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Advanced Micro Devices CEO Lisa Su said that reported its growth opportunities and chances to take market share from rival Intel remain strong in spite of a slowing PC client market.
She made the remarks in an earnings call as Santa Clara, California-based AMD reported revenues and earnings for the third quarter ended September 30 exceeded expectations, with revenue growing 54% to a record $4.3 billion.
“We delivered our fifth straight quarter of greater than 50 percent year-over-year revenue growth with each of our businesses growing significantly year-over-year and data center sales more than doubling,” Su said.
She said the PC market is strong in terms of end-user demand, but component shortages mean that the market will likely be “flattish” in the fourth quarter. Su said supply constraints will likely last into the first half of the year, and that the PC market will be flat as a result.
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But fourth-quarter demand will be helped by semi-custom chip sales, which are higher with stronger demand for the Microsoft and Sony game consoles. AMD makes the main chips for those consoles.
AMD Lisa Su said that Ryzen 5000 processor shipments increased by a double-digit percentage sequentially, as Acer, Asus, HP and Lenovo all increased their mobile laptop offerings.
Su said that cryptocurrency mining-related sales generated negligible revenue.
“It’s not a segment we have been servicing. We have tried very much to keep our gaming graphics focused on gamers,” Su said.
Demand has exceeded supply in year two of the game consoles shipping, Su said. She mentioned that year four is usually the peak year for console sales. She said she saw multiple growth drivers across PC, datacenter, and consoles. During the quarter, datacenter and graphics sales more than doubled from a year ago. On top of that, datacenter graphics chip sales grew significantly.
AMD’s Epyc server chips are getting into cloud computing deployments at Cloudflare, Vimeo, and Netflix, and servers targeting the enterprise are coming from Dell, HPE, Lenovo, Supermicro, Cisco, and others. AMD has a datacenter event coming on November 8. Workstation chip sales are also strong.
More threatening to rival Intel, Su said, “We expanded our wins in the quarter with Fortune 1000 financial services, automotive and aerospace companies and see significant ongoing growth opportunities as our enterprise server pipeline.”
AMD is also getting supercomputer wins. But Su said the PC client market looks flat in terms of revenues in the fourth quarter.
AMD said it has gained revenue for six consecutive quarters in client PC chips, and it has had record results in servers for six quarters as well. That implies that AMD is gaining market share, though the company did not claim that this quarter.
Su said that the $35 billion Xilinx acquisition is on track to close by the end of the year. Su said she expects strong cloud and enterprise demand for AMD’s Epyc chips in 2022. AMD has Zen4 chips coming in that time frame.
“We always expect the competition to be strong, but our focus is always consistent execution of our roadmap,” Su said.
Overall, AMD has had a good run on momentum behind its Zen and Zen 2 architectures for processors, which can generate 50% or more better performance per clock cycle than the previous generation. This architecture put AMD ahead of Intel in performance for the first time in a decade, and it has helped the perennial No. 2 PC chip maker into a fast-growing contender against Intel.
In the past couple of years, Intel has had stumbles not only on the chip design side but also in manufacturing, where it has lost its technological advantage to rivals such as TSMC, which makes both processors and graphics chips for AMD. As a result, AMD has been making historic market share gains for the past three years. What’s interesting is AMD has been making these gains amid a historic chip shortage driven by the supply whipsaw from the pandemic and unprecedented demand for electronic goods.
Intel, by comparison, reported it could see a slowdown in Q4 amid problems such as slowing demand in China. Su said she saw a normal environment for demand in places like China.
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