AMD, as Advanced Micro Devices Inc. is better known as, opened its third development centre in India at Bangalore last week. India is set to play an important role for the company as it changes its development strategy to focus more on combining different technologies such as the central processing unit and the graphics processing unit, shifting to mobile computing and developing more multi-core technologies, AMD chairman and chief executive officer Hector de J. Ruiz told Mint. In a wide-ranging interview, Ruiz also talked about India as a market for AMD, the firm's rivalry with Intel Corp., and the semiconductor policy in India. Edited excerpts:

Tapping potential:AMD chairman and chief executive officer Hector de J. Ruiz

What has become apparent to us in the last two to three years is that our strategy for development is changing such that our need to have a larger presence in India is very important, not only from the Indian market perspective but from the access to the talent that we have been able to acquire in this region. We are evolving a development roadmap that requires a more distributed R&D around the world than we have had in the past. We have our core centre of excellence in the Hyderabad and Bangalore regions that is outstanding at combining technologies on a piece of silicon. The future for us is more about combining technologies and we think that India is the best place for us to expand that capability.

Our future is really about heterogeneous multi-core technology, which means we are going to combine on our piece of silicon, cores of different types and these centres (in India) will be participating in aspects of that design. 

Can you give us a sense of the scale and scope of AMD work done out of India?

Roughly, India is about 25% of all of our R&D efforts done globally in terms of the workforce and that is going to increase even more. From nothing three years back to 25% of the global R&D today is very significant. India has a full bona fide end-to-end R&D system where engineers do architecture, design, verification, validation and the work even gets put into the central system for work that is being done in other parts of the world. 

Is there any particular project or piece of work done in India that really excites you?

Yes, they (India) are doing some work on what we call the ‘technology fusion', which is a combination of technologies, having to do with consumer electronics. This concept of fusion is very long term and powerful and we think that only in 2010 will it start to be fully realized. Today, the CPU is always lit up no matter what happens. In fusion, the piece of silicon will be designed in such a way that different pieces will turn on depending on what you are using, and by doing that, you will have better power efficiency, better performance and better features.

I have no doubt that they (engineers in India) will make some significant contributions, and they have to, because we are betting the company on that. Their output is critically embedded on the future work at AMD. 

The market has been very positive for AMD from a business point of view. According to analysts, from a 14-15% market share you had three years back, it is 20-21% today. How have you achieved that and what are your plans to retain or increase your market share in the future?

There are a number of things that are helping us grow. Firstly, five years ago we had no participation in the enterprise space. Today, as a result of our products—Opteron and Barcelona (chips)—our acceptance in that very demanding space has become good. Our plan is to continue to get better there as that is a very important segment for us. It has high profitability, good margins and is highly stable and steady. We used to have very little participation in mobile and we have begun to look at that in the last couple of years. That is becoming a bigger business and is a part of AMD’s growth. Then, five years ago, we had no participation in the commercial space as we were mostly in consumer products. 

How has this year been for you and what’s in the offing in the near future?

This year has actually been a very challenging year for us. We have had to digest an acquisition, which was pretty big. (AMD bought ATI Technologies Inc., a graphics processor company, for $5.4 billion or Rs24,516 crore in October 2006.) We had execution problems and were late in our own products. But, all that is behind us.

We believe that in mobile, the platforms are going to be very demanding and of actual value. Next year, we are introducing a mobile platform called Puma, that allows us to partition the work flow between the CPU and the GPU differently. So, if you decide to watch a movie on your laptop while you are on a 10-hour flight, the laptop will automatically and intelligently switch off the CPU and only run the GPU. This way, you will save a lot of power and your batteries can last the whole flight. Those are very powerful things that have nothing to do with how fast the CPU is. We are going to move over to that space where consumers will want real value. Our technology is going to be driven by consumer needs and value. 

You were one of the first companies to talk about a collaboration with SemIndia Inc. (a local semiconductor fabrication company) to set up a manufacturing facility in the region. Where are you on that?

We have not changed our relationship with SemIndia, but not much seems to have gone forward with that. I think it has been very challenging for the combination of people who want to build manufacturing and also for understanding by the communities including the government.

There is a lot of learning going on and we are going to benefit from that but right now, things have been slower than people had hoped for. Part of the reason is that it was underestimated how challenging it is to really build a semiconductor facility. It’s much easier and cheaper to build a (automobile) factory. The national state and the local governments are going to have to think very carefully on what they really want, but it is inevitable that at some point in the future, India will have to find a way to have a manufacturing presence in the semiconductor space. 

What’s in it for AMD to participate with a manufacturing facility such as SemIndia?

To us, it is all about learning what are the experiences SemIndia will have in trying to set this up and be able to benefit from that at some point of time in the future.

Is the way you deal with competition from Intel any different in India from other markets?

As companies, we are fiercely competitive. Our belief is that they are abusive with their monopoly and they are just as abusive in India as they are anywhere else in the world. But we believe that will change. There is pressure from all over the world for them to change their practices because country after country continues to find them guilty of monopolistic behaviour that is not legal. (AMD is fighting Intel on alleged anti-competitive practices in the US, European Union, Japan and Korea.)

In conjunction with that, the Government of India also needs to change its procurement practices. Today, they have a 90% of procurement in India, that is still selective and specifies Intel (in its purchases). It deprives the Indian tax payer from getting benefit from the procurement the government makes. It is important for governments around the world to be open and say we want a computer that does the following things and it does not matter what’s inside it. That’s changing a lot but India has been slower to that change. 

Analysts feel that AMD has projected itself more as a company with the best price advantage than the best quality, something that Intel strongly advertises. Any plans to shift this?

We have more of a perception in India than other countries that our products are cheaper and quality is an issue. We need to change that and work with our customers to do that. It would be good for us to educate the Indian customers that we are being chosen for some of the most mission critical applications around the world. For example, the (US) government is using AMD technology for supercomputing applications in the defense department. All the stock exchanges around the world, except one, use our technology. Our products are very high performance and high quality and for some reason, we have ended up with this low-priced perception that we need to work on changing.