Advanced Micro Devices: Life beyond Intel


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Case Details:

Case Code : BSTR039
Case Length : 14 Pages
Period : 1987 - 2002
Organization : AMD, Intel
Pub Date : 2002
Teaching Note :Not Available
Countries : USA
Industry : Semiconductor

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Enacting The David/Goliath Story Contd...

The Athlon/Pentium tussle continued till the end of 2002, and then AMD did something it had never done before. The company launched its first-ever high profile advertisement campaign across the world, on the lines of Intel's high-decibel marketing campaigns. This move attracted comments in media reports that AMD was getting aggressive like never before against Intel. This newfound aggression was attributed to a host of reasons, most of them rooted deep in the bitter rivalry between the two companies.

Background Note

AMD was established in 1969, by Jerry Sanders [previously Director (Worldwide Marketing) at Fairchild Semiconductor1] along with seven others with a capital of $1,00,000. They identified their mission as 'building a semiconductor company that offered products for electronic communication, computation and instrumentation manufacturers' (Refer Exhibit III for a brief note on the semiconductor industry). AMD began operating from a room in a co-founder's (John Carey) apartment, shifting later on to a full-fledged office in Sunnyvale, California, which became its headquarters. Initially, the company produced alternate source devices, that is, they obtained products from other companies and redesigned them to function more efficiently at greater speeds.

AMD defined this as 'Parametric Superiority,' a strategy that it followed for many years. To make its products saleable and also to enhance the quality of the already improvised versions of the products, the company made and tested all its products according to the MIL-STD-833 standards.2

In 1970, AMD had 53 employees and launched 18 different products along with its first proprietary product, the Am2501 chip. In 1972, AMD became a publicly traded company and in 1973, it established its first overseas manufacturing facility in Penang, Malaysia. By 1974, AMD had made more than 200 different products and the number of employees had increased to 1500. The company posted $26.5 million in annual sales for the same year. In 1975, AMD launched the 8080A standard processors and introduced the AM2900 processor line. The company posted revenues of $ 168 million in the financial year 1974-75. Intel had become a formidable name in the industry by now. Not only were both the companies started by ex-Fairchild employees, they were operating essentially in the same business...

Excerpts >>

1] "Voltas' FY 05-06 net sales up by 32 per cent; operating profit up by 124 per cent; net profit up by 40 per cent," www.tata.com/voltas, May 12, 2006.

2] "Some like it hot," www.tata.com, September 01, 2004.

 

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