AMD Announces First Loss in Years as Consumer Chip Sales Drop 65%

On Tuesday, AMD introduced its first quarterly loss in years as a result of weak gross sales of processors for buyer PCs. General, AMD’s chip gross sales fell 64%. AMD’s knowledge middle and gaming {hardware} shipments remained robust and secure 12 months over 12 months; That is fairly an achievement given gradual server purchases and weak demand for gaming {hardware} amongst shoppers. Whereas AMD administration expects the CPU market to begin to get well within the second half of the 12 months, the corporate’s outlook for the second quarter will not be so optimistic.

combined bag

AMD’s income within the first quarter of fiscal 2023 was $5,353 billion, down 9% from the identical interval of the earlier 12 months and barely decrease than within the earlier quarter. Sadly, the corporate turned the crimson with a internet lack of $139 million in comparison with internet earnings of $786 million within the first quarter of fiscal 2022. Moreover, AMD’s gross margin decreased from 48% in FY2022 to 44% in Q1 2023.

AMD President and CEO Dr. “We carried out very nicely within the first quarter as we generated better-than-expected income and earnings in a combined demand surroundings,” stated Lisa Su.

(Picture credit score: AMD)

Certainly, AMD’s outcomes have been combined as all the firm’s enterprise items, aside from the Consumer Computing enterprise, remained roughly flat in comparison with the primary quarter of fiscal 2022 and even remained worthwhile. In reality, AMD’s Information Middle unit even managed to extend its income reasonably, however its profitability fell.

“Our strategically vital Information Middle and Embedded segments generated greater than 50% of income within the first quarter,” stated Jean Hu, AMD EVP, CFO and Treasurer.

(Picture credit score: AMD)

Shopper CPU Gross sales Drop, Information Middle {Hardware} Stays Sturdy

(Picture credit score: AMD)

AMDs Consumer Computing The enterprise unit generated $739 million in income within the first quarter of fiscal 2023, down 65% from the identical quarter of the earlier 12 months. The unit misplaced $172 million in distinction to the $625 million revenue it introduced in the identical quarter a 12 months in the past. For years, AMD’s principal supply of earnings has been promoting CPUs and chipsets for shopper computer systems, however this unit suffered a second quarter in a row income decline and misplaced cash. It appears that evidently AMD’s shopper computing enterprise has suffered extra from the gentle computing market than Intel’s shopper computing group, whose first-quarter gross sales fell 36% year-on-year.

“As we said in our final earnings name, we imagine the primary quarter is the underside for our shopper processor enterprise,” Su stated.

(Picture credit score: AMD)

In distinction, AMD’s Sport Enterprise The unit’s first-quarter income totaled $1,757 billion, down 6% from final 12 months, which looks like a powerful end result given the continuing turmoil. System-on-chip for Microsoft’s and Sony’s sport consoles has had the lion’s share of AMD’s gaming enterprise and has grown 12 months on 12 months. In the meantime, gross sales of discrete Radeon graphics processors fell year-over-year. Nonetheless, they grew quarter-on-quarter as the corporate accelerated shipments of Radeon RX 7900 collection graphics choices and supplied earlier technology Radeon RX 6000 collection merchandise at aggressive costs. Regardless of the challenges, the division remained worthwhile and reported internet earnings of $314 million (12% year-on-year decline).

“Semi-custom SoC income elevated year-over-year as demand for premium consoles remained robust after the vacation cycle,” Su stated. “Gross sales over Radeon RX 6000 and Radeon RX 7000 collection GPUs in gaming graphics channels elevated sequentially. We noticed robust gross sales of our top-end Radeon RX 7900 XTX GPUs within the first quarter and are on monitor to develop our RDNA 3 GPU portfolio, the brand new mainstream this quarter. with the discharge of present Radeon RX 7000-series GPUs.”

(Picture credit score: AMD)

In Q1 of 2023, AMDs Information Middle Enterprise income of $1,295 billion, which is sort of flat in comparison with the identical quarter of the earlier 12 months ($1,293). In the meantime, the unit’s profitability fell 65% 12 months over 12 months to $148 million. maintain volumes excessive.

It is notable that when in comparison with Intel’s datacenter and AI group, AMD’s server enterprise carried out barely higher, albeit holding regular. In distinction, the blue firm reported a 39% income drop for knowledge middle components.

(Picture credit score: AMD)

AMDs Embedded EnterpriseThe corporate, which largely sells merchandise developed by Xilinx and a few CPUs designed by AMD, reported earnings of $1,562 billion and revenue of $798 million, a optimistic spotlight in AMD’s monetary report.

Cautious Look

AMD expects its second-quarter income to stay roughly the identical as the primary quarter, totaling round $5.3 billion ± $300 million.

(Picture credit score: AMD)

Such a cautious outlook is considerably shocking, as AMD is ramping up manufacturing and gross sales of its Ryzen 7000 collection processors for laptops, and Phoenix chips are on their option to OEMs. The corporate expects shopper PC income to extend quarter-on-quarter. The corporate can also be on monitor to launch its new Radeon 7000 collection graphics processors within the second quarter, which is anticipated to spice up the corporate’s gaming {hardware} gross sales, although this can be offset by weak gross sales of console SoCs.

Moreover, AMD plans to formally launch EPYC “Bergamo” CPUs for cloud knowledge facilities and EPYC “Genoa-X” for high-performance technical computing functions. Whereas server CPUs are likely to have gradual ramps, these components will nonetheless enable AMD to barely improve gross sales of knowledge middle {hardware}.

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