $2 billion a year business as “intelligent systems.” Intel is moving its chips into cars with dashboard entertainment systems, retail kiosks, and communications infrastructure. In the latter, Intel has deals with Huawei, China Telecom and Verizon.

“The world is moving to client-aware computing,” where the network understands the computing device and exploits it if it is based on Intel architecture, Otellini said.

Intel’s acquisition of McAfee and Wind River have contributed about $4 billion a year in revenues. McAfee is now embedding its security functions inside Intel chips.

“We’ll continue to deliver shareholder value through” chip manufacturing, architecture, and new markets, Otellini said.

Speaking about Intel’s overall strategy, Patrick Moorhead, analyst at Moor Insights & Strategy, said, “This makes a lot of sense for Intel because it leverages their strength in the data center. If Intel can tie client processor features to server features like security, this will create in a sense, a ‘lock-in’ that would be difficult to break apart. Intel’s competition knows this and will do everything they can to block these advances.”

As for Intel’s manufacturing advances, Moorhead said that the company is typically years ahead of rivals, but smaller companies such as TSMC and Globalfoundries have found ways to be competitive in the past, even with rising factory costs.

“Regardless, it will be tougher to stay close to Intel on process technology and manufacturing,” Moorhead said.

Chip maker Advanced Micro Devices reported today that its first quarter results beat expectations, but the company had a big loss of $590 million. While AMD is very competitive with its product line-up, the results show that it’s not easy to keep waging in the unending war with Intel, the world’s biggest chip maker. Worth noting is that the loss is due not to operations but to an accounting charge.

Revenue for the quarter was $1.59 billion, down 2 percent from a year ago. The loss of $590 million amount to 80 cents a share. Analysts had expected revenues of $1.56 billion. The loss included a $703 million charge related to a change to the valuation of AMD’s equity in Globalfoundries, a contract chip manufacturer that AMD spun off. The charge is not completely a cash charge. In the first quarter a year ago, AMD had a $492 million gain on the valuation of the Globalfoundries ownership.

If you take the accounting charge out, then AMD had a good quarter, with a non-GAAP profit of 12 cents a share, or $92 million, compared to analysts’ estimates of 9 cents a share. It’s not clear if everyone will be able to see that in AMD’s overall picture.

The charge is due to a change in the exclusivity of certain 28-nanometer chips from Globalfoundries and other smaller matters. AMD no longer owns a stake in Globalfoundries.

“AMD delivered solid results in the first quarter as we remain focused on improving our execution, delivering innovative products, and building a company around a strategy to deliver strong cash flow and earnings growth,” said Rory Read, AMD president and CEO. “A complete top-to-bottom introduction of new APU offerings, combined with ample product supply resulting from continued progress with our manufacturing partners, positions us to win and grow.”

AMD has a healthy $1.7 billion in cash. In the quarter, it used $281 million to purchase micro-server maker Sea Micro. Average selling prices declined sequentially and were flat compared to a year ago. In a conference call with analysts, Read said the company has been improving its execution and is better positioned to take advantage of its opportunities. AMD is launching its Brazos 2.0 chips for laptops in the second quarter. That should give the company a boost in the fast-growing notebook market. In the second quarter, Sunnyvale, Calif.-based AMD expects revenue to increase 3 percent.

Read said customers will launch a record number of AMD-based laptops in the current quarter, thanks to Brazos 2.0.

In the past, AMD’s chips haven’t had the combination of low-power consumption and processing power. Instead, AMD created fast and brainy chips that could be used in everything from laptops to desktops and servers. But the chips ran too hot to be used in the tiny enclosures of tablet computers.

The first tablet chip coming this year is code-named Hondo. It will combine a microprocessor and graphics in the same chip in a solution that AMD calls an accelerated processing unit, or APU. The Hondo chip will be made with a 40-nanometer manufacturing process and will feature ultra-low-power consumption.

AMD has been chasing Intel for a long time and now faces competition from ARM-based rivals in tablets. But AMD is in a much healthier financial state than it has been in the past; the company has more than $2 billion in debt, but it generates more than $500 million in free cash flow so it can continue to pay down that debt.

The code-named Brazos 2.0 chip has a faster TurboCore and universal serial bus 3.0 capability in a 40-nanometer solution. AMD will also launch Trinity, a second-generation APU built with a more advanced 32-nanometer process. That will feature significant performance and power improvements. And AMD will also debut its Southern Islands stand-alone graphics chip this year, which has a next-generation graphics core and other cool features. It will be built with AMD’s most advanced 28-nanometer process.

Revenues for the quarter slightly exceeded expectations at $12.9 billion, compared with $12.87 billion a year ago. Earnings were $2.7 billion, or 53 cents a share, compared with $3.2 billion, or 56 cents a share, a year ago. Analysts expected Intel to report revenue of $12.84 billion, compared with $12.8 billion a year ago. Earnings were expected to be $2.5 billion, or 50 cents a share.

In after-hours trading, Intel’s stock price fell 2.5 percent to $27.77 a share.

The quarter was affected in part by slowing growth in the PC market, which has been hurt by sales of tablets. Sales have also been hobbled by a shortage of hard disk drives. Tech-research firm Gartner said that PC sales in the first quarter were up 2 percent in unit shipments.

Intel generated $3 billion in cash from operations, paid $1 billion in dividends, and used $1.5 billion to repurchase stock.

“The first quarter was a solid start to what’s expected to be another growth year for Intel,” said Paul Otellini (pictured at top), Intel president and chief executive. “In the second quarter we’ll see the first Intel-based smartphones in the market, ship products based on 22nm tri-gate technology in high volume, and accelerate the ramp of our best server product ever, providing a tremendous foundation for growth in 2012 and beyond.”

Chief financial officer Stacy Smith said that hard drive shortages affected first-quarter sales, as they did in the fourth quarter. But he said that the impact on the PC market was not as severe as expected. Intel’s PC client and server chip businesses were down, but Intel is in the verge of launching Ivy Bridge, a new graphics-microprocessor combo chip that will likely see high demand starting the second quarter.

“Overall it was a good quarter, given they had begun transitions of both PC and server lines,” said Patrick Moorhead, analyst at Moor Insights & Strategy. “Q2 is big for Intel with new Ivy Bridge Ultrabook solutions shipping into the channel for spring, Romley (serverchips) continuing to ramp, new micro-server lines, and three new cellphone customers shipping phones to end consumers. If they can execute well, they should be set for a good year given Windows 8 ships for the holiday buying season.”

For the second quarter, Intel expects revenue of $13.6 billion, plus or minus $500 million. Gross profit margin percentage will be 62 percent on a GAAP basis, or 63 percent non-GAAP. Research and development spending will be $4.6 billion in the second quarter.

For the full year, Intel is targeting GAAP gross profit margin percentages of 64 percent and 65 percent non-GAAP. R&D plus acquisitions will be $18.3 billion, and capital spending will be $12.5 billion. Intel will report second-quarter earnings on July 17.

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Intel in 2011 increased its market share in the $300 billion semiconductor chip market to 15.6 percent, up 2.5 percentage points from 13.1 percent in 2010. This represents the highest market share for Intel since 2001, when it reached 14.9 percent. Over the last five years, Intel’s share of the market ranged from 11.9 to 13.9 percent.

“Intel in 2011 captured the headlines with its major surge in growth,” said Dale Ford, head of electronics and semiconductor research for IHS. “The company’s rise was spurred by soaring demand for its PC-oriented microprocessors, and for its NAND flash memory used in consumer and wireless products.”

(Intel sold the flash through a joint venture with Micron). Intel’s market share was also boosted by its acquisition of Infineon’s wireless chips business. That helped it stave off No. 2-ranked Samsung Electronics, which had a market share of 9.2 percent, unchanged from 2010.

Intel’s revenue jumped 20.6 percent in 2011, outpacing the growth rate of every other supplier in the top 20 except Qualcomm (which grew 41.6 percent) and ON Semiconductor. Intel’s previous market share was 13.1 percent in 2011. Another fast-growing chip maker was Nichia, a maker of light-emitting diodes, which grew 34.1 percent.

Overall market growth for chips was 1.3 percent in 2011. That was due to a weak 5.9 percent drop in the fourth quarter of 2011. Of 302 chip suppliers, about 52.6 percent grew sales in the year.

[Photo credit: Dean Takahashi; pictured is Intel CEO Paul Otellini]

Advanced Micro Devices is launching a new server processor family today that targets companies that serve lots and lots of web pages to users.

The new AMD Opteron 3200 series processor family is aimed at changing the economics for single-socket servers used by dedicated web-hosting providers that operate huge data centers. AMD says its new chips offer 60 percent better performance per dollar and 19 percent less power per core.

It has enterprise-related reliability features, such as error correction code memory, and it can pay for itself in as little as seven months, or 14 percent faster than rival Intel, AMD says. Dedicated hosting providers need their data centers to become profitable faster than ever, said Patrick Patla, corporate vice president and general manager at Sunnyvale, Calif.-based AMD’s commercial business.

He said AMD is offering a server-class product at desktop prices. The launch of the new processor is part of an initiative that AMD launched in November targeting web and cloud customers. The initiative is aimed at creating servers that are densely packed with power-efficient processors. That is why AMD recently bought “micro server” company Sea Micro for $334 million.

The AMD Opteron 3000 series chips are available as 4-core or 8-core microprocessors and run from 2.7 gigahertz to 3.7 gigahertz. A core is a computing brain, and chips these days can have multiple cores on a single piece of silicon. The AMD Opteron 3200 series processor is being used in servers shipping from MSI, Tyan, Fujitsu, and Dell. The 3200 series is based on AMD’s Bulldozer core.

Advanced Micro Devices is acquiring Sea Micro today for $334 million, including $281 million in cash. Sea Micro has been disruptive because it can pack a lot of computing power in a server rack that is about a sixth of the usual size. Its servers use a quarter of the usual electricity and cost a lot less.

The servers use Intel’s Atom microprocessors, which are targeted at energy efficient devices such as tablet computers. But AMD’s move could shake things up for Intel, which presumably will lose some of its business.

The advantage of Sunnyvale, Calif.-based SeaMicro’s small and power-efficient computers is that enterprises can now shove a lot more computing power into a given amount of space and use a lot less electrical power, thereby cutting electricity bills dramatically. That matters because electricity costs are the biggest part of the budget for operating data centers.

Andrew Feldman, chief executive of Sea Micro has said in past interviews that SeaMicro had become the fastest-growing system company in Silicon Valley history. SeaMicro’s customers include France Telecom, Skype, Rogers Wireless, Mozilla, eHarmony, and China Netcom BB. Hundreds of millions of internet users traverse SeaMicro’s hardware daily.

As we’ve described in earlier stories, Intel has been improving its server microprocessors by making them more power efficient. But the microprocessor only accounts for a third of the power consumption in a server. SeaMicro’s innovation lies in how it attacks the remaining two-thirds of the power consumption problem. It does so by combining a lot of the extraneous chips into a single, more-efficient custom chip, Feldman said.

In its earliest system, SeaMicro put 384 Intel Atom dual-core processors (for a total of 64-bit 768 cores) in a 10-rack system, which is just 17.5 inches high. The newer SM10000-64HD was a 20 percent improvement over SeaMicro’s previous server line and a 150 percent improvement on its compute density record, or the amount of computing power in a given space.

That single machine could replace rival systems with a bunch of equipment: 60 traditional servers, four rack switches, four terminal servers, and a load balancing server. It uses a quarter of the power and a sixth of the space. SeaMicro can put an entire server on a motherboard that is 5 inches by 11 inches. Since the hardware is Intel-based, customers don’t have to change their software at all.

SeaMicro was founded in 2007 and is backed with $60 million in funding by Khosla Ventures, Draper Fisher Jurvetson, Crosslink Capital, and a number of strategic investors. It also won grants from the U.S. Departement of Energy ($9.3 million) and the state of California ($250,000). SeaMicro has 80 employees. Most recently, it raised $20 million.

SeaMicro also attacked the power consumption problem with a very clever trick known as virtualization.

Today, virtualization is frequently used with servers. It is a layer of software that rests between an application and the servers that it runs on. If an application needs only two servers, the virtualization software finds two available servers to run the application. If the application gets busy and needs 10 servers, the virtualization software finds 10 available servers to do the job. The application is no longer tied to specific servers; the virtualization software frees up the overall system and gets more use out of the available servers.

SeaMicro did the same thing, but it applied the concept of virtualization to the inside of a server. Feldman designed custom chips that could take the tasks that were handled by everything beyond the Intel microprocessor and its chip set. The custom chips virtualize all of those other components so that it finds the resource when it’s needed. It essentially tricks the microprocessor into thinking that the rest of the system is there when it needs it.

SeaMicro virtualized a lot of functions that took up a lot of space inside each server in a rack. It also did the same with functions such as storage, networking, server management, and load balancing. Full told, SeaMicro eliminates 90 percent of the components from a system board. SeaMicro calls this CPU/IO virtualization. With it, SeaMicro shrinks the size of the system board from a pizza box to the size of a credit card.

By boiling down the rest of the system into a couple of chips, SeaMicro can get rid of a lot of the components in a system, thereby getting rid of space, cost, and power consumption.

AMD reported a loss of $177 million, or 24 cents a share, compared with 14 cents a year ago. Revenue was $1.69 billion, compared with $1.65 billion a year ago.
Rory Read (pictured), left the No. 2 job at AMD customer Lenovo to take the position as chief executive of AMD at the end of August.

Analysts expected the company to report a profit of 16 cents a share on revenues of $1.72 billion. The results included a $209 million non-cash impairment charge for the change in value of Globalfoundries, the manufacturing company that AMD spun out as a separate company.

On a non-GAAP basis, not counting the charge, AMD reported fourth quarter net income of $138 million, or 19 cents a share, and non-GAAP operating income of $172 million. Besides the one-time impairment charge, AMD  reported restructuring charges of $98 million related to cutbacks in the fourth quarter. Revenue was short due to graphics chip salesthat were weaker than expected.

In a statement, Read said he was encouraged by the success of AMD’s line of Fusion processors, which combine a microprocessor and graphics on the same chip. To date, AMD has sold 30 million accelerated processor units (APUs), or combo chips. Read said AMD’s Brazos low-power APU platform is the company’s fastest-growing one ever. The server business has regained momentum, and AMD”s goal is to “consistently deliver on its commitments.”

In a conference call with analysts, Read said that the PC supply chain has proven to be very resilient despite flooding in Thailand that hurt shipments of hard disk drives. He said that the graphics chip business was hurt in part by that supply chain impact, but he noted that servers have now grown for the past couple of quarters.

For the full year-ended Dec. 31, AMD reported revenue of $6.57 billion, net income of $491 million, or 66 cents per share, and operating income of $368 million.  Full year non-GAAP net income was $374 million, or 50 cents per share, and non-GAAP operating income was $524 million.

AMD is the perennial underdog to Intel. This morning, AMD’s market value was $4.55 billion, compared with $136.51 billion for Intel.

About a year ago, AMD’s highly respected CEO Dirk Meyer left the top job after a dispute with the board. On Meyer’s watch, AMD outwitted Intel in server chips with the 2003 launch of its Opteron server microprocessors, and he also settled antitrust litigation with Intel, extracting a $1 billion from the bigger company. But Intel bounced back strong in both server chips and laptops chips, and AMD’s market share hovered around 15 percent to 20 percent.

While Intel shifted its focus into low-power chips, AMD bet heavily on combining graphics and microprocessors in the same chip. It launched that family of chips last year under the Fusion name, but Intel also matched it with a less-capable but adequate combo chip dubbed Sandy Bridge. Meanwhile, AMD has been sparring back and forth with Nvidia to provide the fastest graphics processor, a title that AMD says it now owns. AMD said its newest family of APUs will be offered by one of the world’s biggest computer makers in early 2012.

Read now has AMD readying its slate of chips for the introduction of Windows 8, the new operating system from Microsoft that is expected to hit the market later this year. Graphics chip revenue declined 5 percent from the previous quarter and 10 percent from a year ago, mainly due to a decline in mobile graphics chip sales. But the company did say that it launched the world’s fastest desktop graphics chip in December.

AMD’s gross profit margin was 46 percent. The company has $1.9 billion in cash now.

Dean McCarron, an analyst at Mercury Research, said, “As appears to be the case with Intel, server products provided
stability in the quarter. So both companies appear to have experienced a weaker client market, consistent with impact from hard disk availability and early indications of an economic downturn. Graphics was down, and attributed to weakness in mobile. This is consistent with mobile having seasonal weakness in Q4, compounded by the drive availability issue and some OEMs (original equipment makers, or computer makers) leaning out inventory in preparation for the spring platform refresh cycle.”

Intel reported earnings today for its fourth quarter, beating the reduced expectations for the busiest season of the year.

The report sheds light on sales for the whole PC ecosystem, since Intel is the world’s biggest chip maker and its results are a bellwether for the industry.

Intel reported earnings per share of 64 cents on revenues of $13.9 billion. A year ago, Intel earned 59 cents a share on $11.5 billion.

Intel itself had predicted it would make between $13.2 billion to $14.2 billion in revenue for the fourth quarter. On a non-GAAP basis, Intel reported net income per share of 68 cents. Analysts expected Intel to report 61 cents a share in net income (non-GAAP) on revenue of $13.74 billion. On Dec. 12, Intel warned that it was lowering expectations by $1 billion due to supply chain problems created by flooding in Asia. In Thailand, heavy monsoon rains left hard drive assembly factories under several feet of water. Production has resumed, but not without hiccups.

“2011 was an exceptional year for Intel,” said Paul Otellini, Intel president and chief executive, in a statement. “With outstanding execution the company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records. With a tremendous product and technology pipeline for 2012, we’re excited about the global growth opportunities presented by Ultrabook systems, the data center, security and the introduction of Intel-powered smartphones and tablets.”

The company saw some impact from the flooding in Thailand, which hurt shipments of hard disk drives. Since hard drives are a vital part of computers, computer makers couldn’t sell as many PCs, hurting sales of Intel’s microprocessors and other chips. But the impact wasn’t enough to completely ruin the quarter.

On a broader level, the PC market’s growth has slowed as consumers shift more of their computing to tablets and smartphones, where Intel is barely present in the market. Even so, Intel appeared to do a good job selling chips for traditional PCs in the quarter.

For the full year, Intel reported record revenue of $54 billion (up 24 percent) and net income of $12.9 billion (up 13 percent), or $2.39 a share.

In the third quarter, Intel reported $14.2 billion in revenue, up 28 percent from $3.1 billion a year ago. McAfee and Intel Mobile Communications contributed $1.1 billion in revenue to the company’s top line in the third quarter, and the numbers beat analysts’ $13.9 billion prediction for the quarter.

Its net income for the third quarter 2011 was $3.47 billion (or 65 cents per share), up from 2.96 billion (or 52 cents per share) from a year ago — a 17 percent increase.

On a sector basis in the fourth quarter, Intel’s PC Client Group reported revenue of $9 billion, up 17 percent. Data center group revenue was $2.7 billin, up 8 percent. Other Intel architecture group revenue was $1.1 billion, up 35 percent. Intel Atom microprocessor revenue and chip set revenue was $167 million, down 57 percent. McAfee and Intel Mobile Communications generated about $1 billion in revenue.

Last week, Intel said that Lenovo and Motorola would create smartphones based on Intel’s Atom microprocessors. That was the first real progress for Intel in smartphones after years of trying.

Meanwhile, Intel’s dominance in the PC market will be challenged later this year when ARM-based chip makers Qualcomm, Nvidia, and Texas Instruments ship chips that can run Microsoft’s Windows 8 operating system on tablets and laptops. In the past, Windows has been available on the Intel-compatible x86 architecture.

For the first quarter, Intel expects revenue of $12.8 billion, plus or minus $500 million. Gross profit margin is expected to be 63 percent, plus or minus a couple of percentage points. Research and development spending is expected to be $4.4 billion.  For all of 2012, Intel expects a gross profit margin of 64 percent, plus or minus a few percentage points. Spending is expected to be $18.1 billion to $18.5 billion. R&D will be about $10.1 billion, and capital spending will be $12.1 billion to $12.9 billion.

Chip-maker Nvidia showed that a tablet computer with its new Tegra 3 processor for mobile devices can run Windows 8.

Huang made the announcement at the company’s press conference at the Consumer Electronics Show in Las Vegas. The Tegra 3 uses the ARM architecture rather than the Intel-dominated x86 architecture, so it is interesting that the ARM-based Tegra 3 can now run Windows, which has been Intel-based for many years.

Microsoft announced last year that it would add ARM-based processors to the chips that can run Windows 8. Now the day is near when ARM-based vendors such as Nvidia will crack the hold that Intel and Advanced Micro Devices have had on PC chips.

“I can’t wait to ship it,” Huang said. “This is going to be a fantastic tablet year, with (Google’s) Ice Cream Sandwich and Windows 8.”

Nvidia, which is the largest stand-alone maker of PC graphics chips, spent most of its press conference showing how well rich applications can run on Nvidia-based tablets with Tegra 3 chips. Huang showed off the graphics features of Tegra 3, playing cool 3D games such as Wipeout HD and Shadowgun (a first-person shooter game) on an Nvidia-based tablet. Huang used one of the best pro gamers on the planet, Johnathan “Fatal1ty” Wendell to demonstrate the game on an Asustek Transformer Prime tablet-and-PC hybrid.

Huang sang the praises of Ice Cream Sandwich version of the Google Android operating system, which he said unites the fragmented pieces of Android. The Eee Pad Transformer Prime is available for sales today, running Ice Cream Sandwich.

Jerry Shen, chief executive of Asustek, said that his company had just announced a 7-inch Tegra 3-based tablet for $249. That’s a very low price for a tablet computer using a quad-core Tegra 3 chip. It has all-day battery life and can run cool games.

Huang also announced a surprise feature of Tegra 3 called DirectTouch. It means that Tegra’s fifth “ninja” processor can handle the processing of touchscreen inputs that are normally handled by microcontrollers. Huang said that the ninja processor is much faster than microcontrollers, and can triple the performance of touchscreen processing.

Huang closed with a note that the Tegra 3 will appear in “some of the world’s fastest cars,” including a Lamborhini model, in addition to cars being made by Audi. Audi evidently has more announcements about car electronics systems coming up.

IHS forecast in September that the world chip industry would grow 2.9 percent. The industry, which provides chips for all things electronic and is a bellwether for the tech economy, faces major economic headwinds this year thanks to uncertainty in Europe and the stock market.

In the third quarter, the chip market is expected to expand 3.5 percent compared to the previous quarter. That is down from the September forecast of 4.8 percent. While the third quarter was weaker than predicted, the growth was still positive in terms of the full-year forecast.

“Although the forecast of 1.2 percent revenue growth in 2011 is just barely positive, an expansion of any magnitude is significant from the standpoint of market psychology,” said Dale Ford, analyst at IHS. “Given the worsening economic environment and growing pessimism in the electronics supply chain, many market forecasters had projected third-quarter revenues would decline and pull down the results for the full year of 2011.”

In the fourth quarter, revenue is expected to decline 2 percent from the third quarter. If the industry actually fell 7 percent in the fourth quarter from the third, then overall chip revenue growth would be negative for 2011.

Even though the overall industry is slowing, a number of chip makers are expected to have solid growth in the fourth quarter. Those include Intel, Samsung, Renesas, Qualcomm and Advanced Micro Devices. Bright spots include microprocessors, image sensors and NAND flash memory. Each segment is growing more than 15 percent this year. Sensors and actuators will grow more than 5 percent, but the memory market is weighing down the whole chip sector, with declines of 15 percent or more for different types of memory.

The electronics industry took a big hit this year in the second and third quarters as a result of the disaster in Japan. That took out about 2.5 percentage points in the second quarter and resulted in a market decline in that period.

Meanwhile, flooding in Thailand is expected to reduce hard disk drive shipments by 30 percent in the fourth quarter. That will cause PC shipments to fall short of expectations, taking a further toll on chip sales. By the first quarter, hard drive inventories will be depleted and the lost production will take its toll in that quarter. Weak economic conditions are expected to last into 2012. For 2012, chip revenue growth is expected to be 3.2 percent, and real growth won’t return until 2013.

The supercomputer will pave the way for “exascale computing” and will be known as Titan. It will use Tesla graphics processing units (GPUs) from Nvidia to deliver GPU computing, or parallel processing that uses the graphics chips for non-graphics processing tasks. The system will deliver over 20 petaflops of peak performance. That’s more than two times faster and more than three times more energy efficient than today’s fastest supercomputer, the K computer in Japan. The Titan system will probably be the world’s most powerful supercomputer upon its installation, according to the semiannual Top500, which ranks computers based on their peak performance.

Titan will let scientists use massive parallel computing power for research and discovery in a variety of fields, including material science, energy technology, medical research, geoscience, and others. It’s worth noting that microprocessor makers IBM and Intel lost out on the deal.

“All areas of science can benefit from this substantial increase in computing power, opening the doors for new discoveries that so far have been out of reach,” said Jeff Nichols, associate laboratory director for Computing and Computational Sciences at the lab in Oak Ridge, Tenn.

Titan will be used to research things such as more viable biofuels, cleaner burning engines, safer nuclear energy, and more efficient solar power. Steve Scott, chief technology officer of Tesla products at Nvidia, said that the Tesla GPUs will provide over 85 percent of the peak performance of Titan, showing that a supercomputer that runs on microprocessors alone is less efficient than one that runs on GPUs too.

The combination of microprocessor and GPUs together will help break through barriers of performance that Intel-based supercomputers have hit in recent times, due to concerns about cooling and overheating, according to Addison Snell, chief executive of Intersect360 Research.

In the first phase of the Titan deployment, Oak Ridge will upgrade its existing Jaguar supercomputer with 960 Tesla M2090 GPUs using Nvidia’s code-named Fermi designs. These GPUs will serve as companion processors to multi-core microprocessors in that Cray XK6 supercomputer. In the second phase, expected to begin in 2012, Oak Ridge plans to use up to 18,000 Tesla GPUs based on the next-generation architecture code-named Kepler.

Read will replace acting CEO Thomas Seifert, who moves back to chief financial officer at AMD. While executive chairman Bruce Claflin will return to his role as chairman. Read will have a tough job as the point man for AMD’s perennial struggle against Intel, which usually has about four times as much market share in the PC microprocessor market.

Read starts immediately and comes with more than 28 years of experience in the tech industry. As president and chief operating officer of Lenovo, Read helped transform the company by taking it into new product segments and growing both its market share and profitability.

Prior to becoming COO and president, Read was head of the Americas group at Lenovo. At Lenovo Americas group, Read helped drive double-digit revenue growth and market share gains. Prior to that, he spent 23 years in management positions at IBM, which spun out its PC division to establish Lenovo as a separate company.

In a conference call, Read said he was excited about the opportunity and AMD’s solid track record for execution, particularly related to AMD’s Fusion chips, which combine graphics and microprocessors on the same chip.

“We are just scratching the surface for what we can do,” Read said, noting that AMD has sold more than 12 million Fusion chips in the past six months.

Read said he believes the PC market is poised for growth, despite challenges from the tablet and smartphone markets. He said he liked how AMD had a tradition of being an innovator that looks for the chance to create the “next big thing.” He said there is a drive for increased chip capacity and performance but at lower power levels. He said it was early to talk about a tablet strategy, but Thomas Seifert, chief financial officer, said on the conference call that the company is targeting products for tablets around the time of the introduction of Windows 8, which is expected to hit the market in 2012.

Claflin said on the conference call that AMD sought a new CEO because it felt it could take advantage of new opportunities in the PC market faster than it otherwise was doing.

“It’s a very interesting time in the industry,” given operating system trends and the upcoming Windows 8 software from Microsoft, he said.

AMD said it chose Read “not only for his experience and accomplishments, but also for his passion, the depth and clarity of his strategic vision, and his keen ability to bring that vision to reality.” Read fills the job that had been open since the departure of Dirk Meyer, who resigned as AMD’s CEO in January.