Welcome back. Today, we are doing a really deep
dive into a company that I think defines resilience,
advanced micro devices or, you know, AMD. It
really is. This isn't just a corporate history.
It's a story about being the perpetual underdog
for, what, decades? For decades. Always the challenger,
always fighting for a little bit of market share.
And now when you look at them, they're not just
participating in high performance computing and
AI. They're actively shaping it. It's one of
the most incredible turnarounds in tech. The
hook here is just so compelling. How does a company
go through multiple near -death experiences,
lose almost every big fight for years, and then
come back to completely reshape an industry?
And the power shift is so recent. I mean, you
look at 2022. For the first time ever, AMD's
market CAG actually surpassed Intel's. Which
is just staggering. That's not just a stock price
thing. That's the market saying, we believe in
your future more than the incumbents. And that
future is all about the data center. Their numbers
back it up. In 2024, they hit, what, over $25
billion in revenue, around 28 ,000 employees.
But the real story is where they're going, the
AI space. Exactly. These massive deals, like
the one with OpenAI announced in late... 2025.
We're talking about a multi -billion dollar commitment
for six gigawatts of AI processors. When you're
making deals that big, you're not the underdog
anymore. You're a pillar of the industry. Right.
So our sources today give us that whole picture,
the early days, the legal wars, the strategic
moves. It all paints a picture of how they got
here. Yeah. So let's start at the very beginning.
So let's go right back to the beginning, the
foundational years. Right. May 1st, 1969. And
it's the classic Silicon Valley story. You've
got Jerry Sanders and seven of his colleagues
all frustrated leaving Fairchild Semiconductor.
We hear about Fairchild all the time. Intel's
founders, Noyce and Moore, they came from there,
too, just a year earlier. What was going on at
Fairchild that it was just bleeding all this
top tier talent? It was a classic case of institutional
friction. Fairchild was a giant, a pioneer, but
it got slow. It got bureaucratic. And people
like Jerry Sanders, who was famously charismatic
and, well, flamboyant. He wasn't the type to
wait for permission. He and his engineering team
felt they could move faster, execute better,
but the corporate structure was holding them
back. They saw an opportunity and decided, like
Intel, to just go build it themselves. And Sanders'
whole philosophy was aggressive from day one,
high performance, high risk. Absolutely. He had
that thin quote about how you have to be willing
to work hard and take calculated risks. And that
really guided their first big strategic decision.
Which wasn't about some revolutionary new chip.
It was about quality control. Exactly. They decided
to guarantee their products to the United States
military standard, which for a startup was a
huge and expensive promise to make. So they were
basically eating their initial profit margins
just to get a foot in the door. They were, but
it was brilliant. You have to remember, in the
late 60s, early 70s, microchips were just not
reliable. That was the industry's... biggest
problem. So if you're a big customer, especially
the military, you can't have components failing.
Right. So AMD comes in not with a brand new invention,
but by taking existing logic chips and just promising
they'll be rock solid. They guaranteed quality
that built trust. It built a customer base and
it gave them a revenue stream they could use
to fund their own designs. So they established
a beachhead on reliability and then they started
to innovate. Precisely. Their very first product
in 1970 was the AM9300, a shift register. But
their first proprietary success came later that
year with the AM2501 logic counter. And then
into RAM in 71, the pace was pretty frantic.
It was. By the end of 1971, they'd hit $4 .6
million in sales. They were proving they could
design and deliver. But the real game changer
was 1975, when they decided to go head -to -head
with Intel in the brand new microprocessor market.
This was the big one. Intel had invented the
microprocessor with the 4004 just a few years
earlier. AMD jumped in with the AM9080. Which
was a clone, right? A reverse -engineered Intel
8080. It was. That was common practice for market
entry. But it immediately set up this rivalry
that would be defined by intellectual property.
And that led to this incredibly important cross
-licensing agreement in 1976. Why would Intel,
the market leader, agree to license its tech
to a competitor? They almost had to. It was because
of a key technological change. Microcode. So
microcode is basically software that lives on
the chip itself. Exactly. It translates the complex
instructions into signals the silicon can actually
understand. And because it was software, it was
protected by copyright. Ah, so for AMD to keep
making compatible chips, they needed a legal
license for that microcode. Precisely. The 1976
agreement gave them that license. And in return,
Intel got access to some of AMD's other designs.
It was a detente, really, a necessary evil for
both sides. An arrangement that somehow lasted
all the way until 1995. It did. And it formed
the legal foundation for the entire PC industry
that was about to explode. And while that was
going on, AMD kept growing. They had a joint
venture with Siemens. They opened a new plant
in Austin. And sales hit $100 million by 1978.
They were getting ready. They were streamlined,
capitalized, and positioned perfectly for the
war that was coming. Okay, so if that first decade
was them just, you know, getting their feet wet.
This next part is where the real fight begins.
It's basically survival. And it all comes down
to one company, IBM. The IBM PC. When IBM decided
to use Intel's x86 chips, they had one very strict
rule. A non -negotiable rule. They would not
bet their entire PC business on a single supplier.
It was too risky. So they forced Intel to find
a licensed second source manufacturer, and that
manufacturer was AMD. It was. This led directly
to that 10 -year technology exchange deal in
1982. AMD was now officially licensed to make
the chips that would power the PC revolution,
the 8086, the 8088, and so on. They were indispensable,
riding this massive wave. They were thriving.
But inside Intel, the mood started to change
by around 1984. They realized AMD wasn't just
a backup supplier anymore. They were a competitor,
a real one. And Intel decided they wanted out
of the deal. And they showed it by their actions.
When the next generation chip, the revolutionary
8386, was ready, Intel stopped cooperating. They
refused to share the technical details AMD needed
to make it. Which was a direct breach of the
contract. It was an existential threat to AMD.
Totally. If they couldn't make the 386, they'd
be stuck making obsolete hardware. They would
become irrelevant overnight. So in 1987, they
fought back. They invoked arbitration. And Intel's
response was, well, the nuclear option. They
just canceled the entire 1982 agreement. And
that kicked off one of the longest, most bitter
legal fights in tech history. The arbitration
alone took five years. It finally came down in
1992. And the ruling was in AMD's favor. The
arbitrator agreed Intel had breached the contract.
But Intel didn't stop there. They appealed. They
fought it all the way to the Supreme Court of
California, which finally upheld the decision
in 1994. AMD was vindicated, but the damage was
done. They couldn't just sit around and wait
for the courts, though. That uncertainty forced
them into a radical new strategy. This is the
moment that saved the company. They couldn't
wait for blueprints that might never arrive,
so they had to start designing their own chips
from scratch. That's a process called clean room
design. We basically have engineers who have
never seen the original design try to replicate
its function just by observing how it works.
It's incredibly difficult. You're building a
compatible chip using your own totally new microcode
and internal design. They were betting the entire
company that their engineers were smart enough
to pull it off. And they did. By 1991, they had
the AM386. Their own clone of the Intel 386.
And the market was starved for it. They sold
a million units in just a few months. Then came
the AM486 in 93, which was hugely popular with
big companies like Compaq. This forced evolution
turned them from a second source manufacturer
into a true competitor. A homegrown competitor.
And that led to their first... truly in -house
CPU in 1996, the K5. And the name is a story
in itself. The K stood for kryptonite. This is
a direct shot at Intel, who everyone saw as Superman.
It was AMD saying, we're the one thing that can
hurt you. The competition was heating up. They
bought a company called NextGen in 96 for almost
a billion dollars. A huge acquisition. They basically
bought the engineering talent they needed to
create the K6 processor, which came out in 97
and competed really well. against Intel's Pentium
II Sec. But the big break came in 1999 with the
Athlon, the K7. This is where they intentionally
severed compatibility with Intel. Right. Because
of all the legal issues around Intel's motherboard
connectors, AMD just made their own, called Slot
A. For the first time, you couldn't just swap
an AMD chip for an Intel one. You had to choose
a side. A huge strategic risk? It was. But while
this CPU war was raging, they had another big
business running in the background. Flash memory.
And they decided to sell it off, which seems
counterintuitive. Why sell a profitable business?
Because the war with Intel was costing them a
fortune. They needed cash and they needed focus.
In 2003, they spun off their flash memory division
into a joint venture called Spansion. So they
cashed out a huge asset to fuel the main fight.
Exactly. They sold off the rest of it by 2005.
Yeah. It was a painful but necessary move to
pour every single resource they had into winning
the microprocessor war. They knew they couldn't
fight on two fronts at once. So after all that,
they're laser focused. And then in 2003, they
pull off one of their biggest wins ever with
the K8 architecture. K8 was, I mean, it wasn't
just them catching up. This was a genuine leap
forward. It introduced three really fundamental
innovations. First was 64 -bit computing. The
Bi -86 -64 instruction set, which they branded
AMD 64. This was a huge deal. broke the 4GB memory
barrier that 32 -bit chips had, which was becoming
a serious bottleneck. And Intel didn't have it.
They didn't. Intel was forced to adopt AMD's
standard, which was a massive symbolic victory
for AMD. Okay, so that's one. What was the second
big innovation? They moved the memory controller
from the motherboard directly onto the CPU die
itself. Which sounds technical, but what does
that actually do? It drastically reduces latency.
Before, the CPU had to go off -chip to talk to
the memory, which is slow. By putting the controller
right on the CPU, data access became way faster.
The whole system felt quicker. So why didn't
Intel do that first? They were kind of locked
into their existing architecture. Changing it
would have been a huge expensive headache for
them and all their partners. AMD, as the challenger,
could afford to take a bigger risk on a new design.
And the third piece was hyper transport. Right.
A super fast connection that let all the components
talk to each other. It was all part of this cohesive
vision for a more efficient system. And the products
they launched, the Opteron for servers and Athlon
64 for desktops, were incredibly successful.
For a while there, around 2005, AMD was the undisputed
technology leader. They launched the first dual
-core CPUs for both servers and desktops. They
were on top of the world. But then they made
another huge risky move. In 2006, they bought
the graphics card company ATI for $5 .4 billion.
A massive, massive gamble and one that nearly
bankrupted them when the financial crisis hit
a couple of years later. Was it worth it? All
that debt? In the long run, absolutely. It was
essential. ATI was a graphics giant with their
Radeon line. By buying them, AMD suddenly had
top -tier IP in both CPUs and GPUs. And that's
where the Fusion idea came from, the APU. Exactly,
the Accelerated Processing Unit. The vision was
to put the CPU and the GPU on a single piece
of silicon. This would be cheaper, more power
efficient, and way faster because they could
share data directly. A vision that would, as
we'll see, eventually save the company. But before
that, they made another huge change. They stopped
making their own chips. They went fabless. It
was a matter of survival. By 2008, building a
new fab, a fabrication plant, cost a truly astronomical
amount of money. AMD just couldn't compete with
Intel's spending power. So they spun off their
manufacturing arm into a new company, Global
Foundries. They did. This let them focus all
their money and brainpower on one thing, chip
design. It was a huge philosophical shift, but
a necessary one. But right after all these big
moves, things went south, fast. The bulldozer
architecture in 2011 was a disaster. It really
was. It was a totally new design that was supposed
to be revolutionary, but it just didn't perform.
In real world tests, it fell way behind what
Intel was offering. And a bad product leads to
corporate chaos. It did. There were CEO changes,
massive layoffs in 2011, 2012, 2014. The company
was bleeding money and looked like it might not
survive. And the sources say there was one thing
that kept them afloat during this dark period.
The semi -custom business. This is where that
eye -wateringly expensive ATI acquisition paid
off. They could combine their CPU and GPU technology
into a single custom chip. A custom APU. And
they sold those chips to Sony for the PlayStation
4 and to Microsoft for the Xbox One. So the gaming
consoles. Yes. Both consoles, launched in 2013,
ran on custom AMD hardware. That business provided
a steady, predictable, high -volume stream of
cash that acted as a financial lifeboat. It kept
them alive and, crucially, gave them the money
they needed to fund their next big bet. So those
console deals, they were basically a lifeline.
They bought them time. And capital. The capital
they needed for what was basically a bet -the
-company project. Zen. An entirely new architecture,
built from the ground up, led by the legendary
engineer Jim Keller. The pressure must have been
incredible. Immense. They set this staggering
goal for themselves. A 40 % increase in IPC.
instructions per cycle, over their last generation
chip. An IPC is the real measure of a processor's
efficiency, how much work it gets done per clock
tick. Exactly. And 40 % is an almost unheard
of generational leap. And they didn't hit it.
No, they blew past it. In 2017, they announced
they had achieved a 52 % IPC increase. 52! That's
just, that's a revolution, not an evolution.
It put them right back in the game. It was a
fundamental technological triumph. It showed
that all the pain and restructuring had paid
off. So what was the magic? What made ZEN so
good so fast? It was a combination of things.
They moved to a much more efficient 14 nanometer
manufacturing process. They introduced simultaneous
multithreading, or SMT, which is their version
of Intel's hyperthreading. So one physical core
can act like two virtual ones. Much better for
multitasking. Right. But the real secret sauce
was the move to a modular, chiplet -based design.
Okay, so instead of making one giant, monolithic
chip, which is expensive and hard to do without
defects... They started making smaller, modular
chiplets, which they called core complex dyes,
or CCDs. These are much cheaper and easier to
manufacture with high yields. And they connect
these little chiplets together to build a bigger
processor. Exactly. Using a super -fast interconnect
they called Infinity Fabric. This is the key.
It allowed them to scale up core counts for their
server chips called Epic, much more cheaply and
efficiently than Intel could with its monolithic
designs. A massive competitive advantage in the
data center. A huge one. And it powered their
new consumer lineup, too, the Ryzen chips. And
the market responded immediately. It was a swift
and brutal comeback. By 2019, AMD's Ryzen desktop
processors were actually outselling Intel's.
For the first time in years, they were winning
the consumer market. And they kept the pressure
on. Zen 2 in 2019, Zen 3 in 2020. They just kept
executing. Flawlessly. And they weren't just
winning on core count anymore. By 2020, with
chips like the Ryzen 5 5600X, they were competing
and sometimes even beating Intel on single -threaded
performance, which had always been Intel's stronghold.
And all the while, that semi -custom business,
the console lifeline, was still going strong.
Oh yeah. The new generation of consoles, the
PlayStation 5, the Xbox Series X and S, even
the Scheme Deck, they all run on custom chips
based on the Zen 2 architecture. It's the perfect
dual strategy. Predictable console money funding
the high -margin, high -performance CPU war.
And that Zen comeback, led by Lisa Su, it just
completely changed the game. It gave them the
foundation for, well... For what's happening
right now. This massive, almost aggressive pivot
into the data center, into AI. And to do it,
they started making some truly monumental acquisitions,
starting with Zilinx in 2022. The price tag on
that was just mind -boggling. $50 billion. That's
one of the biggest deals in the history of the
industry. What on earth did they get for $50
billion? They got market leadership in a very
specific, very important type of chip, FPGAs,
field programmable gateways. So for anyone listening,
what makes an FPGA so valuable in the world of
AI? Flexibility. A normal CPU or GPU, its function
is fixed when it leaves the factory. An FPGA
can be reconfigured, reprogrammed in the field
after it's been made. So you can create custom
hardware pipelines for new... AI models or specialized
networking tasks that are changing all the time.
Precisely. It gives data centers incredible adaptability.
So AMD didn't just buy a product. They bought
the ability to offer customized adaptable silicon
for any future workload. It's a huge strategic
advantage. And then right after that, another
acquisition, Pensando for $1 .9 billion. This
was for something called a DPU. A data processing
unit. This is another really smart strategic
move. A DPU is basically a smart network card
that offloads tasks like security and storage
from the main CPU. So it makes the whole server
more efficient. Exactly. It shows that they're
not just thinking about selling a CPU anymore.
They're thinking about selling an entire optimized
data center platform. And to support all this
new hardware, they went on a software buying
spree. This is maybe the most critical part of
their plan to take on NVIDIA. NVIDIA's dominance
isn't just its hardware. It's the software ecosystem,
CUDA, that locks developers in. So AMD's strategy
is to build a powerful open -source alternative.
Yes. They bought Nod .ai in 2023, then Silo .ai
for over $600 million in 2024, then a whole string
of smaller AI software companies in 2025. They
are buying the talent and the technology needed
to make their hardware easy to program for AI.
They even bought a hardware company, ZT Systems.
For $4 .9 billion. This shows you the full vertical
integration play. They're moving beyond just
selling chips to selling entire fully customized
server racks and data center hardware solutions.
A one -stop shop. And all of this leads up to
that bombshell announcement in late 2025, the
OpenAI deal. This was the ultimate validation
of the entire strategy. OpenAI, arguably the
most important AI company in the world, committing
to buy six gigawatts of AMD's next -gen AI processors
over five years. A deal that will be worth tens
of billions of dollars. It instantly makes AMD
a true co -equal competitor to NVIDIA in the
AI space. And the structure of the deal is just
fascinating. It includes warrants for OpenAI
to buy up to a 10 % stake in AMD. But only if
AMD's stock price hits an incredibly ambitious
target of $600 a share. It's an incredible show
of confidence. It directly ties the success of
AMD's hardware to the company's future market
value in a way we've never really seen before.
But amid all this AI excitement, what about the
original fight, the server CPU market against
Intel? They haven't taken their eye off that
ball. Thanks to the success of Epic, they have
been clawing back market share steadily. As of
mid -2025, they hold about 36 .5 % of the server
CPU market. Which is a huge number. Intel still
has the lead, but 36 .5 % is a serious, serious
position to be in. The comeback is real. So to
really get the full picture of where they are
today, you have to look at the whole ecosystem
they've built. Right. It's not just about one
chip anymore. It's the hardware, the software,
everything working together. Let's start with
the graphics side, the Radeon Technologies Group.
They spun that out as its own unit in 2015 to
give it more focus. They did. And its architecture
has evolved dramatically. They moved from their
older designs to what they called Graphics Core
Next, or GCN. And GCN was a big philosophical
shift, wasn't it? It was. It was all about using
the GPU for more than just graphics, for general
-purpose computing, GPGPU. Which positioned them
perfectly for the machine learning room that
was just around the corner. Exactly. And their
newest architecture is RDNA. The RDNA2 version...
which came out in 2020, was their first real
high -end competitor to NVIDIA's RTX cards with
full support for hardware -based ray tracing.
It shows they're still serious about the consumer
gaming market, not just the data center. Absolutely.
And all of this ties back to that core concept
we talked about earlier, the APU. The Accelerated
Processing Unit. The CPU and GPU on one piece
of silicon. It's the foundation of so much of
their success. It simplifies design, it saves
power, and it boosts performance. Because the
CPU and GPU can communicate directly through
that high -speed Infinity Fabric we mentioned.
No more slow trips across the motherboard. Right.
And beyond the core chips, they've innovated
in other areas too, like FreeSync. Which synchronizes
your monitor's refresh rate to your graphics
card, getting rid of screen tearing. And they
made it an open standard VI adaptive sync so
anyone could use it without paying for expensive
proprietary hardware. Which brings us back to
their software strategy. It's all about open
source. It's a huge deliberate choice. A direct
contrast to NVIDIA's closed off CUDA ecosystem.
They have GPU open for their graphics tools,
things like FidelityFX, Super Resolution or FSR.
FSR is that upscaling technology that gives you
higher frame rates with almost no loss in visual
quality. It is. And for the AI and supercomputing
side, they have ROCM, the Radeon Open Compute
Platform. So the idea is to attract developers
who don't want to be locked into one company's
proprietary system. That's the gamble. Build
an open, powerful platform, and the developers
will come. And if the developers come, they'll
drive demand for AMD's hardware. It's a long
-term play. They're even making their own open
-source AI models now. That's right. In early
2025, they announced Instella, a 3 billion parameter
language model. It's another signal that they
are all in on open standards for AI. We can't
finish talking about their engineering culture
without mentioning one fun fact. Ah, the Guinness
World Records. Pure bragging rights. they hold
the record for the highest frequency ever achieved
by a computer processor they do they hit 8 .794
gigahertz with their old fx 8350 processor using
liquid helium for cooling of course it's just
a little symbol that even when the company was
struggling for its life that core drive for raw
performance never went away So when you look
back at it all, from what, 1969 with a few frustrated
engineers. To 2025, signing these multi -billion
dollar deals to power the future of AI. It's
an incredible story. And the biggest takeaway
for you, listening, has to be that none of this
was guaranteed. It was earned through a series
of huge calculated risks. Every step of the way,
the legal fight with Intel forced them to become
innovators. The massive debt -fueled ATI acquisition
gave them the IP they needed to survive. The
shift to a fabulous model freed up the cash they
needed for Zen. And that Zen comeback under Lisa
Su's leadership, it just changed everything.
It set the stage for this massive pivot into
AI with acquisitions like Zilinx. Their survival
has always depended on two things. Making big
architectural leaps, like with AMD64 back in
the K8 days, and making smart business pivots,
like focusing on the console market when the
PC market was weak. It's a masterclass in adaptation.
Which brings us to our final thought. AMD's massive
deal with OpenAI is tied to its stock hitting
an ambitious $600 a share. To get there, they
have to become an undeniable leader in AI. And
they've spent $50 billion on Xilinx to get access
to those flexible, reconfigurable FPGA chips.
Their entire software strategy is built around
being open and adaptable. So here's the question
for you to think about. For the last 30 years,
high -performance computing has been defined
by the battle between standardized CPUs and GPUs.
But AMD's massive investment in customizable
FPGAs suggests a different future. Is the future
of computing going to be another round of the
same... CPU versus GPU fight, or is the market
shifting to a place where victory belongs to
whoever can build the most specialized, rapidly
adaptable, custom silicon for every single new
AI workload? If that's the future, AMD might
be betting that the era of the general purpose
processor is coming to an end.