Microservers and Advanced Micro Devices, Inc. (AMD)’s Future

Advanced Micro Devices, Inc. (NYSE:AMD) is seeking to diversify its product portfolio, especially due to the fact that worldwide shipments of PCs are expected to fall about 9.7% this year (IDC). On Monday, the management presented chips designed to run slot machines, factory robots, airport signs, medical equipment and other devices. These new products will be available as of next year and should help the firm reach a wider public and new markets.

The announcement seems to have inspired confidence amongst investors, as Advanced Micro Devices, Inc. (NYSE:AMD)´s stock rose by more than 3% on Monday, and 4% on Tuesday, standing amongst the most active New York Stock Exchange-traded stocks of the day. However, the impact of the company’s design wins in all three of the major game controllers cannot be disregarded. Advanced Micro Devices, Inc. (NYSE:AMD)´s chips will be present in Microsoft Corporation (NASDAQ:MSFT)’s, Sony Corporation (ADR) (NYSE:SNE)’s and Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY)’s new game consoles.

Advanced Micro Devices, Inc. (NYSE:AMD)Back to Monday´s disclosure, a fact to highlight: Advanced Micro Devices, Inc. (NYSE:AMD) will become the first company to offer both ARM and x86 chips for low-power and high-performance embedded designs (microservers, mainly). “The new lineup includes two best-in-class x86 accelerated processing units (APUs) and central processing units (CPUs), a first look at a high-performance ARM system-on-chip (SoC) and a new family of discrete AMD Embedded Radeon™ graphics processing units (GPUs) expected to launch in 2014” (AMD Press Release).

The announcement can be understood as a part of Advanced Micro Devices, Inc. (NYSE:AMD)´s new business strategy, which aims to shift its focus towards the high-growth embedded market. The new processor solutions will further help the company penetrate this segment, in which it had already made a very successful foray with its award-winning Embedded G-Series SoC family.

The decision to change its focus looks like a smart one, since Advanced Micro Devices, Inc. (NYSE:AMD) has been Intel Corporation (NASDAQ:INTC)´s underdog for too long. As the industry leader, Intel Corporation (NASDAQ:INTC)´s enjoys of all kinds of scale and long-term advantages. Having reckoned this, AMD has been dedicating solely to design while outsourcing manufacturing since 2009. This has allowed the company to create technologically differentiated products that set it apart from Intel Corporation (NASDAQ:INTC). The last (cutting-edge) products launched by Advanced Micro Devices, Inc. (NYSE:AMD) are a clear example of this.

Meanwhile, non-PC markets continue to grow and Advanced Micro Devices now seems better positioned to profit from them. And, although many would expect the mobile segment to drive growth, the microserver industry looks like the one that will make a difference for AMD going forward.

Disclosure: Javier Hasse holds no position in any stocks mentioned