Mark Papermaster: The Man Behind AMD’s Success – Economy

Mark Papermaster knows his way around tense situations; he worked directly under Steve Jobs for two years. When he left Apple in 2010 as head of the hardware division, it should have happened at the instigation of the notoriously dissatisfied company boss Jobs. One possible reason: the problems with the iPhone 4 antenna. Now Papermaster is facing a crisis that is shaking up the global economy. There are too few computer chips, many industries are throttling production because they lack the damned microprocessors.

Papermaster is chief technology officer at the chip manufacturer Advanced Micro Devices, better known as AMD. The 60-year-old Canadian is a luminary when it comes to what holds the world together on the nanometer level: chips like the “Ryzen” for frequent gamers, the “Epyc”, which shovels data in many data centers, or the “thread ripper” for desktop PCs in particular demand (current price from 5000 euros) – they have all got AMD back on track after a long dry spell. The boss Lisa Su – and Papermaster – have the largest share in this.

In an interview with SZ he was in a good mood for someone whose industry is in the eye of a storm: “The huge increase in demand is exciting, but also challenging,” he says. The moment is historic: The pandemic has led to the “mass adaptation” of digital technology. Now the previous objectors and the sedate also work and live in gigahertz rhythm. And more gaming is done on high-performance gaming computers.

“People are dependent on PCs and cell phones”

“We in the industry have always considered ourselves essential to the critical parts of businesses since the first personal computers came out in the early 1980s,” says Papermaster. “But now people are addicted to PCs and cell phones.” He has shaped his industry for decades. At IBM he was responsible for chips and servers for 25 years. Apple wanted him so badly that the iPhone company fought over him in court with IBM. He started at AMD ten years ago and brought the company back on a technological level with the seemingly overpowering competitor Intel.

Mark Papermaster got AMD back on track.

(Photo: AMD / OH)

One of the secrets of its success is that AMD relies on individual chip parts – so-called chip sets – that can be combined instead of using all the energy on just one super chip. Papermaster therefore sees AMD well armed against the crisis: “We saw the need for high-performance processors coming.” He does not believe that the chips will at some point no longer be able to keep up with the demands of gamers or companies: “I see no limit to innovation. Whenever people have announced that we have reached a hard barrier, innovation has prevailed.”

Companies like AMD would have to change their strategy in the crisis, says Jan-Peter Kleinhans from the Berlin think tank Stiftung Neue Kompetenz. Because AMD is one of those chip designers who do not have their own production facilities, but instead have them produced. They don’t have fabs, as the super-specialized chip factories are called. “Fabless companies are now securing substrate and silicon wafer capacities – that goes against their business model, but is indispensable in times of scarcity,” says Kleinhans.

The industry is too inflexible

A recent paper by Kleinhans and his colleague Julia Hess makes it clear what Papermaster’s industry is struggling with: The think tank’s semiconductor experts describe the many causes of the crisis. The pandemic, in conjunction with other “external shocks” such as fires or power outages, had shown the industry’s great weakness: a lack of flexibility. This is due to the long production cycles – it takes four to six months to manufacture a chip. Added to this is the geographical concentration in East Asia and the limited sources for the specialty substances in the supply chain.

Computers, consoles, cars: in the pandemic, the world thirsts for pretty much anything that has a chip in it. The fact that the existing production facilities have not been able to ramp up production quickly since the increase in demand is due to a system that is sewn on edge. Building fabs is very expensive and requires highly specialized workers and technicians with years of experience. However, only fully utilized fabs can recover the money invested. As a result, there was practically no overcapacity when demand picked up.

When it comes to supply chain problems, Mark Papermaster is keeping a low profile. AMD works with its partners across the entire supply chain in North America and Asia to keep up with production: “We are very focused on the supply chain. We fine-tune every aspect of the design of our products so that they can be produced more easily.”

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