Question Just saw that AMD announced that shipments dropped about 16% - will prices drop?

GunsMadeAmericaFree

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maddie

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I would think companies with the most cash on hand would be better positioned in the event of an economic slowdown.
Sales don't stop completely, it goes to the best suited for the new cost conscious conditions.

Flexibility in product stacks and costs of manufacture. Can repurpose chiplets for client or server. Many separate markets for 6nm designs to absorb wafers (console, mobile APUs, IO chiplets). Performance/area approach to RDNA3. Lower power advantages. I see them having cost advantages across all lines. They will have to sacrifice margins but then everyone will be doing the same anyhow.
 

trivik12

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We are in a recession. So will impact every company. That said 53% Q on Q drop on Client is rough though DC is doing great with Intel missteps with SPR. That is why operating income is still great.

Intel's Q3 projections were already horrendous. It would be interesting to see where it lands. I hope they also pre announce and not deliver a huge miss. That would terrible to do for back to back quarters.
 
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itsmydamnation

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Yes, if they are going to drop hopefully they pre announce it.

This will eventually affect servers. Just takes time.

Reddit AMD comment said sales had to literally halt in August and September to get this kind of drop.

Over a decade of propping the market up by encouraging reckless borrowing and spending to "increase" GDP figures and now everyone faced with the prospect of paying back with much higher interest rates in all categories will do that for you.

Not to mention lockdowns killing jobs and work.

If the interest rates continue to rise, watch house sales halt and the mortgage crisis of 2008 will repeat but in an amplified manner and in many more countries, which will make this "recession" look like utopia.

Almost funny, because if most people practiced responsible spending, increased interest rates would do the opposite and benefit everyone.
not to derail , but i see this as nothing but a profit lead inflation spiral , all to keep stock market prices high. stock markets got high on CVOID subsidy driving profit numbers. I only see consumer spending going down until purchasing power returns and that wont happen until companies return to pre COVID profit levels.

Your idea of "responsible spending" and interest rates being good belongs back in the 1940's where it didn't work last time. The fix is to get the stock market back to reality.
 
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trivik12

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Crazy thing is AMD was dropping even before this news. 4 weeks ago it was at 85.45 while overall market dropped but AMD dropped even worse. Its terrible how wall street seems to get inside information ahead of time and make money at the cost of retail investors :-(
 
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IntelUser2000

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Your idea of "responsible spending" and interest rates being good belongs back in the 1940's where it didn't work last time. The fix is to get the stock market back to reality.
What are you talking about? We're now in the 21st century so all fundamentals matter jack?

No, if vast majority of the people didn't have massive amount of mortgages and credit card debt and all kinds of debt, and have money saved up in savings accounts, yes the "GDP growth" would have been lower but the economy as a whole would have been much more resilient.

In the previous quarter, they said client shipments were down 8% but ASPs were up 35%. It's like the ASP suddenly went flat.
ASPs up by 35% - 1.35x

They said revenues declined by 40%. Tell me that I'm misunderstanding you and you know basic math? 40% decline in revenue means ASPs need to increase by 67% to make up for it. 35% increase is piddy compared to 40% decline.

1.67x/1.35 = Even if ASPs went flat in Q3, you still need to account for 24%. So both volume and ASPs tanked.
 
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DisEnchantment

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Yes, doom prophet @maddie was right on the money.
Perfect storm, recession, crypto, covid wfh disappearing, conflict in Europe, trade war in the east, etc.

It wasn't rosy in Q2 either but inclusion of Xilinx revenue gave a wrong picture. But some folks were adamant when I pointed that out.
I am waiting for some big dips on Intel or AMD and grab some more stock.

Laptops cratered I think.

Mid to long term, market in the east might will sink even more and not even come back anymore.
 
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IntelUser2000

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Pre-earnings shows Client dropped by a massive 40% Y/Y. They said it was due to lower volume and ASPs.

I bet you this is just AMD experiencing the drops other companies like Intel had in Q2, but later.

Also if the volumes are smaller, then you don't need to do as much pre-shipment.
 
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IntelUser2000

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Yes, if they are going to drop hopefully they pre announce it.

This will eventually affect servers. Just takes time.

Reddit AMD comment said sales had to literally halt in August and September to get this kind of drop.

Over a decade of propping the market up by encouraging reckless borrowing and spending to "increase" GDP figures and now everyone faced with the prospect of paying back with much higher interest rates in all categories will do that for you.

Not to mention lockdowns killing jobs and work.

If the interest rates continue to rise, watch house sales halt and the mortgage crisis of 2008 will repeat but in an amplified manner and in many more countries, which will make this "recession" look like utopia.

Almost funny, because if most people practiced responsible spending, increased interest rates would do the opposite and benefit everyone.
 
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trivik12

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With this info, kind of seems like AM5 pricing may have been a bit high in the hopes that a new generation would boost demand which might offset the slowdown somewhat.

Since, if anything, it had the opposite effect, I think prices will probably come down.

Really looking forward to seeing the exact same thing (or worse) happen to Nvidia.
Since Zen 4 launched end of the quarter, it had no impact on the earnings. This is due to overall economy in a recession.
 

maddie

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Yes, doom prophet @maddie was right on the money.
Perfect storm, recession, crypto, covid wfh disappearing, conflict in Europe, trade war in the east, etc.

It wasn't rosy in Q2 either but inclusion of Xilinx revenue gave a wrong picture. But some folks were adamant when I pointed that out.
I am waiting for some big dips on Intel or AMD and grab some more stock.

Laptops cratered I think.

Mid to long term, market in the east might will sink even more and not even come back anymore.
I prefer the term truth prophet as it turns out true. ;)

Seriously though, this is terrible, I guess we'll see more from the other big players soon.
 

HurleyBird

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Since Zen 4 launched end of the quarter, it had no impact on the earnings. This is due to overall economy in a recession.
Right, I mean, if Zen 4 launch demand was approached something like Zen 3 launch demand then AMD could say "we saw a larger than expected drop-off in current generation parts, while demand remains strong for our next generation products which will begin manifesting in Q4." But it doesn't look like that's a narrative they'll be able to use.
 
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itsmydamnation

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I'll add that my gut tells me that demand didn't fall off a cliff at all. Rather, what's fallen off a cliff is consumer patience with corporations price gouging and chasing profits. I think there's a ton of demand, especially from those who were priced out of the market during COVID craziness, for solid performance at a reasonable price. Consumers were screwed over the last two years, and now feel like they are owed a good deal. What the the market really wants right now is something that looks like a $250 7700X on a reasonably, if not aggressively, priced platform. If that's what AMD had delivered, then instead they might be scrambling for more N5 capacity to meet demand.
i think you will find its laptops/ OEM not DIY
 
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Markfw

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Confused by all this. A lot of people (not just me) were snatching video card like crazy when crypto went bust (so to speak), and look at the number of Zen 4 systems being built ? And AMD doubling production in servers ? I will see when the Q3 report drops...
 

jpiniero

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Pre-earnings shows Client dropped by a massive 40% Y/Y. They said it was due to lower volume and ASPs.
In the previous quarter, they said client shipments were down 8% but ASPs were up 35%. It's like the ASP suddenly went flat.

Confused by all this. A lot of people (not just me) were snatching video card like crazy when crypto went bust (so to speak), and look at the number of Zen 4 systems being built ? And AMD doubling production in servers ? I will see when the Q3 report drops...
Cutting prices on AM4 might be part of it. OEMs buying cheaper processors might be part of it.
 

Saylick

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I'm guessing the majority of the revenue decline was OEM shipments; DIY and us enthusiasts only comprise a small portion of their client revenue. Even then, I'm sure the Osbourne effect had an impact on Zen 3 sales given that everyone was waiting in anticipation for Zen 4, and now that Zen 4 is out but the platform costs are high, I'm not even sure Zen 4 will save them.

If I were AMD, I'd divert as many Zen 4 CCDs to server as possible. There's only so much consumer demand you can prop up with discounts and incentives, but it'd be like pissing in the wind when the macro environment sucks. Might as well cater to the markets where demand is still relatively strong.
 

Markfw

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Not surprised at all. It's going to be a bloodbath in the hardware world. Lots of AMD/NV/Intel stuff is going to sit on shelves.
NOTHING has indicated a slowness for AMD servers, especially the doubling of output. That agrees with what we have heard before. AMD could not provide enough chips for server demand. And that is their most profitable line.
 

gdansk

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The economy is truly in a recession if even AMD's server business is cutting forecasts.

And no, I don't think it will lead to price cuts except where there is competition.
 
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Markfw

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Time for the doom song!




Eventually weak consumer demand will slow cloud expansion and other, you know, stuff. As for the topic of this thread, it may be that the expected 16% downturn is only for client/gaming.
Could that be OEM client/gaming ? I see no evidence here of DIY slowing.
 
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Joe NYC

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I'll add that my gut tells me that demand didn't fall off a cliff at all. Rather, what's fallen off a cliff is consumer patience with corporations price gouging and chasing profits. I think there's a ton of demand, especially from those who were priced out of the market during COVID craziness, for solid performance at a reasonable price. Consumers were screwed over the last two years, and now feel like they are owed a good deal. What the the market really wants right now is something that looks like a $250 7700X on a reasonably, if not aggressively, priced platform. If that's what AMD had delivered, then instead they might be scrambling for more N5 capacity to meet demand.
I think Europe being on the brink of economic meltdown, companies closing doors, unable to keep the lights on is much bigger problem as of right now than "price-gouging"

Even $250 today is equal to $225 just 12 months ago.

Most people just forgot to take inflation into account after nearly 4 decades of relative price stability.
 
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Joe NYC

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DisEnchantment

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Nah, it's doom prophet cuz it turns out doom. :smilingimp:
Well it seems to be more apt because we are heading towards Armageddon, financially and otherwise.

Good thing that might come of this is that your DIY transparent loop will have inbuilt Illumination without needing radium coatings.
No RGB needed, glows without power. Only small problem is that nobody might be there on social media anymore to like your content.
 

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