Thursday, November 13, 2008

AMD Unveils a Server Chip Called Shanghai

AMD Unveils a Server Chip Called Shanghai

The new computer chip is more versatile than a comparable one that Intel will release in a few days, giving AMD an important advantage

November 13, 2008, 12:01AM EST ---

Advanced Micro Devices is releasing a computer chip that could give it a much-needed boost against bigger rival Intel (INTC).

On Nov. 13, AMD (AMD) unveiled a processor, code-named Shanghai, for use in servers, the powerful computers that run corporate networks. Unlike other recent chips from AMD, Shanghai is being released on time, and it will be more versatile than a comparable chip due to be released from Intel in the coming days.

AMD says Shanghai will perform 35% better than its previous generation of server chips while decreasing power requirements by 35%, a combination that should help customers reduce operational costs while boosting efficiency. Best of all, it's been met with rave reviews from customers that have tried it in their machines. "It's been tested by enough people who say it performs very well," says Brian Piccioni, an analyst at BMO Capital Markets in Toronto.

Market Share Is Slipping

AMD needs all the good news it can get. The company's share of PC and server chips tumbled to 17.7% in the third quarter, from 23% a year earlier, while Intel boosted its share to 82.1%, according to Mercury Research. The company is also reeling from a price war with Intel and crippling debt associated with the poorly timed purchase of graphics chipmaker ATI, hurdles that have resulted in quarterly losses, a share price collapse, and the replacement (, 7/17/08) of CEO Hector Ruiz with Dirk Meyer. AMD shares tumbled 13% on Nov. 12 to close at 2.57.

With Shanghai, to be sold under the Opteron brand, AMD hopes to show it's got some of its operational mojo back after the disaster that was the previous server line, Barcelona. Introduced in September 2007, but not generally available until April 2008, Barcelona was not only seven months late, but slower than had been expected, damaging AMD's reputation and allowing Intel to recapture much of the market share it had lost to AMD in the server chip business.

Intel's new chip, code-named Nehalem, is due to be released Nov. 17. Sold under the name Core i7, Intel's new chip will resemble Shanghai in an important way. It will sport, directly on the silicon of the chip itself, a component that connects directly with the memory chips in the computer. Known in chip industry lingo as an "on-chip memory controller," the part helps speed performance in what has always been a key bottleneck. AMD's chips have boasted this on-chip memory controller since 2003, while Intel had generally resisted the approach for years.

AMD Has the Advantage

AMD's use of the on-chip memory controller gave it an important leg up on Intel when it rolled out its first generation of Opteron server chips in 2003, and it managed to win business (, 5/3/06) among key server vendors, including Dell (DELL). But that performance lead was short-lived as Intel improved its chips and AMD's began to lag. Then came the Barcelona debacle.

By finally embracing on-chip memory controllers, Intel is expected to produce a series of chips based on the Nehalem design that will deliver screaming performance and over time probably beat AMD on many metrics. But in the short term, AMD has an important advantage. Intel's first Nehalem chip will be suitable for use only in single-chip computers like desktops.

Chips for use in two-chip and four-chip servers will follow in the next few months, and it may be a year before chips for four-chip systems are ready. "AMD will have an advantage of anywhere from a few months to almost a year," says Nathan Brookwood, head of research firm Insight64. "Nehalem will win many of the benchmarks, but it's going to be a while before Intel has qualified them to run in the multiprocessor systems."

IT Spending Slowing

However impressive their chips, both companies face a common challenge. The economic slowdown is forcing customers to curtail IT spending. On Nov. 12, Intel slashed its fourth-quarter sales forecast (, 11/13/08), saying "revenue is being affected by significantly weaker than expected demand in all geographies and market segments." The typical customers for the kinds of servers AMD is targeting with Shanghai are just the financial-services companies and other large corporations responsible for warnings like Intel's.

Market research firm IDC said on Nov. 12 that IT spending worldwide will grow only 2.6% in 2009, significantly less than the prior forecast of 5.9%. The cuts will be worst in the U.S., where spending is expected to grow only 0.9%. "The market is shrinking pretty quickly," says Doug Freedman, analyst at American Technology Research in San Francisco. "Demand is going to be pretty soft next year."

Hesseldahl is a reporter for

September 29, 2008 7:00 PM PDT

AMD says new 'Shanghai' chip is ready to go ---

AMD said Monday it is set to roll out its next-generation "Shanghai" chip--minus the mistakes of the last generation.

The No. 2 processor maker wants to make one thing crystal clear: Shanghai is not Barcelona. The latter chip was rolled out in September 2007 to great fanfare only to be delayed a whopping eight months (or more, depending how the delay is calculated) due to production glitches and bugs. The chip was also hampered by speed (core clock frequency) limitations. This gave Intel an opportunity to regain ground it had lost to AMD in the server chip market.

"We had some mis-starts in getting Barcelona to market and wanted to bring as much velocity to Shanghai as possible. Learn from our mistakes and, as a company, never do that again," said Pat Patla, general manager of AMD's server and workstation chip business.

Shanghai--a quad-core product targeted at servers--will be AMD's first 45-nanometer processor. (Barcelona is 65-nanometer.) Typically, the smaller the geometries, the faster and more power efficient the chip. Intel has been shipping 45-nanometer processors since last year and these processors now make up most of Intel's offerings.

AMD needs Shanghai to succeed. It is reeling from a string of losses and is on the verge of announcing a major restructuring. "To bring it back to profitability the execution of the server product line is absolutely critical," said Ashok Kumar, an analyst at investment bank Collins Stewart. "That is really their only profit pool."

AMD's server chip roadmap includes a six-core Istanbul processor in Q4 2009

AMD's server chip roadmap includes a six-core Istanbul processor in Q4 2009

(Credit: AMD)

To ensure this, AMD designated a lead engineer to take over the entire Shanghai project to establish goals for the "health of the silicon, the schedule for the silicon, and the confidence level of the silicon," Patla said. AMD had to make sure that "the product that we put in the hands of our partners is going to be of substantial stability so they can do lots of early validation," he said.

As a result, the schedule for Shanghai has been pulled in. "Originally the plan was that Shanghai would launch in Q1 of '09 and we were able to pull that into Q4," according to Patla, adding that the product will not only be announced in the fourth quarter but vendors will be shipping servers in the fourth quarter.

"We're in full production right now in the factory," he said. "People will start getting first silicon from the final production very shortly."

Patla asserted that Shanghai is a "very power efficient product" and will perform much better than Barcelona because the smaller 45-nanometer process yields "a lot more (clock) frequency."

At the same frequency (speed), Shanghai will outperform Barcelona by about 20 percent, Patla said.

AMD is also boosting the size of the cache memory, which typically speeds performance, from 2 megabytes to 6 megabytes. Another speed improvement will come from increasing "instructions per clock," Patla said.

"We're also turning on HT3 (HyperTransport 3) and you'll see partners start to validate that in the Q1 time frame," Patla said. HyperTransport is a high-speed communication link technology between silicon.

Shanghai will be followed by a 45-nanometer desktop processor code-named Deneb, which is due to launch in the fourth quarter of this year or first quarter of 2009, AMD said.

In the fourth quarter of 2009, AMD will add a six-core processor. "We'll take what we've learned from our 45-nanometer process and Shanghai core and bring out an Istanbul six-core product," Patla said. Like Shanghai, this will be targeted at servers with up to eight processor sockets.

Brooke Crothers is a former editor at large at CNET, and has been an editor for the Asian weekly version of the Wall Street Journal. He writes for the CNET Blog Network, and is not a current employee of CNET. Contact him at Disclosure.