AMD CEO sees healthy PC growth, strong 2006 sales

SINGAPORE (Reuters) - Advanced Micro Devices, the world's second-largest chip maker, said on Tuesday technology upgrades from businesses and robust demand in emerging economies will drive healthy growth in the computer market next year.

Chief executive Hector Ruiz told reporters during a visit to Singapore that 2006 was expected to be "a good year" for AMD in terms of revenue growth.

"In 2004, we grew 28 percent. In 2005, which has a few weeks left, we're probably going to grow somewhere in the 35-plus percent. That means we're in an accelerating mode of gaining share, and expect to continue that in 2006," he added.

AMD ranks a distant second behind Intel in the market for microprocessor chips that serve as the brains of personal computers.

It has roughly 10 percent of the global microprocessor market in revenue terms and 15 percent in unit terms. Intel has about 80 percent of the market.

Ruiz said one factor driving a "healthy outlook" for the global computing market was strong demand from the emerging economies of Latin America, Russia, India and China, with gross domestic product in some of these countries expected to grow by 8-10 percent next year.

Hardware upgrades by businesses and wider use of PCs in homes would also be contributing factors, he added.

"The PC is finding its way into the home, (in the form of) digital media PCs — we see a huge trend towards that," he said.


New plant in 2006

He said AMD plans to build a new factory in 2006, and was considering half a dozen countries for the location, adding that Singapore could be in that list.

"There are two things driving that decision — one is the availability of knowledge workers, which is strong in the US, Japan, parts of Europe and Singapore. The other is the cost of capital, which takes into account incentives, taxes and financing," he said.

AMD has chip assembly and test operations in Malaysia, Singapore and China, but its two manufacturing plants are located in Dresden, Germany.

It also has an agreement with Singapore's Chartered Semiconductor Manufacturing Ltd for the world's fourth-largest supplier of built-to-order chips to start making AMD64 microprocessors next year.

Ruiz said the company will move more aggressively into "multi-core technologies" next year, referring to chips that combine two or more processors into a single piece of silicon. This increases performance and power efficiency when computers need to process more than one task at a time.

AMD unveiled its dual-core Opteron microprocessor for server computers in April.

In October, AMD posted a higher-than-expected 73 percent jump in net income to US$76 million for the quarter ended 25 September, while net sales rose 23 percent to US$1.52 billion.

Last month, AMD said its 2006 microprocessor shipments would increase at double the projected industry growth rate of 10 percent, led by server sales. It expects to ship 40 million chips this year, and this would rise by 8-10 million units in 2006.

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