Having launched its A-series chips code-named “Trinity” for laptops last week, AMD’s (NYSE:AMD) introduction of the company’s R-series accelerated processing unit (APU) chips are a continuation in its new line of processors. (See: Trinity Chips to Challenge Intel Powered Ultrabooks) AMD’s main competitors in this arena include Intel (NASDAQ:INTC) with its low-power Atom chips for embedded devices and ARM (LSE:ARM), which offers low-power micro-controller and processor designs for devices such as smart meters and refrigerators. The embedded processor division contributes a meager 3.5% to our $8.39 price estimate for AMD, which is a premium of 39% to the current market price.
The Embedded R-Series accelerated processing units (APU) platform is designed for mid-to-high graphics intensive applications such as digital signage, casino gaming and kiosks as well as parallel processing intensive applications including medical imaging and security surveillance. AMD has pioneered the embedded APUs to offer its customers a high-performance, power efficient and small form factor embedded processor.
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Companies such as Advantech-Innocore and Quixant are making products based on AMD’s R-series chips for high performance casino gaming applications. The chips are also being used by Axiomtek to make Mini-ITX motherboards, which are commonly used for customized computer equipment in fields such as robotic. 
Because of its scalability, these next generation APUs provide developers with the flexibility to leverage the same board design and software stack for a variety of applications. Additionally, with discrete graphics integrated into the processor, applications that previously required a separate graphics processor or the card can now be delivered on a wide range of form factors.
AMD’s Revenues from Embedded Processors to See an Upward Trend
Embedded devices are increasingly becoming relevant in the home and enterprise as the Internet facilitates data exchange between servers and equipments. Devices like sensors and smart meters are used to gather data and connect devices, and the new AMD processors could help serve games and graphic-intensive data from the cloud as well. The embedded processor market is expected to increase at an annual growth rate of 7.7% till 2015. 
The embedded technologies are an important part of AMD’s strategy in developing a broad range of powerful solutions across a variety of industries. The company’s revenue from this division has grown from an estimated $160 million in 2007 to more than $216 million in 2011. We expect the revenue to continue with the y-o-y growth and reach $330 million by the end of our forecast period. However, even a significant deviation from our forecast will only have a marginal impact on the overall company valuation.Notes:
- AMD aims for better graphics in casinos, hospitals with new chips, PC World, May 22, 2012 [↩]
- Embedded Processor Market Achieves Record-Setting Revenue of $3.6 Billion According to New Linley Group Report, Linley Group Press Release, September 13, 2011 [↩]