Advanced Micro Devices, Inc. (AMD): Timely Vega And Navi Launches Could Tackle NVIDIA Corporation (NVDA)

If Advanced Micro Devices, Inc. (NASDAQ:AMD) manages to stick to timelines with Vega and Navi, it could actually give NVIDIA Corporation (NASDAQ:NVDA) a run for its money.

Advanced Micro Devices, Inc. (NASDAQ:AMD) shareholders have had a terrific past year. Market capitalization of their company has more than tripled over the past 9 months alone on the back of improving fundamentals (1) and operational competitiveness. But this isn’t the ceiling for AMD just yet; the company is still in the process of staging a turnaround of its lifetime. I’m of the opinion that apart from the promising CPU segment, AMD’s continued financial and operational improvements would also depend immensely on the timeliness of its Vega and Navi GPU launches. Let’s take a closer look.

AMD’s Vega Effect

AMD’s next-gen Vega GPU line-up has received so much attention and coverage lately that it hardly needs an introduction anymore. The chipmaker unveiled its latest GPU line-up at the CES 2017 event earlier this month, and preliminary benchmarks revealed that AMD’s new flagship outperformed Nvidia’s 6-month old flagship by 15-20% in terms of raw performance. AMD didn’t reveal any technical or pricing related details about the Vega line-up, perhaps to keep the folks over at Nvidia guessing until the last moment. The smaller chipmaker was expected to go out of business merely a year ago, and now it’s giving stiff competition to the industry’s best. So AMD has grown to become formidably positioned.

Now, one might argue that Advanced Micro Devices, Inc. (NASDAQ:AMD) is about 6 months late with its Vega line-up. After all, the latest flagship was competing with a 6-month old flagship from NVIDIA Corporation (NASDAQ:NVDA). And this is true. But would it hamper AMD’s market share gains for the remainder of 2017?

Well, as per preliminary reports, AMD’s Vega line-up is expected to hit the shelves during the first half of 2017 (2). This would suggest that its GPU line-up would be available for mass-retailing, latest by June 2017. It’s primary competitor, Nvidia, on the other hand, is expected to only unveil a Pascal refresh around the same time-frame (3). Since it’s just a refresh, there’s a high chance that its performance improvements over the original Pascal, unveiled last year, won’t exceed 15-20%. I don’t think these gains would be enough to completely obliterate AMD’s performance-oriented Vega flagships and make them irrelevant for buyers. After all, Vega was also showcased to be 15-20% faster than Nvidia’s original Pascal flagship released last year.

The reason I say this is because Nvidia has very little that it can do with the Pascal refresh. It can make minor tweaks to its existing architecture, such as adding a few hardware features, boost the transistor count a bit at a bigger die or maybe overclock it. But none of these changes are permanent and long-lasting in nature that would immediately serve as a death sentence for AMD’s Vega. Boosting transistor count or clock speeds negatively impacts power efficiency after all.

I suspect that the heightened competitiveness of Vega should provide the semiconductor stalwart a very good platform to gain some market share in the mid and upper GPU segments. But, I would like to emphasize on the fact that AMD would have to strictly adhere to its timeline, or otherwise Nvidia’s upcoming Volta GPUs (scheduled for 2017-end release) would absolutely destroy Vega’s performance advantage.

NVIDIA’s Navi Bomb

The battle for gaining a long-lasting market share in the highly coveted mid and high-range GPU segments won’t end with just one Vega line-up release though. A lot would depend on the timeliness and competitiveness of AMD Navi as well, which is scheduled to succeed the Vega line-up in 2018.

Gauging from AMD’s recent release history, I suspect that AMD’s Navi line-up would be released in the first half of 2018. We don’t know any technical specifications of the next-gen GPU series, so commenting on its performance would purely be conjecture on my part.

But what we do know is that the Navi line-up would be tasked to compete with Nvidia’s Volta line-up. The Volta-series GPUs, as I mentioned earlier in the article, are expected to be released by 2017-end. So for AMD to continue growing its market share, it would have to release the Navi line-up in the first half of 2018.

Failing to adhere to a strict timeline or performance gains would neutralize any material gains for AMD that its Vega line-up might score. So timeliness would again be of critical importance.

(Source: Author)

I created and attached a timeline above to provide some clarity about how the market dynamics might play out. It was made assuming that Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) both release their upcoming products as per the aforementioned schedules, and that there isn’t any delay by any of the chipmakers, which is essentially the best case scenario for AMD. Basically AMD stands to gain market share between mid 2017 to 2017-end and a similar pattern might repeat during 2018 as well.

Investors takeaway

I keep emphasizing on the timeliness factor as it is one area that AMD has historically lagged in. It has, many times in the past, come up with good products that were a little late to the market. So AMD was forced to slash its prices (margins) in a bid to stay competitive in the highly competitive semiconductor industry.

But for AMD to truly make a difference in the GPU segment this time around, it would have to ensure that its Vega and Navi line-ups are not only competitive in terms of performance, but also released in a timely manner. Only then, the chipmaker would be able to record sustainable market share gains in the GPU segment.

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The article Advanced Micro Devices Inc (NASDAQ:AMD) (AMD): Timely Vega and Navi Launches Could Tackle Nvidia originally appeared on amigobulls.com. Watch our analysis video on AMD

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Additional Links:

(1) http://amigobulls.com/articles/why-amd-inc-stock-should-stop-falling-now?ref=il&ref=im

(2) http://www.anandtech.com/show/11002/the-amd-vega-gpu-architecture-teaser?ref=il

(3) http://wccftech.com/nvidia-pascal-volta-gpu-leaked-2017-2018/?ref=il