AMD sees opportunity in small Chinese cities

“The next billion PC customers will come from emerging markets, especially China,” said Rory Read, AMD's president and chief executive officer.

China's information technology (IT) industry has reached an inflection point with the rise of cloud-computing and the government's move to push the integration of Internet, broadcasting and communications networks, Read said.

China is likely to release the names of the pilot cities by the end of this year, reported the Economic Observer. The government selected 12 cities for trials in 2010, including smaller ones such as Zhuzhou in Hunan and Mianyang in Sichuan. Each city has a population of about 5 million people. AMD's China business is crucial to fuelling the growth of the company's future success, said Read.

Read was appointed as AMD's top executive in August, when the interim CEO Thomas Seifert returned to his original role as the company's chief financial officer. Read is AMD's third CEO since 2008.

“I'm very pleased to be joining AMD at this important time in its history,” said Read. The 49-old took his job at AMD as a “once in a lifetime opportunity” to be a part of a technology team at what is regarded as a crucial point in the computing industry.

In late November, company spokesman Mike Silverman indicated that AMD is likely to shift its focus away from competing with its long-time rival Intel Corp. starting from next year. That happened just days before Read announced his plan to boost sales in China's smaller cities and rural areas.

Read's strategy is based on the idea that the desktop and laptop industries are not going to die any time soon. The PC market will continue to grow in the next five years despite the addition of tablet PCs, Read reasoned.

“Strong adoption of AMD Accelerated Processor Units (APUs) drove a 35-percent sequential revenue increase in our mobile business,” said Read.

The California-based chip-maker teamed up with Chinese PC makers such as Lenovo Group, Asus and Acer Inc. to better penetrate the nation's smaller cities as well as rural areas.

AMD will build a stronger relationship with the PC manufacturers by giving them what they need, according to the CEO. The company has approximately 2,500 employees in China.

Lenovo, one of the most important partners for AMD in China and Read's previous employer, also plans to boost its laptop sales in smaller cities and rural areas, said Vice President Tang Jie.

Acer, the world's fourth-largest PC maker by sales, expects sales to grow by between 20 and 25 percent in 2012, said Oliver Ahrens, who heads Acer's China operation.

“Our APUs and processors will help them to gain market share,” according to Read.

“Consumer PC demand was weak because of rising competition from tablets and due to increasing economic concerns,” said Matthew Wilkins at the research firm IHS iSuppli. This trend could benefit companies such as Intel because “a greater proportion” of its microprocessor revenues were driven by the corporate market, said Wilkins.

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