This article is a recounting of public story. The real truth is much more nuanced with enough internal reasons (AMD veteran here).
AMD made a lot of profits with the x86-64 (Opteron family) around 2004-2005. However, that got to managements head and there were a series of missteps:
- Inorganic growth: The company went from small teams with startup culture to larger teams with many projects. AMD went and acquired large teams from HP in Fort Collins and Sun in Boston (Millenium chip team) in one fell swoop. This slowed projects a lot while assimilating and learning to work together with very different cultures and methodologies.
- Mid-management from IBM: Since the company was growing larger, a bunch of VPs from IBM were hired. They tried to bring IBM style processes which will not work when you do not have a captive market like IBM and your competitor is Intel 🙂
- Too many projects: The people and management growth resulted in everyone wanting their own chip project instead of working on derivatives of existing projects. There were too many projects conceived, spent cycles on and then cancelled.
- Paid too much for ATI: Bought them for 5.4 billion in 2006 when they could have waited till 2008 and bought them for 1 billion 🙂 They had to write off most of the ATI value off their books and took charge for it.