Friday, July 11, 2003
AMD plans aggressive China sales push
Reuters Hong Kong, July 11
The world's second-largest microprocessor maker, Advanced Micro Devices Inc, has launched a sales push in China and aims to grow at least twice as fast as the overall market, its China marketing chief said.
Analysts said the goal may be reachable given AMD's low China market share, which recently crossed into double digits, and its competitive pricing over chief rival Intel Corp
But it will also face stiff resistance from Intel, which counts China as one of its biggest and most lucrative markets, they added.
AMD's sales drive comes amid a flurry of activity at the company, which made China a top priority with the arrival of new chief executive Hector Ruiz in April 2002.
"Our new CEO is putting a lot of focus on China," senior product marketing manager for Greater China, Thomas Tong told Reuters in an interview this week in Hong Kong. "We're getting a lot more support, a lot more resources than in the past."
Hewlett-Packard Co, the sixth-largest personal computer seller in China with about three per cent of the market, began selling PCs with AMD central processing units (CPUs) in two of its five China models in June, Tong said. Sales of the models -- the first AMD-equipped desktop PCs available nationally -- have grown quickly and now account for nearly half of Hewlett-Packard's PC sales in China, he said.
But AMD, with about 20 per cent of the global CPU market, is also talking to the nation's other top players, Tong said.
Among those, the top prize is Legend Group Ltd, the country's biggest PC maker with 28 per cent of the market, whose models currently carry Intel CPUs.
AMD has already signed an informal agreement to sell to Legend, though the Chinese computer giant has not agreed to any specific commitments, according to a knowledgeable source.
Tong declined to comment.
UPHILL
AMD may have some success in China at the lower end of the market because of its competitive pricing, said Adam Parker, an analyst at investment research firm Bernstein. But Intel could also drop its prices to protect its position, he added.
"AMD has signed deals in China and is trying to get their products proliferated there," he said. "Every company is trying to gravitate to where they think revenue growth is highest.
Shipments of personal computers in China grew 15 per cent to 11 million units last year and are expected to grow another 17 per cent this year, according to IDC. This compares with the United States, where PC shipments grew 3.2 per cent to 47.5 million units in 2002, while global shipments grew 1.5 per cent to 136.5 million.
Last October, AMD agreed to collaborate on PC designs and servers with Shanghai's China Basic Education Software Co Ltd and named a general manager for AMD China reporting directly to Ruiz.
Late last month, AMD also announced its first two deals to have Athlon chips included in notebook computers available throughout China from Tsing-Hua Unisplendor and Amoisonic Electronics
The education contract should help AMD get a foothold in Chinese schools, which are trying to put more computers on their premises, said JMP Securities analyst Krishna Shankar.
"In general, China and other emerging countries are always looking for cost effective propositions and AMD does offer pretty good performance at a very cost-effective price," he said.
Before the latest deals, much of AMD's CPU sales in China went to generic PC makers and regional producers, Tong said.
He declined to provide specific figures, but said AMD now sells more than one million CPUs in China each year. "If we want to achieve our internally established goal, I think we need to grow at least twice as fast as the market."
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