AMD’s profit decimated: Epyc CPUs and consoles save AMD’s quarter

Server business hui, Ryzen CPUs and Radeon GPUs ugh: AMD is also feeling the slump in demand, but has better prospects than Intel.

(Image: Mark Mantel / heise online)

AMD posts an operating loss of $64 million for the three months of July through September 2022 — a decrease of $1 billion in one year. It ended up with a small net profit of $66 million due only to tax refunds. Epyc CPUs and semi-custom processors for the Playstation 5 and Xbox Series X/S prevented worse things from happening.

AMD’s annual report doesn’t look quite as disastrous as Intel’s: Revenue rose 29 percent year-on-year to just under $5.6 billion; Excluding the ongoing spending on the billion-dollar Xilinx acquisition, operating income would be approximately $1.3 billion, and net income nearly $1.1 billion.

In particular, due to its own misjudgment, AMD is now in a worse position than necessary. In the previous quarter, the company turned over just under $6.6 billion and forecast quarterly sales of $6.7 billion. However, due to the collapse in demand for desktop PCs and notebooks, AMD had to issue a sales warning at the beginning of October.

AMD’s Revenue Trend: Despite the global PC hardware recession, revenue increased year over year. The server division is continuously taking market shares from Intel. (Image: AMD)

The client division around the Ryzen CPUs plus all mainboard chipsets only generated around one billion in sales and made an operating loss of 26 million dollars. A year ago there was an operating profit of $490 million. Sales have halved within just three months (-40 percent year-on-year). Sales of Radeon graphics cards were also bad. Just like Nvidia , AMD had to make write-downs due to high inventories – here worth 160 million US dollars.

Microsoft and Sony have nevertheless helped the gaming division (semi-custom processors for consoles and Radeon GPUs) to increase sales by 14 percent to $1.6 billion. Divisional operating profit fell about 39 percent to $142 million. Demand from both customers has been strong in preparation for the Christmas season – demand for the Playstation 5 in particular continues to outstrip supply.

AMD’s Revenue by Division (in billions of US dollars)
business areaQ3/2022Comparison Q2/2022Comparison Q3/2021
data centers1.68th%45%
client1-53%-40%
gaming1.6same14%
embedded1.34%1549%
Total5.6-15%29%

Show table

The star of AMD’s annual report is the data center group with annual growth of 45 percent to $1.6 billion in sales. Operating profit jumped 64 percent to $505 million. AMD speaks of the tenth record quarter in a row in terms of sales of Epyc CPUs. Also included in this division are Instinct GPU accelerators, network processors, FPGAs, and adaptive systems-on-chip for data centers from Xilinx.

AMD has added all other Xilinx products to the embedded division. Thus, this department shows a jump in sales of an incredible 1549 percent, to now 1.1 billion dollars. Embedded operating profit has even exploded by 2661 percent to $635 million thanks to the Xilinx takeover.

In the current fourth quarter of 2022, AMD expects sales of 5.2-5.8 billion dollars, i.e. standstill on average. The company is promising further server growth, which is not surprising given the forthcoming presentation of the fourth Epyc generation Genoa aka Epyc 9004 on November 10th: The CPU family includes 96 cores with AVX512 support, which Intel with the ongoing Delays from Sapphire Rapids cannot counteract. Institutional shareholders are taking AMD’s business numbers positively – the stock rose more than three percent to around $62 in after-hours trading.

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