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AMD: Development of ‘Zen’ CPUs is our largest R&D spending now

Advanced Micro Devices has been slashing its research and development budgets for a number of quarters in a row now due to decreasing revenues. With limited R&D resources, AMD has to prioritize its spendings. According to chief executive officer of AMD, at present the company spends most of its R&D money on development of upcoming microprocessors based on “Zen” micro-architecture.

AMD spent $232 million on research and development in the first quarter of 2015 (or around 22 per cent of revenue), a 2 per cent increase compared to the previous quarter, but a 17 per cent decrease from the same period a year ago. AMD spends roughly 20 per cent of its revenue on R&D and cannot substantially increase its investments even when it needs to. In a bid to ensure that it can fund crucial projects, AMD cut its SG&A [sales general and administrative] expenses in Q1 2015 to $125 million, down 9 per cent sequentially and 20 per cent year-over-year.

For AMD, the key priority right now is development of high-performance microprocessors, said Lisa Su, chief exec of AMD, in a brief interview with Hardwareluxx web-site at Computex. In fact, high-performance “Zen” processors account for the largest portion of AMD’s R&D investments right now.

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It should be noted that by now AMD has completed development of its “Zen” micro-architecture, engineers of the company are on the finish line with development of “Zen+” and designers of the company should be on the home straight with 2016 chip designs.

Based on AMD’s official roadmaps as well as unofficial information from sources with knowledge of the company’s plans, the chip designer intends to release four products based on “Zen” micro-architecture in 2016. AMD plans to launch new Opteron processors featuring eight, sixteen or even more “Zen” cores; a high-performance desktop chip code-named “Summit Ridge” with up to eight cores; a mainstream accelerated processing unit known as “Bristol Ridge” with four “Zen” cores as well as a low-power APU code-named “Basilisk” with two “Zen” cores inside.

All AMD’s new processors will be made using a FinFET manufacturing technology (presumably, using GlobalFoundries’ 14LPP fabrication process), which means giant spending on design. According to various industry experts, it costs three times more to design a chip with FinFET transistors than to design a chip with planar transistors. Design of a high-end FinFET system-on-chip can cost around $150 million, which is a giant sum for AMD. If the company wants to release two high-end and one mainstream FinFET models next year (note that Opteron uses the same dies as the next-gen FX), it needs $350 – $380 million just to design them. Making those chips material will add mask and tape-out costs.

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In a bid to ensure that “Zen”-based products are available next year, AMD had to make a number of tough decisions. The company postponed release of processors based on its ARMv8-compatible “K12” cores to 2017. Besides, AMD cancelled release of its 20nm system-on-chips – “Amur” and “Nolan” – that belonged to the “Skybridge” family of products.

“The past six or seven months have really given us times to re-look at the [planned] products and [determine] which of the products are going to return on investments because they give us strong market positions and which of the products are not,” said Lisa Su, chief executive officer AMD at the company’s financial analyst day. “I the past I talked about 20nm node that we did some designs on. We have started some initial designs, we have run some silicon, but those parts are probably not going to go into production because we think we can get much more bang for the buck out of FinFET technologies going forward.”

The cancellation of “Amur” and “Nolan” means that AMD will not have anything new to offer for inexpensive tablets based on Microsoft Corp.’s upcoming Windows 10 this fall. The outdated “Mullins” system-on-chip will hardly be able to compete against the latest application processors from Intel and other chip designers. As a result, to fund development of “Zen” processors, AMD had to abandon certain short-term opportunities.

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It is still unclear when AMD plans to release its “Zen” processors. In fact, it is even unknown whether the company has taped out any of “Zen”-based chips.

Mass production of chips starts between nine and twelve months after the initial tape-out. Therefore, if AMD wants its first “Zen” processors to be inside 2016 BTS [back to school] PCs and servers (such machines hit the market in late July or early August), it needs to formally introduce them in mid-2016 and start high-volume production at least 1.5 – 2 months before that (production cycles for FinFET processes are about 90 days). If this is the case, AMD should have taped out the first “Zen”-based products several months ago. If the company plans to release its “Zen” chips in time for 2016 HR [holiday refresh] cycle, then it should tape them out in July ’15 (at the latest) and formally introduce them in early fall 2016.

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KitGuru Says: It is good to see that AMD wants to get back into the game with high-performance offerings. Moreover, “Zen” micro-architecture looks very promising from many perspectives and AMD’s plans seem rather ambitious. Unfortunately, without any actual release schedules of AMD’s “Zen” and Intel’s “Cannonlake”, it is hard to make any credible predictions about AMD’s positions on the market of microprocessors next year.

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