AMD splits out its graphics chips into the Radeon Technology Group

Advanced Micro Devices

The Sunnyvale, Calif.-based chipmaker was hit hard in 2012, thanks to the rapidly-changing PC market which saw global shipments plunge as much as 8% one quarter. The cause: a saturated PC market and the ongoing transition to tablets as many consumers' go-to device. As a result, AMD saw earnings plunge 17% with a net loss of $1.18 billion. As part of a restructuring effort announced in the third quarter, AMD is simplifying product development and streamlining its supply chain. It will also focus on areas of opportunity, like the $67 billion global video game market, where its chips will provide the horsepower in Sony's upcoming PlayStation 4 console.
Photo: Ashley Pon/Bloomberg/Getty

AMD has effectively split its graphics chip unit into a separate business internally called Radeon Technology Group on Wednesday, nine years after it bought its way into the graphics processor business with the purchase of ATI in 2006. The move has no impact on its financials.

The company’s CEO Lisa Su said the move was made to let the graphics division focus on gaming and virtual reality opportunities, but it seems more likely that AMD is trying to prepare for some kind of internal spin out of its graphics business. The new group would be led by Raja Koduri who would be promoted to senior VP and chief architect. Koduri will report to Su and would oversee all of the chips used in AMD’s graphics cards, semi-custom and GPU compute products, as well as the specialty chips that AMD (AMD)makes that combine graphics and CPU functions.

In a press release highlighting the move Su said, “With the creation of the Radeon Technologies Group we are putting in place a more agile, vertically-integrated graphics organization focused on solidifying our position as the graphics industry leader, recapturing profitable share across traditional graphics markets, and staking leadership positions in new markets such as virtual and augmented reality.”

What is missing from the release is any mention of artificial intelligence, which is where AMD’s graphics rival Nvidia is spending a lot of energy and investment, and where many investors feel that there is a huge opportunity. Also missing is a sense of how this split may play into rumors of a reported break up of AMD’s business that have been swirling around the company for a few months.

“You could view this as a precursor to something else,” said Kevin Krewell, principal analyst with Tiras Research. “But it would be hard to pull the graphics and the CPU divisions apart.” Krewell says that plenty of interested private equity firms and other potential investors have inquired about splitting AMD’s technology, but it’s a complex undertaking given that AMD’s license to produce server chips is hugely valuable, but is granted by Intel, which doesn’t have to offer a buyer the same rights as AMD has today. Meanwhile, the graphics division is one of only two players in the high-end graphics markets, with Nvidia being the only other alternative.

For more on the latest chip innovations check out Fortune’s video on IBM making even more efficient chips:

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