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AMD CEO: Why it's good to be the 'smaller guy'

·Chief Tech Correspondent
AMD CEO Lisa Su says virtual reality has applications far beyond entertainment. Source: AMD

AMD CEO Lisa Su is on a roll.

Ever since the 47-year-old electrical engineer became chief executive of AMD (AMD) in October 2014, the Texas-based chip company has experienced something of a turnaround — a rare feat in the tech industry where innovation is lightning-fast and failure can be lethal to the bottom line. To wit, AMD’s stock has more than quintupled over the last 12 months, currently trading around $11.50 a share.

In an interview with Yahoo Finance at CES 2017 in Las Vegas, Su chalked up the company’s quiet resurgence to a significant shift in strategy: making fewer bets in outlying areas like, say, chips for tablets, and successfully doubling down in areas the company excels at (read: computer chips and graphics cards). The company also managed a huge coup on the console gaming front, as its chips are used exclusively in current-generation consoles and next-generation consoles, including Sony’s (SNE) recently debuted PlayStation 4 Pro and Microsoft’s (MSFT) upcoming Project Scorpio, due out later this year.

“We understand we’re the smaller guy,” Su added, referring to rival Intel. “In some sense, you can view that as daunting. Yes, our competition may have significantly more engineers or significantly more R&D investment. On the other hand, we have significantly more freedom. We have the freedom to innovate.”

One major innovation came in May 2015, when AMD announced Ryzen, a new generation of computer chips that promises a 40% leap in performance above and beyond AMD’s previous chips. That’s a huge claim, given performance increases, particularly from competitors like (INTC), have slowed to a crawl, but one borne out by several third parties.

LAS VEGAS, NV – JANUARY 05: An attendee uses a virtual reality demostration at the Denso booth at CES 2017 at the Las Vegas Convention Center on January 5, 2017. Photo by David Becker/Getty Images
LAS VEGAS, NV – JANUARY 05: An attendee uses a virtual reality demostration at the Denso booth at CES 2017 at the Las Vegas Convention Center on January 5, 2017. Photo by David Becker/Getty Images

As it continues to innovate, AMD is betting on the growth of technologies such as virtual reality and augmented reality by designing computer processor chips such as Ryzen that offer significantly better performance than what’s already out there.

Of course, Su acknowledged that VR has yet to reach its full potential.

“What’s holding it back right now is, it’s still a little complex to use, still a little bulky,” Su told said. “With technological advances, there’s a very natural curve between cost and complexity and adoption. When the cost and complexity are high, the adoption rate is, let’s call it ‘modest.’”

AMD’s chief executive is, however, bullish that VR will become a widely used technology in the long-term, thanks in part to technologies from Oculus, PlayStation VR and HTC, which finally released their respective headsets to the masses over the last 12 months.

“They really do take you into a different experience category,” Su explained, adding that VR has applications far beyond entertainment. Imagine, for example, a doctor training for a challenging surgery with VR, or an architect exploring the hallways of a building design before it’s even built. “You can’t get that in a PC environment today or even in any console environment. Putting you into a virtual world really allows you to think differently.”

More of our CES coverage:

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.