News AMD 3Q20 results

[Hitman928]

AMD had a very strong (i.e. record setting) 3rd quarter blowing past estimates.

AMD Reports Third Quarter 2020 Financial Results

― Record revenue grew 56 percent and net income and EPS more than doubled year-over-year — SANTA CLARA, Calif., Oct. 27, 2020 (GLOBE NEWSWIRE) --...

www.globenewswire.com

GAAP Quarterly Financial Results​

​

	Q3 2020	Q3 2019	Y/Y	Q2 2020	Q/Q
Revenue ($M)	$2,801	$1,801	Up 56%	$1,932	Up 45%
Gross profit ($M)	$1,230	$777	Up 58%	$848	Up 45%
Gross margin	44%	43%	Up 1pp	44%	Flat
Operating expenses ($M)	$781	$591	Up 32%	$675	Up 16%
Operating income ($M)	$449	$186	Up 141%	$173	Up 160%
Net income ($M)	$390	$120	Up 225%	$157	Up 148%
Earnings per share	$0.32	$0.11	Up 191%	$0.13	Up 146%

They are also forecasting a very strong (record setting) 4th quarter. AMD said that they are seeing increased demand for their Epyc processors and made no mention of Covid causing headwinds like Intel said they were experiencing.

For the fourth quarter of 2020, AMD expects revenue to be approximately $3.0 billion, plus or minus $100 million, an increase of approximately 41 percent year-over-year and 7 percent sequentially. The year-over-year increase is expected to be primarily driven by the ramp of new Ryzen, EPYC and semi-custom products and growing customer momentum. AMD expects non-GAAP gross margin to be approximately 45 percent in the fourth quarter of 2020.

AMD now expects 2020 revenue to grow by approximately 41 percent compared to 2019, up from prior guidance of 32 percent. Non-GAAP gross margin is expected to be approximately 45 percent, consistent with prior guidance.

AMD's growth story continues. The ramp of the console sales should have effected their margins more than they did, but AMD's increased high margin product sales were able to offset the low margin console ramp. Their increased full year revenue guidance with GM of 45% also points to higher margin products selling more than expected. With Zen3 launching in Q4, it will be tough for Intel to stop the market share loss to AMD, especially in the high value market segments.

 

[Hitman928]

And if you didn't see it, AMD is officially aquiring Xilinx in an all stock deal. See this thread: https://forums.anandtech.com/threads/amd-acquires-xilinx.2586646/

 

[moinmoin]

Looks like AMD is having troubles capping its growth at an average of 25%.

Edit: Dr. Lisa Su: "We reported our fourth straight quarter with greater than 25 percent year-over-year revenue growth, highlighting our significant customer momentum."
I guess 25% is the minimum now.

 

[Jimzz]

Looks like AMD is having troubles capping its growth at an average of 25%.

Edit: Dr. Lisa Su: "We reported our fourth straight quarter with greater than 25 percent year-over-year revenue growth, highlighting our significant customer momentum."
I guess 25% is the minimum now.

Well not hard to have those growth numbers when you go from near 0%/death to matching and now leading in your area.

Hopefully they will not make the same mistake they did before by taking their foot off the gas pedal. Intel is down but they have a LOT of money and pull.

 

[DisEnchantment]

One of the other takeaway from the call is that Lisa said even though demand still outstrip supply they have strongly improved their supply for the next quarter and will continue to work with the supply chain throughout 2021.
And she masterfully dodged a question regarding 5nm vs 7nm split for 2021 . I thought that was brilliant, because you could infer some things based on that.

 

[moinmoin]

Well not hard to have those growth numbers when you go from near 0%/death to matching and now leading in your area.

Hopefully they will not make the same mistake they did before by taking their foot off the gas pedal. Intel is down but they have a LOT of money and pull.

Indeed, it's easier to have a couple isolated quarters with huge growth from near zero than having a steady growth. And in the past said average 25% were the target across the next 5 years iirc. So it's not in AMD's interest to fuel higher expectations for future quarters with numbers like for this quarter (which may well be once a console gen due to preparations for the upcoming launch of next gen consoles included in that quarter).

 

[Hitman928]

Indeed, it's easier to have a couple isolated quarters with huge growth from near zero than having a steady growth. And in the past said average 25% were the target across the next 5 years iirc. So it's not in AMD's interest to fuel higher expectations for future quarters with numbers like for this quarter (which may well be once a console gen due to preparations for the upcoming launch of next gen consoles included in that quarter).

Yes, the console ramp definitely helped the Y/Y and Q/Q numbers and will do so next quarter as well. But as mentioned, the gross margin numbers staying level shows growth in high value products as well. In the 4th quarter, console revenue should be ramping down but they still project a ~7% increase in revenue again showing growth in non-console markets. It will be interesting to see of AMD gives full 2021 year guidance in January.

 

[Hitman928]

A link to their slide presentation for 3Q earnings.

https://d1io3yog0oux5.cloudfront.net/_1c911660cd1a84222da249749d89af54/amd/db/778/6608/file/AMD+Q3%2720+Earnings+Slides.pdf

 

[guachi]

Interesting that graphics revenue was down slightly year over year. CPU revenue must have been amazing.

Looks like Apple moving to 5nm has given AMD room to grow dramatically as I think AMD is using a lot of the 7nm formerly used by Apple.

 

[Panino Manino]

It's unrelated, I know, but talking about money I was thinking if someone could sue AMD because of that "mountain bike".
Going by Gamer Nexus review it's an actual life hazard.
How crazy that AMD's amazing streak of success and broken like this.

 

[Doug S]

Interesting that graphics revenue was down slightly year over year. CPU revenue must have been amazing.

Looks like Apple moving to 5nm has given AMD room to grow dramatically as I think AMD is using a lot of the 7nm formerly used by Apple.

It isn't like the A14 being built on N5 has stopped Apple's demand for N7/N7P used to build the A12 & A13 that are still used in shipping iPhones, as well as other products.

TSMC doesn't build all the capacity for a new process on day one. They have a lot more 7nm capacity today than they had when Apple and Huawei shipped the first 7nm chips in their products. Likewise they will have a lot more 5nm capacity in two years than they have today.

 

[Hitman928]

Some quotes from the earnings call:

In Graphics, revenue declined year-over-year, and increased sequentially as we prepare to launch our next generation Radeon GPUs this quarter. Mobile GPU sales grew by a double-digit percentage year over year, led by solid demand for our Radeon Pro 5000 M series powering Apple's MacBook Pro.

Data center GPU revenue increased sequentially and year-over-year based on new cloud-based visual computing wins. Our Radeon Instinct accelerators continue gaining momentum in the HPC market. Recently announced wins include Australia's most powerful supercomputer, as well as the new LUMI supercomputer in Finland that is expected to deliver over 550 petaflops of peak performance.

AMD changing their forecast in console chip sales from ramping down in 4Q to increasing volume due to higher than expected demand.

We now expect Semi-Custom shipments and revenue to increase sequentially in the fourth quarter based on strong demand.

Turning to Server, we set a record for quarterly Server processor revenue as sales grew a double-digit percentage sequentially and more than doubled year-over-year, driven by growing cloud and enterprise adoption. In cloud, the largest hyperscale customers expanded their second-gen EPYC processor deployments across both their internal infrastructures and publicly-available instances.

In the third quarter, Microsoft Azure expanded their AMD offerings to 18 regions and nine availability zones and launched new data analytic services powered by second-gen EPYC processors that deliver 30% better performance than competitive offerings. Amazon rolled out multiple new high-performance AMD instances and Google announced general availability of their cloud confidential virtual machines powered exclusively by second-gen EPYC processors.

Enterprise data center adoption continue to accelerate as well. We added multiple Fortune 1000 customer wins in the quarter across key verticals, including financial services, automotive and EDA

 

[moinmoin]

A link to their slide presentation for 3Q earnings.

https://d1io3yog0oux5.cloudfront.net/_1c911660cd1a84222da249749d89af54/amd/db/778/6608/file/AMD+Q3%2720+Earnings+Slides.pdf

Slide 4: NOOOOOooooooo... the "leadership" bug has infected AMD as well now.

Slide 7:
- ASP is lower y/y due to a higher mix of mobile processor sales? This is curious considering Renoir goes up to 8 cores whereas 12/16c on desktop should be relatively niche and not affect ASP that much. Either 8c Renoir is too cheap or AMD didn't manage to ship enough 8c Renoir chips. I guess it's the latter?
- Record quarterly Client processor revenue driven by highest ever quarterly mobile processor unit shipments and revenue, and it could have been more going by the constant shortage. It's quite interesting that in the laptop market AMD managed the fasted turnaround of all markets (with friendly support by Covid no doubt).

Slide 8: Expect semi-custom shipments and revenue to increase q/q in Q4’20 based on strong demand. Kind of odd that console demand would have been both underestimated and corrected before the launch, probably influenced by Covid again.

 

[VirtualLarry]

Ryzen 5000 Series / Zen3... cue FUTURAMA_Take_My_Money_Please.gif

 

[CHADBOGA]

Finally AMD has a QTR that financially reflects how well their products have been received/talked about.

 

[IEC]

I don't own any AMD stock so I'm not invested in their financial performance either way, but it's good that they are making money.

To think they were on the brink of bankruptcy not too long ago... Lisa Su and crew did a fine job righting the ship. Now it's time to see if they can keep up the 15%+ IPC gain pace.

 

[mxnerd]

It's unrelated, I know, but talking about money I was thinking if someone could sue AMD because of that "mountain bike".
Going by Gamer Nexus review it's an actual life hazard.
How crazy that AMD's amazing streak of success and broken like this.

It's a terrible, trerrible bike. AMD should recall the bike and refund the money.

 

[DrMrLordX]

It's a terrible, trerrible bike. AMD should recall the bike and refund the money.

Probably why it's sold out all the time. They likely quietly pulled it.

 

[Hitman928]

Quoting from another thread to avoid further derailment.

I quoted your post where you stated this :

"You cannot have flat GM if your revenue increase is being driven largely by console chips, it's mathematically impossible. "

That's a math fail.

Then it should be very easy to disprove, no?

Q4 production limitations won't be felt until Q1 next year.

True, but they will be producing roughly the same amount of console chips in Q4 as they did in Q3, they're not going to have a huge spike in console chip production for consoles that will be sold after the holidays. That means for this report about AMD allocating 80% of their current wafers to consoles to be true, they have to already be dedicating close to that for this quarter and yet, AMD's earnings report and projections from just 2 months ago don't support that.

If you are questioning the limitations of their fab contracts, just goolge it. The source article came from Taiwan and is in Chinese, but there are a ton of summaries.

AMD reserves 80% of its SoC chips for PS5 and XSX - iGamesNews

We assume as normal that a lot of people want the same product at the same time, that a lot of hype is generated by the current console or the rigorous GPU,

www.igamesnews.com

"AMD has reportedly made deals with SONY and Microsoft to sell their custom chips for PS5 and Xbox Series X, to the point where the Reds have nothing less than 120,000 wafers "

Tech4Gamers - All About Technology and Gaming News

Tech4Gamers is a definitive source for news on gaming and emerging technologies. Featuring product reviews and a credible analysis on the latest innovations

tech4gamers.com

"Turning the data around, this means that 80% of the wafers provided by TSMC to AMD went to consoles, while with the remaining 20% - around 30,000 wafers, the company has not been able to meet the demand for Ryzen 5000, the Radeon RX 6000 GPUs, and even the AMD Ryzen 3000 prices are skyrocketing due to stock availability issues. In short, AMD has given high priority to consoles, affecting rest of the market."


It doesn't really matter if your napkin math on financials fails to resolve this with their margins and revenue and so on. This is what's happening to production in Q4, it's already affected their launches on the DIY market and will likely continue to affect it throughout Q1 2021.

What are the source of these reports? Just because it gets reported by a single person with unknown sources and then repeated by multiple outlets doesn't make it true. And no, I don't have much confidence in it because it conflicts with AMD's own statements and financial data.

AMD can't sell what they don't have.

This is true, but they've been increasing sales of both Ryzen and Epyc every quarter so I guess they do have more to sell than you think?

Intel is pretty much going to own the desktop market through the end of Q1 2021 by default.

Again, who said otherwise?

Nvidia will likewise own the GPU market by default.

Completely off the current topic, but OK?

By the time they can get capacity, maybe in Q1 2021, Rocket Lake will be out. Edit: this is actually immaterial. AMD won't have chips to sell in any qty, so Intel can do whatever.

Intel's continued falling market share Q/Q and Y/Y says otherwise.

Meanwhile, Qualcomm has reportedly become the #1 customer for 7nm thanks to iPhone 12 modems.

Reported by whom? More ambiguous Chinese sources?

AMD has to compete for fab capacity with companies that are much larger and with much deeper pockets than it has.

Hasn't seemed to stop them so far.