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AMD Registers Highest Ever Quarterly Revenue in Q2 2022

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AMD Registers Highest Ever Quarterly Revenue

AMD registered its highest ever quarterly revenue in Q2 2022 at $6.6 billion with 70% YoY growth.

  • The growth was driven by the company’s data center and embedded segment.
  • The gross margin was down 140 bps YoY at 48% due to the amortization of the assets acquired from Xilinx.
  • AMD completed the $1.9-billion acquisition of Pensando Systems during the quarter to complement its data center product portfolio with a high-performance data processing unit (DPU) and software stack.
Source: Counterpoint Estimates, Company Earnings

Segment reporting

  • Revenue for the data center segment was $1.5 billion, an increase of 83% YoY due to strong support from EPYC processors and lack of competitive products.
  • Client segment revenue stood at $2.2 billion, an increase of 25% YoY due to focus on premium notebook portfolio and higher ASP for processors.
  • Gaming segment revenue was $1.7 billion, a 32% YoY increase driven by semi-custom chips for console sales. Gaming graphics revenue declined due to consumer inflationary pressure.
  • Embedded segment revenue was $1.3 billion, up 2,228% YoY due to the inclusion of Xilinx’s embedded revenue.
Source: Counterpoint Estimates, Company Earnings

 

Data center segment

  • The revenue growth came from the mainstream adoption of EPYC processors across cloud service providers and enterprises.
  • The company also launched first ever cloud-based software-as-a-service solution for chip design for Microsoft Azure and Synopsys by deploying Milan-X and 3D-stacked chiplets.

Outlook

  • The company is committed to its next-generation chipsets roadmap of launching Genoa, which will be fabricated using TSMC 5nm, in Q3 this year.

Client segment

  • The company delivered sequential growth for the ninth quarter straight due to its focus on the premium notebook processor portfolio.
  • Consumer OEMs launched ~300 designs while ~50 product launches were made on Ryzen-based systems for the enterprise segment.

Outlook

  • The company is committed to its next-generation chipsets roadmap of bringing 5nm Ryzen 7000 desktop processors and AM5 platforms in Q3.

Gaming segment

  • The company managed to deliver growth for the segment, which was facing inflationary headwinds, driven by semi-custom console growth.

Outlook

  • The company plans to launch in Q3 a high-end RDNA gaming GPU fabbed at 5nm and aiming to provide a 50% improvement in performance per watt.

Embedded segment

  • The Xilinx acquisition proved to be the segment’s star as FPGA and custom compute remained in demand. Mission critical nature of the products helped in sailing through the economic headwinds.
  • Industries: Communications emerged as the leader due to higher demand in the wired segment from multiple Tier 1 system vendors, while demand in the wireless segment was driven by multiple ramp-ups of ORAN deployments in North America.
  • Embedded CPU revenue grew significantly in the quarter due to higher automotive sales and the product ramp of new networking and storage design wins.

Q3 2022 outlook

  • The revenue is expected to be ~$6.7 billion, an increase of around 55% YoY, primarily supported by the data center and embedded segments.
  • PC segment will decline 13-15% due to inflationary pressures and tightening consumer spending.
  • Data Center and Embedded to deliver growth due to product ramps after suffering supply constraints earlier this year.
  • Gaming business to decline from graphics revenue perspective but console business to provide the strength

Akshara Bassi

Akshara Bassi is a Senior Research Analyst with Counterpoint Research based in India with primary focus on Global Cloud & Server Markets. She has more than five years of work experience in market research and strategy consulting focusing on digital transformation and new market opportunities. She has worked across Semiconductor, Aviation & FMCG industries. She holds a Masters in Business Administration from MDI Gurgaon, Masters in European Business from ESCP Paris and Bachelors in Electrical & Electronics Engineering from Panjab University.
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