TrendForce’s latest analysis reveals the challenges faced by AMD in the $35 billion deal to buy FPGA manufacturer Xilinx as part of the data center push.
AMD will increase its influence across industries such as 5G, data center, ADAS (advanced driver-assistance systems), and industrial automation, in turn overtaking MediaTek in revenue and becoming the fourth largest IC design company behind third-place Nvidia, according to TrendForce.
San Jose, California-based Xilinx makes programmable chips used in data centers to speed up tasks like artificial intelligence work and in 5G telecommunications base stations.
As AMD and Xilinx are both major clients of TSMC, AMD will command more leverage when negotiating for TSMC’s foundry services following the Xilinx acquisition.
Intel and Nvidia have traditionally performed well in AI, 5G infrastructure, ADAS, and industrial automation. Though AMD falls short in these industries in comparison with Intel and Nvidia, it is catching up by continuing to strengthen its CPU and GPU development and its partnership with TSMC.
Intel is currently facing setback in 7nm advanced process development.
AMD lags behind Intel and Nvidia with regards to product breadth, product adoption, technology, and revenue. By acquiring Xilinx, AMD hopes to close the gap by leveraging the programming flexibility and parallel computing advantages of Xilinx’s FPGA products to generate commercial opportunities in 5G infrastructure, AI, ADAS, and industrial automation.
However, Xilinx has suffered revenue drops for the past three quarters due to the U.S.-China trade war. Net revenue of Xilinx fell to $767 million from $833 million in the second quarter on the back of strength in the data center unit.
Xilinx’s data center chip business grew 30 percent to about $107 million. Analysts believe that Xilinx’s growth was higher due to enhanced sales to Huawei Technologies.
TrendForce analyst CY Yao indicates that, should the trade war further intensify and result in an expanded Entity List, Xilinx will face even more challenges. The company said it expects third-quarter revenue of $750 million to $800 million.
The integration of software resources, including developer tools and libraries, will present particular difficulties for AMD, since these resources need to be compatible across CPU, GPU, and FPGA product categories.