Sizing up the Impact of AMD’s Llano Release

AMD (NYSE:AMD) has finally released its Llano chips for PCs that combine the power of GPU and CPU on the same chip that will compete directly with Intel’s (NASDAQ:INTC) Sandy Bridge processors. What this means is that AMD will now have a better chance against Intel, and integrated graphics business for companies like Nvidia (NASDAQ:NVDA).

There are a few positive developments for AMD here. A significant increase in battery life with Llano along with AMD’s command over graphics could create solid demand for the new chips and pose competition for Intel’s Sandy Bridge processors.

An article in The New York Times states:

And since nothing eats battery life like running a movie, A.M.D. says the chip also offers dramatically improved battery life. A notebook computer with Llano can run 10 hours, the company said, about double what its predecessors could do. ^[1]

Assuming that desktop sales growth remain lackluster, the key market to watch will be notebooks. AMD’s success with Llano should emerge in market share gains in the notebook market as well as the impact on average pricing. We’ll have to wait and see to what extent AMD can benefit from new chips. Below you can see how changes in market share and pricing can impact AMD’s stock value.

For details on how Llano’s performance stacks up against Sandy Bridge, refer to our previously article titled “Can AMD’s Llano Beat Sandy Bridge?“. Our price estimate for AMD stands at near $9.50, implying a premium to market price.

See our complete analysis for AMD.

1. A.M.D. Releases Chips With New Graphics Abilities, The New York Times, Jun 14 2011 [↩]