Longbow Research semiconductor analyst JoAnne Feeney this afternoon reiterates a Neutral rating on shares of Advanced Micro Devices (AMD), writing that she has “independent confirmation” of the story by SemiAccurate’s Charlie Demurjian from earlier today that Nvidia (NVDA) has pushed AMD out of the business for graphics processing units (GPU) in future Apple laptop designs.
It appears, writes Feeney, that there has been not a technical slip but a cooling of the relationship between Apple and AMD:
AMD’s GPUs will no longer be appearing in Apple MacBooks — at least not next year. We estimate that this Apple business will have generated $40-43M in sales for AMD in 2011 (about 2.5%-2.9% of sales), but the hit to reputation is likely to be a bit larger. Contacts confirm that AMD GPU performance is not the issue — this is some sort of a customer-supplier tiff and Apple is known to be very difficult with its suppliers.
Feeney thinks a quarter of the 11 million MacBook laptops Apple may ship in 2012 will have a GPU (excluding all the “Air” units, which will use integrated graphics), and with an average selling price of $15, that amounts to a $40 million opportunity.
This is “the other shoe” dropping for AMD, which takes a hit to its reputation, she writes, and, conversely, it’s a “lifeline” for Nvidia. That’s perhaps good news, actually, for AMD, as it clears away the last big potential negative for the stock, she writes:
We do not see this pointing to share loss for AMD GPUs more generally, but it is not likely to improve confidence in the AMD story. That said, this is likely to be the last bit of AMD-specific bad news and with that behind it, AMD will now likely trade in line with broader market conditions.
AMD shares are down 9 cents, or 1.7%, at $5.38, while Nvidia shares are up 56 cents, or 4%, at $14.49, having completely reversed losses in the morning session.
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