News AMD 3Q22 Earnings

[Hitman928]

As AMD already pre-announced, 3Q was rough. They still had decent Y/Y growth but lower than expected at the beginning of the year and profitability was much lower this quarter. 4Q projections a little better. Will need time to dig into it more.



Edit:

The good:

• Gross margins still at 50% excluding Xilinx acquisition amortization.
• Data center and embedded continue to grow.
• Excluding Xilinx acquisition amortization, operating income and net income increased y/y.
• Gaming revenue continues to be strong thanks to strong console sales.
• AMD is projecting flat revenue for 4Q due to increased data center and embedded sales.
• AMD is still projecting 43% revenue growth for 2022 over 2021.

The bad:

• With Xilinx acquisition costs included, they had a negative operating income (accounted for over $1B loss).
• CPU and GPU sales were down. Doesn't seem like AMD expects them to recover by end of year.
• Consumer CPU (and probably GPU) had an operating loss on the quarter.
• A not insignificant portion of their full y/y growth will be from the Xilinx acquisition.
• Increased operating costs.

 

[KompuKare]

Amazing funneling of resources into R&D by AMD!

https://twitter.com/x/status/1587548315478069248

Not that throwing money at problems solves them faster (ask Intel!), but hopefully this points to some interesting things down the line.

Looks like they are definitely not intending to repeat the Athlon days - where with revenue coming they baulked at upgrading their fabs - but I guess the telling numbers would be Q1 2023 after the downturn.

 

[DAPUNISHER]

If CPU sales matter, go to a different forum and talk about it (maybe in the stock market thread).

So if I want to discuss CPU topics you don't approve of, I should go to another forum to talk about them? LULZ!

Hardware Unboxed just did a video devoted to retail CPU sales. It's almost at a 100,000 views already. I think that clearly displays the interest many DIY builders and PC gamers have in retail CPU sales data. If it is about CPUs, this the correct venue for discussing it.

The thread title is explicit. Don't click on this type of content next time. Problem solved.

 

[Tuna-Fish]

As does AMD, so it's unlikely that AMD will be able to get enough money together to increase their wafer orders, it's not like TSMC is giving them away.
Also why would they, when the whole market has a huge drop-off?
Are they doing server on different wafers than client?

TSMC has in the past given preferential treatement to AMD in that they allow AMD to pay at delivery, instead of requiring prepayments like with everyone else. This was likely done because the wellbeing of AMD is seen as a strategic investment at TSMC. I don't think that there is any chance that AMD will be unable to order chips they believe will sell from TSMC. If AMD somehow cannot raise money themselves, TSMC will give them an advance. Simply because a world with AMD as a major player is better for TSMC than one without.

I don't think AMD is going to greatly increase orders, though. Getting stuck with tons of depreciating inventory is bad (and something that AMD has experience in), and the economy doesn't in general look like it's going to be so hot in the near future, so there's no reason to expect sales to be very good.

 

[coercitiv]

Simply because a world with AMD as a major player is better for TSMC than one without.

symbiosis

 

[MadRat]

Everyone got slapped with inflation on Q3 reports.

Unless a company was unstable before the Q3 report, its nothing to panic about. Gather your cash because its going to be the best time to buy inexpensive stock. When markets warm up everyone will have cash and then they will be expensive. Get in when cash is in short supply.

 

[KompuKare]

I don't think AMD is going to greatly increase orders, though. Getting stuck with tons of depreciating inventory is bad (and something that AMD has experience in), and the economy doesn't in general look like it's going to be so hot in the near future, so there's no reason to expect sales to be very good.

But wasn't most of that negative experience a long time ago mostly in the A-series APUs - possibly even before those went 'dozer?

More recently, AMD's seem have had too little inventory and been obsessed about margins. Point being, why pay the huge expense of the fixed costs of designing something and have too little inventory?

Having good margins is all very well, but profit = margins * volume and it seems AMD are not really interested in volume (aside for in consoles).

I simply cannot see them making a loss if they had a glut of RDNA3, Zen4 or even Zen3 parts.

And in terms of risk-management I find it very strange that they didn't do (or don't appear to be planning) a Zen4 + DDR4 design as currently Zen4 is simply too expensive. Their "Zen4 must only be DDR5" is almost as risky as Intel's old "P4 can only be RAMBUS" was, and with a chiplet design Zen4 plus a DDR4 IOD should be easy(ish).

 

[eek2121]

But wasn't most of that negative experience a long time ago mostly in the A-series APUs - possibly even before those went 'dozer?

More recently, AMD's seem have had too little inventory and been obsessed about margins. Point being, why pay the huge expense of the fixed costs of designing something and have too little inventory?

Having good margins is all very well, but profit = margins * volume and it seems AMD are not really interested in volume (aside for in consoles).

I simply cannot see them making a loss if they had a glut of RDNA3, Zen4 or even Zen3 parts.

And in terms of risk-management I find it very strange that they didn't do (or don't appear to be planning) a Zen4 + DDR4 design as currently Zen4 is simply too expensive. Their "Zen4 must only be DDR5" is almost as risky as Intel's old "P4 can only be RAMBUS" was, and with a chiplet design Zen4 plus a DDR4 IOD should be easy(ish).

The entire tech industry is seeing losses, why would AMD be the exception? Tech employees in the US know this: layoffs are happening everywhere. The job market is still white hot, but that will change. The global economy is entering a recession. Between Russia’s invasion of Ukraine, the fed raising interest rates to curb inflation in the US, and the crypto markets collapsing things aren’t going to be great for the foreseeable future.

 

[moinmoin]

More recently, AMD's seem have had too little inventory (...)

All macroeconomic stuff aside AMD publicly stated several times that this is due to availability of substrate being a bottleneck that is already being worked on and should improve this gen.

 

[maddie]

The entire tech industry is seeing losses, why would AMD be the exception? Tech employees in the US know this: layoffs are happening everywhere. The job market is still white hot, but that will change. The global economy is entering a recession. Between Russia’s invasion of Ukraine, the fed raising interest rates to curb inflation in the US, and the crypto markets collapsing things aren’t going to be great for the foreseeable future.

Yeah, the multiplying sanctions are breaking world trade. Uncertainty is huge with no crystal balls available.

 

[NTMBK]

Amazing funneling of resources into R&D by AMD!

https://twitter.com/x/status/1587548315478069248

I presume the almost doubling of R&D spend in 2022 is due to the Xilinx merger?

 

[dullard]

So if I want to discuss CPU topics you don't approve of, I should go to another forum to talk about them? LULZ!

Who said I don't approve of that topic? It is an important topic to many. It is just that earnings reports have nothing to do with this particular sub-forum ("Discussion about CPUs and Microprocessors. Need help with that new CPU? Like to push it to the limits; overclockers welcome here!"). I'm also a somewhat regular poster in the stock market thread which is a much better fit for earnings reports.

 

[moinmoin]

I presume the almost doubling of R&D spend in 2022 is due to the Xilinx merger?

It seems to be a big part but not all of it. Going by the last numbers right before the merger Xilinx appears to have had a steadily growing R&D budget of slightly above 1$ bln per year in the end.

AXilinx Reports Record Revenue of $1.01 Billion in Fiscal Third Quarter

www.xilinx.com

Edit: I'm not actually sure what numbers and time ranges Bits and Chips is referring to, the "first three months of the year" part confuses and the numbers don't match following more extensive source:

AMD Research and Development Expenses 2010-2023 | AMD

AMD annual/quarterly research and development expenses history and growth rate from 2010 to 2023. Research and development expenses can be defined as an expense arising from studies and product development processes. <ul style='margin-top:10px;'> <li>AMD research and development...

www.macrotrends.net

 

[Harry_Wild]

All macroeconomic stuff aside AMD publicly stated several times that this is due to availability of substrate being a bottleneck that is already being worked on and should improve this gen.

Well, all the analyst do not think AMD will do well in the chip market since demand is way down. AMD does supply chip to Tesla so that may help offset the consumer marketplace. The worldwide economy now looks like it going down. Maybe after the mid term elections, consumers will have a different outlook?

 

[Vattila]

For quick visual overview, here is my Segment Results chart for the completed quarter. The cratering of the Client segment was pretty dramatic — apparently due to competitive dynamics in a weak and volatile market. The contribution from the Embedded segment is remarkable, showing the strength of the Xilinx business. The operating income from Embedded almost equals Data Centre and Gaming combined.

This was Lisa Su's toughest quarter so far. I wouldn't be surprised if she reflected on where she would be if she hadn't closed the Xilinx deal earlier this year. The diverse business segments she has established have put AMD on much firmer ground, able to withstand market earthquakes that would have put the company in peril before.

Spoiler: AMD 2022-Q2 Segment Results

OneDrive link

 

[Hitman928]

It seems to be a big part but not all of it. Going by the last numbers right before the merger Xilinx appears to have had a steadily growing R&D budget of slightly above 1$ bln per year in the end.

AXilinx Reports Record Revenue of $1.01 Billion in Fiscal Third Quarter

www.xilinx.com

Edit: I'm not actually sure what numbers and time ranges Bits and Chips is referring to, the "first three months of the year" part confuses and the numbers don't match following more extensive source:

AMD Research and Development Expenses 2010-2023 | AMD

AMD annual/quarterly research and development expenses history and growth rate from 2010 to 2023. Research and development expenses can be defined as an expense arising from studies and product development processes. <ul style='margin-top:10px;'> <li>AMD research and development...

www.macrotrends.net

The numbers are for the first 3 quarters of the year, not first 3 months, they made a mistake in the original tweet.

 

[DrMrLordX]

As does AMD, so it's unlikely that AMD will be able to get enough money together to increase their wafer orders, it's not like TSMC is giving them away.

AMD isn't in debt anymore. They have enough cash flow to expand production for large ODM orders.

Also why would they, when the whole market has a huge drop-off?

AMD is growing shipments and revenue in a down market in enterprise. It's not their problem. It's everyone else's.

Are they doing server on different wafers than client?

You should know by now that AMD prioritizes server/workstation over client. Not like that's going to be an issue, since AM4 (N7) seems to be outselling AM5(N5).

I don't think AMD is going to greatly increase orders, though. Getting stuck with tons of depreciating inventory is bad (and something that AMD has experience in), and the economy doesn't in general look like it's going to be so hot in the near future, so there's no reason to expect sales to be very good.

Again, AMD is expanding revenue in enterprise. Now maybe they won't expand orders . . . it may be that they'll sell about what was expected were the economy to have remained as good as it was last year or two years ago. But their Q4 guidance is stronger than Q3's and they're doing quite well in what is already a bad market, so the potential is there.

 

[jpiniero]

AMD finally posted the 10-Q... Client unit shipments were down 43%. They did have a 5% ASP increase though.

 

[A///]

For quick visual overview, here is my Segment Results chart for the completed quarter. The cratering of the Client segment was pretty dramatic — apparently due to competitive dynamics in a weak and volatile market. The contribution from the Embedded segment is now pretty remarkable with the strength of the Xilinx business. The operating income from Embedded almost equals Data Centre and Gaming combined.

This was Lisa Su's toughest quarter so far. I wouldn't be surprised if she reflected on where she would be if she hadn't closed the Xilinx deal earlier this year. The diverse business segments she has established have put AMD on much firmer ground, able to withstand market earthquakes that would have put the company in peril before.

View attachment 70270

Spoiler: AMD 2022-Q2 Segment Results

View attachment 70271

what software do you use?

 

[Vattila]

what software do you use?

My AMD Segment Result chart is just a simple LibreOffice spreadsheet (OneDrive link).

 

[moinmoin]

That's quite the old school way to create a chart.

 

[jpiniero]

So I went back and the client comparison looks like this (compared to last year):

AMD: -43% volume, 5% ASP
Intel desktop: 2% volume, flat ASP
Intel notebook: -28% volume, 3% ASP

Kind of makes you wonder what the comparison would look like if AMD separated desktop and laptop out like Intel does. The other thing is that AMD had been getting big ASP gains and that has pretty much evaporated.

 

[Tigerick]

So I went back and the client comparison looks like this (compared to last year):

AMD: -43% volume, 5% ASP
Intel desktop: 2% volume, flat ASP
Intel notebook: -28% volume, 3% ASP

Kind of makes you wonder what the comparison would look like if AMD separated desktop and laptop out like Intel does. The other thing is that AMD had been getting big ASP gains and that has pretty much evaporated.

That's mean AMD was gaining notebook CPU market share from Intel but losing more than half of desktop CPU market share?