How to generate an initrd image with Yocto
From KoanSoftware Wiki
How to generate an initramf image with Yocto
To build an initramfs, you only need to specify the initramfs image name (e.g., INITRAMFS_IMAGE) and its type (e.g., INITRAMFS_FSTYPES).
INITRAMFS_IMAGE = "core-image-tiny-initramfs" INITRAMFS_FSTYPES = "cpio.gz"
Moreover, the kernel requires these features to load and uncompress the initramfs:
CONFIG_BLK_DEV_INITRD=y CONFIG_INITRAMFS_SOURCE="" CONFIG_RD_GZIP=y CONFIG_DECOMPRESS_GZIP=y
In addition if you want the initramfs to be packaged into the kernel binary instead of being a separate binary (or a different image node of a kernel fitimage) use this setting:
INITRAMFS_IMAGE_BUNDLE = "1"