AMD has kept its word by returning to profitability thanks to demand from console manufacturers, but that might not be enough to make up for its shrinking PC business.
In a mixed financial report, the chip maker said it has benefited from supplying semi-custom processors for the Xbox One and the PlayStation 4, swinging back to a third-quarter profit and beating analyst expectations.
But PC chip sales, AMD's core business, shrank 15% year on year in what CEO Rory Read admitted was the end of the "go-go era" of growth. "There is no doubt that the PC client segment, particularly at the entry level, will feel pressure from tablets," he said. "It’s a competitive space - we are going to be in there and we are going to compete because we have a very good product."
No shortcut back
Despite Read's bullishness, analysts compared AMD's performance unfavourably with Intel, which posted bigger profits earlier this week and saw PC chip sales grow 3.5% year on year.
"We see no shortcut to AMD to regain market share [in PCs]," wrote Auriga analyst Daniel Berenbaum. "Given past missteps, we have low confidence in AMD's design and manufacturing execution."
Meanwhile Intel is successfully pushing into mobile with its next-generation chips for PCs and tablets, codenamed Haswell and Bay Trail.
"They probably lost market share to Intel," said Stifel Nicolaus analyst Kevin Cassidy. "That was a surprise. Intel's Bay Trail and Haswell are coming in on top of where AMD was."
Read promised that tablets and mobile devices would form a "significant portion" of AMD's business in future. "We need to move and attack the new opportunities where the market's going, and that’s what we are doing."
AMD reported a net profit in the third quarter of $48 million (A$49.7 million), up from a loss of $157 million this time last year. Revenue was up to $1.46 billion, from $1.27 billion over the same period. Sales from AMD's Computing Solutions division, which includes PC chips, fell to $790 million, from $927 million in the third quarter of 2012.