Applied Micro Telling The Same Story Over And Over Again
Applied Micro's X-Gene Proves Uncompetitive
Ashraf Eassa • 24 Comments
Ashraf Eassa • 24 Comments
Oct. 8, 2015, 8:35 PM
- 11 months after announcing it plans to enter the ARM server CPU market, Qualcomm (NASDAQ:QCOM) says it has begun sampling to "tier-1 data centers" (possibilities include Amazon, Google, and Facebook) a development platform featuring a pre-production version of a 24-core CPU.
- Details are limited for now, though Qualcomm does state it's using custom ARM cores, as it does for many Snapdragon mobile processors. It also promises an upcoming server CPU "will be competitive in performance and price with current and future Intel (NASDAQ:INTC) chips," and that it will arrive "sooner rather than later" (no specific ETA is provided).
- AppliedMicro (NASDAQ:AMCC) and Cavium (NASDAQ:CAVM) are early leaders in the budding market for ARM server CPUs. Others in the space include AMD, Texas Instruments, and Marvell. Various Web/cloud service providers have shown interest in deploying the chips. But for now, they generally continue buying Intel Xeon CPUs by the thousands.
- Also: Qualcomm is partnering with FPGA vendor Xilinx (NASDAQ:XLNX) to create systems that pair Qualcomm server CPUs with Xilinx FPGAs to provide workload acceleration. Intel is doing something similar with Xilinx archrival Altera, which it's in the process of acquiring.
- A partnership has also been formed with InfiniBand/Ethernet connectivity hardware and chip developer Mellanox (NASDAQ:MLNX). Mellanox's 10-100G InfiniBand and Ethernet gear will be optimized for Qualcomm's CPUs.
Sep. 30, 2015, 10:25 AM
- Mellanox (MLNX -7.3%) has sold off after announcing it's buying network processor (NPU) vendor and Israeli tech peer EZchip (EZCH +14.3%) for $811M in cash. Meanwhile, telecom/data center chipmakers Cavium (CAVM +3.5%), AppliedMicro (AMCC +4.1%), and PMC-Sierra (PMCS +7.9%) are rallying amid a 2% Nasdaq gain - each company's product line includes (but is by no means limited to) NPUs.
- Whereas Mellanox is focused on high-speed data center connectivity hardware (e.g. adapter cards, switches, switching and adapter ICs), EZchip still gets the majority of its revenue from NPUs going into edge routers and other telecom hardware. However, the company has been trying to expand its data center footprint, via its new NPS processor line (supports deeper packet analysis) and its Tilera unit (acquired in 2014, set to launch a processor supporting 100 ARM cores).
- Mellanox asserts EZchip's "products and expertise in security, deep packet inspection, video, and storage processing" will help it "deliver complete end-to-end, intelligent 10, 25, 40, 50, and 100Gb/s interconnect and processing solutions for advanced data center and [telecom] edge platforms." The purchase price is equal to 5.9x EZchip's 2016 sales consensus; Mellanox trades for just 2.3x 2016E sales.
- Update: Summit Research's Srini Nandury thinks Mellanox's selloff stems from the company's failure to reiterate Q3 guidance during today's conference call, in spite of repeatedly being asked by analysts to do so.
Aug. 18, 2015, 2:23 PM
- Having already felt the effects of a string of downbeat earnings reports, chip stocks are underperforming today amid a 0.5% drop for the Nasdaq. The Philadelphia Semi Index (SOXX -1.7%) is near its 2015 lows, and now down 9% YTD. Fresh Chinese macro fears - the Shanghai and Shenzhen exchanges both fell sharply overnight - could be playing a role.
- Micron (MU -4.9%), 4 days removed from hosting its analyst day and 1 day removed from seeing a slew of analysts respond, is among the names down strongly. BofA/Merrill downgraded NAND flash rival SanDisk and NAND controller vendor Silicon Motion to Underperform this morning, which citing Micron and SK Hynix's capex plans - Hynix says it's thinking of spending $39B on fab investments.
- Other major decliners that are tied to the industry include Skyworks (SWKS -5.3%), Qorvo (QRVO -3.6%), IDT (IDTI -6.3%), AppliedMicro (AMCC -4.3%), ChipMOS (IMOS -4.3%), Rambus (RMBS -3.8%), Silicon Labs (SLAB -3.1%), Semtech (SMTC -3.5%), MagnaChip (MX -4.4%), and Amkor (AMKR -3.6%).
- Needless to say, multiples for many hard-hit names have come down considerably over the last two months.
- Chips ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Aug. 14, 2015, 1:52 PM
- Douglas Ahrens, AppliedMicro's (NASDAQ:AMCC) CFO since Oct. 2013, is leaving to become the CFO of a private software company, effective Aug. 21.
- Karen Rogge, whose resume includes stints as Extreme Networks' CFO and Seagate's finance VP, will serve as interim CFO while AppliedMicro looks for a permanent replacement. The company is reiterating its FQ2 guidance.
- FBR's Chris Rolland (Market Perform rating) calls Ahrens' departure "a meaningful negative" for the telecom IC/ARM server CPU vendor. "Mr. Ahrens played a key role in instituting and enforcing the cost-cutting program that was essential to conserving the company’s cash balance of just $77 million ... While Karen Rogge appears to be a stop-gap candidate, it will be challenging to find an equivalent and permanent CFO willing and capable to make the tough decisions needed to see this company successfully through [its] transition."
Jul. 31, 2015, 6:25 PM
- AppliedMicro (NASDAQ:AMCC) rallied to $6.21 today after beating FQ1 estimates and guiding on its earnings call (transcript) for FQ2 revenue of $39M (+/- $2M) and EPS of -$0.03 (+/- $0.02). That's close to a consensus of $39.2M and -$0.03, and better than feared given the light calendar Q3 outlooks offered by many other chipmakers with strong networking/telecom exposure.
- Also: AppliedMicro said it landed over 20 new "end-customer engagements" during FQ1 for its X-Gene ARM server CPUs - clients are said to include several large financial institutions and a major Asia-Pac data center operator. A second-gen CPU (X-Gene 2) is undergoing customer evaluation, and a 3rd-gen product that will rely on an advanced 16nm FinFET manufacturing process (presumably TSMC's) has reached the tape-out stage.
- FQ1 book-to-bill was above 1. Strong demand for AppliedMicro's X-Weave Ethernet/OTN connectivity chips (100G-capable) partly offset soft PowerPC processor sales.
- FQ1 results, PR
Jul. 30, 2015, 4:09 PM
- Applied Micro Circuits (NASDAQ:AMCC): Q2 EPS of -$0.04 beats by $0.01.
- Revenue of $37.81M (-24.8% Y/Y) beats by $0.34M.
Jul. 29, 2015, 5:35 PM
- AIV, AMCC, AMGN, ATEN, AUY, AVD, AXTI, BAS, BCOR, BCOV, BRCM, BVN, CALD, CATM, CLW, CMLS, COHR, COLM, CPSI, CPT, CRAY, CTRL, CXP, DCT, DECK, DGI, DLR, DTLK, EA, EEP, EGO, EIX, ELLI, ES, ESS, EVHC, EXPE, FE, FEIC, FEYE, FLR, FLS, FR, FRGI, GB, GMED, HBI, HK, HME, HTCH, IM, IMMR, INT, ISBC, KAMN, KLAC, LEG, LNKD, LRE, LSCC, MOH, MTD, MTSN, MWA, MXWL, NGVC, NR, NSR, OLN, OMCL, OUTR, PCCC, PDFS, PKI, PODD, PTCT, PXLW, QLGC, QTM, RGC, RMD, RNG, ROVI, SAM, SB, SGEN, SKYW, SPF, SPN, SYA, SYNA, SZYM, TCO, TEP, TMST, TNAV, TNDM, TPX, TSYS, TXTR, UHS, VCRA, VVUS, WAGE, WBMD, WU, WWWW, YRCW, ZLTQ
Jul. 21, 2015, 1:02 PM
- Foundry giant TSMC will deploy HP Moonshot servers running AppliedMicro's (AMCC +1.3%) X-Gene ARM CPUs to implement a Memcached caching system.
- The deal - a quid pro quo for AppliedMicro using TSMC's foundry services? - comes a week after enterprise Linux vendor SUSE announced it would support ARM server CPUs.
- AppliedMicro announced in April it had hit a goal of shipping 10K X-Gene CPUs in FY15 (ended in March). The company is seen as an early leader in an ARM server CPU market also featuring Cavium, AMD, Texas Instruments, and soon Qualcomm. FQ1 results arrive on July 30.
Jul. 8, 2015, 11:37 AM
- Chip stocks are underperforming as the Nasdaq registers a 1.2% decline. The Philadelphia Semi Index (SOXX -2.6%) is now down 13% from a June 1 peak of $101.80, and 4% YTD; it's still up 87% from a Nov. 2012 low of $47.58.
- Plunging Chinese equity markets could be weighing on the group. With retail Chinese investors having set up brokerage accounts en masse over the last year, there are plenty of concerns about the reverse wealth effect of a crash. The Economist reccently downplayed those worries, noting a relatively modest 15% of Chinese household assets are invested in stocks.
- Major decliners among chip developers include Skyworks (SWKS -4.9%), Qorvo (QRVO -5.6%), InvenSense (INVN -5.6%), NXP (NXPI -4.7%), Freescale (FSL -4%), MoSys (MOSY -9.4%), AppliedMicro (AMCC -5.1%), Cavium (CAVM -3.8%), and Silicon Motion (SIMO -6.4%). SIMO also fell yesterday after favorably adjusting its Q2 sales guidance. Skyworks and Qorvo sold off yesterday morning before rebounding in afternoon trading.
- Other names tied to the industry that are seeing heavy selling pressure include ARM (ARMH -4%), TowerJazz (TSEM -5.1%), UMC (UMC -4.4%), Veeco (VECO -4.3%), and Axcelis (ACLS -4.6%).
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Jun. 29, 2015, 10:36 AM
- AppliedMicro (NASDAQ:AMCC) has tumbled out of the gate. Volume (1.21M shares) has already topped a 3-month daily average of 931K.
- Shares fell more moderately on Friday, taking part in a chip stock selloff that followed Micron's results/guidance. The telecom IC/ARM server CPU developer is now down 18% from a June 19 peak of $8.09, after having previously soared with the help of M&A hopes.
Jun. 26, 2015, 2:48 PM
- Chip stocks are seeing outsized losses (SOXX -2.6%) amid a 0.8% drop for the Nasdaq following DRAM/NAND flash giant Micron's FQ3 miss and weak FQ4 guidance - the numbers were blamed on a mixture of soft PC demand, associated DRAM price pressure, and a manufacturing process transition. Some analysts have argued Micron's issues are at least partly company-specific and/or that PC and DRAM demand will improve in 2H15.
- The Philadelphia Semi Index is now down 7% from a June 1 peak of $101.80. It's still up 2% YTD, and (thanks partly to an industry M&A wave) roughly 2x from its fall 2012 lows.
- In addition to PC-exposed Intel and AMD, chip stocks sporting large declines include Qorvo (QRVO -4.9%), Sigma Designs (SIGM -5.7%), MoSys (MOSY -7.9%), Anadigics (ANAD -10.8%), Silicon Motion (SIMO -6.5%), Inphi (IPHI -5.3%), PMC-Sierra (PMCS -3.8%), ON Semi (ON -4.2%), AppliedMicro (AMCC -3.7%), and Vimicro (VIMC -5.3%).
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Jun. 17, 2015, 3:53 PM
- With buyout speculation continuing to swirl, AppliedMicro (NASDAQ:AMCC) has soared on volume of 2.46M shares, nearly 3x a 3-month daily average of 838K. Yesterday, TheDeal suggested (while citing "industry sources") the recent addition of major investor Chris Zepf to AMCC's board could be a sign the company is open to being acquired. "With Chris on the board, the rest of the board members have to start thinking about maximizing shareholder value," said one of TheDeal's sources.
- Sources also speculated Qualcomm could bid for the telecom IC/ARM server CPU developer, as the chip industry continues to rapidly consolidate. Ascendiant Capital's Cody Acree has named both Qualcomm and Marvell as potential suitors.
- Thanks in no small part to M&A hopes, AMCC is now up 60% from an April low of $4.89.
Jun. 10, 2015, 5:38 PM
Jun. 2, 2015, 1:41 PM
- Though still well below a 52-week high of $11.75, AppliedMicro (NASDAQ:AMCC) has jumped to its highest levels since last October. 1.31M shares have been traded, easily topping a 3-month daily average of 750K.
- Possibly helping: AppliedMicro is demoing an HP (NYSE:HPQ) Moonshot server running on AppliedMicro's X-Gene ARM server CPU at HP's Discover conference (runs from June 2-4).
- HP launched the server, known as the ProLiant m400, last September. Back in April, AppliedMicro said it hit its goal of shipping 10K X-Gene CPUs in FY14 (ended in March).
May 15, 2015, 12:58 PM
- Chris Zepf, the founder of hedge fund Kingdom Ridge Capital - the firm currently has a 9.9% AppliedMicro (NASDAQ:AMCC) stake, and is a long-time investor - is joining AppliedMicro's board.
- Zepf: "I have been impressed by the Company's leadership team and the commercialization of its disruptive X-Gene product line for the fast-growing scale-out server market. With the HeliX family of products, AppliedMicro has extended its 64-bit ARM server silicon leadership into the embedded processor market ... AppliedMicro is well positioned to be a significant beneficiary of the broad-based adoption of ARM 64-bit technology."
- The move could be fueling hopes AMCC will join a long list of small-cap chipmakers in putting itself on the block.
- Two weeks ago: AMCC rallies on FQ4 beat, guidance, X-Gene commentary
Apr. 29, 2015, 11:29 AM
- AppliedMicro (NASDAQ:AMCC) guided on its FQ4 CC (transcript) for FQ1 revenue of $37.5M (+/- $2M) and EPS of -$0.05 (+/- $0.02) vs. a consensus of $38.1M and -$0.05. Given the soft guidance provided by many telecom equipment chip peers (led AppliedMicro and many others to sell off), the outlook, together with the company's slight FQ4 beat, is going over well.
- Also: AppliedMicro says it hit its goal of shipping 10K X-Gene ARM server CPU units by the end of FY14, and has "a broad set of [X-Gene] engagements with a growing list of scientific and high-performance computing, enterprise, and hyperscale customers." PayPal was named as a client.
- The company added its X-Weave telecom/data center connectivity chipsets (deliver 100Gbps-240Gbps of throughput) will be used in Verizon's major 100G metro optical network buildout, and have secured 5 more tier-1 design wins. Engagements for AppliedMicro's HeliX embedded/networking ARM SoCs are said to be up 30% Q/Q, with "initial success in high-end networking."
- FQ4 results, PR
Applied Micro Circuits Corp. engages in the provision of silicon solutions for next-generation cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment. Its products include the X-Gene ARM 64-bit Server on a Chip solution, or... More
Industry: Semiconductor - Integrated Circuits
Country: United States