In the last couple of weeks, although AMD’s (Advanced Micro Devices) shares have rallied significantly, the business of the company still looks a bit dodgy. NVIDIA, on the other hand, has gained at the cost of AMD, and the trend is likely to continue because of the superior product offering by NIVIDIA. In order to get share prices back from NIVIDIA, AMD has to do a lot of reshuffling which currently seems highly unlikely.
AMD and NVIDIA are the top two high performance graphics processor manufacturers. NVIDIA enjoys a significant advantage over AMD in the market share.
In the previous quarter, NVIDIA’s market share amounted to an impressive 81.1%.
The GeForce GTX980 Ti graphic card of NVIDIA is both cheaper and faster than AMD’s Fury X. The main problem AMD faces is that it might not have the opportunity to benefit from reducing the prices and keeping the margins sturdy at the same time. Fury X is built on a full “Fiji” die, while GeForce980 Ti is based on the cut-down type of its GM 200 GPU that is used in Titan X.
When we compare the two cards, we see that their chips have almost the same die size that uses the same 28 nanometer process of Taiwan Semiconductor Manufacturing Company. But NVIDIA’s 980 Ti’s operating power is most likely superior compared to that of AMD’s Fury X, giving the costs a much better structure.
It should be mentioned that Fury X uses a new type of memory chip called High Bandwidth Memory. On the other hand, GeForce GTX980 Ti uses a more advanced technology called GDDR5. One can clearly observe that at present stage the price of GDDR5 chip is lower than the price of High Bandwidth Memory.
AMD is not willing to lower its prices since it understands the fact that NIVIDA is more capable of winning the pricing war. Another reason why AMD is not focused on pricing may be that the company is planning to get as much revenue as they can from those customers who only use AMD products.
Most recent quarterly results clearly show the negative effects of the competition with NVIDIA. AMD’s per share earnings of -$0.17 are less than the estimate of about -$0.12. The revenue reported by the company was $1.06 billion, which is higher than the estimated $995.8 million.
Since AMD is not willing to lower its prices, we can see the manufacturer continuing to struggle. The superior products offered by NVIDIA will help it grab an even larger market share. Hence, the investors should continue avoiding AMD.