Analysis: Chip giants dig in for the downturn

Even the big processor firms are not immune to the crisis

Today's crippled economy is presenting many a hurdle to the tech industry, with disheartening news about layoffs and cost-cutting emanating from every direction. Even industry heavyweights, such as Intel, Nvidia and AMD, are not immune to the crisis, leading many to wonder how the technology industry will weather the current financial storm.

Intel, for example, has positioned itself well over the past few years and no one has any doubts about the firm's ability to roll with the punches and come out of the recession relatively unscathed.

Even before the current crisis began, Intel had already spun off or discontinued operations perceived as incongruent with the company's core vision. The firm has also forged numerous partnerships with companies in a variety of sectors, including telemedicine and healthcare PCs. These steps have provided Intel with a commanding lead over its rivals.

In addition, the chip manufacturer has benefited from a surge in netbook sales, despite a slowing market and possible cannibalisation of its slightly higher-end laptop market.

As James Brehm, an industry analyst with Frost & Sullivan noted, "We're coming to an age where the personal computer is seen as a necessity and not just a nicety."

Intel's Atom platform, the basis of most netbooks, makes that necessity possible at an affordable price, even in a recession.

Meanwhile, AMD has attempted to drastically reduce costs by going "asset light" and forming a joint manufacturing venture with Abu Dhabi investors.

The move certainly helps AMD rid itself of hefty manufacturing costs, which were proving something of a huge burden to the firm. At the same time, however, AMD is still at pains to properly integrate ATI into the firm, which has been held back by a clash of cultures and lack of synergy. Tensions are particularly high now, with desktop sales and demand for AMD CPUs dropping as ATI's graphics cards and GPU unit carries the company's main sales.

Similarly, Nvidia has survived by focusing on two niche segments: graphics and the supercomputing market. However, unlike AMD, Nvidia is not attempting to compete in the Intel-dominated x86 Server/PC market, placing the company in a less precarious position than AMD, which is currently straddling the CPU/GPU fence.

David Kanter, of RealWorldTech, explained that, while AMD might be more OEM-centric than Nvidia, the latter remained the number one choice for professional solutions.

"If you look at their financials, something like 30 per cent of their profit comes from professional solutions and that business unit is going to feel a lot less competitive pressure than the consumer-oriented GPUs," he said.