AMD Eyes Android Platform & Sees Large Gains in Mobile

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Downside
180
Market
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Trefis
AMD: Advanced Micro Devices logo
AMD
Advanced Micro Devices

Advanced Micro Devices (NYSE:AMD) is now hiring Android driver development engineers which indicates that the company is clearly looking to make a push into mobile computing. It will not only compete against ARM-based mobile chip producers like Nvidia (NASDAQ:NVDA), but also against its arch rival Intel (NASDAQ:INTC) that is making its own push with Atom processors. Below we discuss what AMD is doing and the potential upside assuming its efforts yield a reasonable amount of success.

Our price estimate for AMD at  $8.85 is slightly ahead of the current market price.


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Hiring of Android Developers

AMD seems to have begun the process of making its chips compatible with Android software. The company has started hiring staff in order to develop Android drivers for its chips marking a clear indication of its interest in this space. Android is one of the leading operating systems for mobile devices like smartphones & tablets and AMD surely wants to get into this space given its high growth.

From AMD’s website:

The Linux Base Graphics team is looking for Android Driver Development engineers to help us evolve our driver stack for new platforms and in line with the development trends in the Android ecosystem. Experience with video decode acceleration within the Android web browser or video player application would be an asset. Experience with webm and/or OpenMax would be a bonus. [1]

Brazos Platform Holds Promise

AMD’s Brazos platform for mobile devices could well challenge Intel’s Atom in netbooks. According to an article on AnandTech, the Brazos chip seems to be doing better than Atom in terms of graphics performance as well as heating. [2] Also, given the fact that the chip is smaller than Intel’s Atom processor, AMD can have significant price advantage and thus challenge Intel. [2]

Looking at the Upside

To see the potential upside for AMD from its push into the mobile market, let’s look at how Atom to Intel as a benchmark. We estimate that Atom constitutes about 2.8% to estimated $155 billion value for Intel. This puts Atom’s value at around $4.3 billion. If AMD can create even half of this value for itself from some success in the mobile computing market (netbooks, smartphones, tablets etc.), it could lead to an upside of as much as 30% to its current price estimate. We note that our current model for AMD does not incorporate mobile computing devices yet because of AMD’s limited presence in this market so far so we will update the model as soon we get more information on AMD’s sales and investment in this channel.

See the current $8.85 Trefis price estimate for AMD.

Notes:
  1. AMD online []
  2. AMD’s Brazos vs. Atom Thermals, Revisited, AnandTech, Jan 14 2011 [] []