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AMD revenue grows 99 per cent YoY driven by strong demand

by Mark Tyson on 28 July 2021, 10:11

Tags: AMD (NYSE:AMD)

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AMD has just published its Q2 2021 financial results. During the most recent quarter AMD's business "performed exceptionally well," asserted the CEO, and this is backed up by the figures – record quarterly revenue of US$3.85 billion, a figure representing a 99 per cent increase year-on-year. Importantly, in a conference call after the results, Dr Lisa Su told investors that despite the general semiconductor shortage, she believed AMD would continue to grow and gain share. Su expects the severity of the shortage to subside next year.

Above, you can see AMD's financial summary slide, which highlights the very impressive quarterly revenue growth YoY. Your attention is also drawn to the 48 per cent growth in gross margin, and record free cash flow of $888 million. AMD also breaks its financials down into two business segments: Computing and Graphics; and Enterprise, Embedded and Semi-Custom. Both business segments are doing extremely well. C&G driven by sales of Ryzen and Radeon chips to systems makers and DIYers – with higher average selling prices (ASPs) than ever before, EE&SC driven by Epyc processor sales for workstations, servers and so on, and sales of semi-custom chips to console makers.

Some highlighted developments in C&G are the recent announcement of the AMD Advantage Design Framework - mixing AMD CPUs and GPUs in modern laptops. In EE&SC AMD boasted of Tesla using its processors in new Model S and Model X vehicles, and of the custom processor which will drive the Valve SteamDeck.

In a post-earnings analyst call, Dr Lisa Su fielded some questions. Su indicated that AMD still has excellent growth potential in the coming quarters, despite the widely reported overall semiconductor industry shortage. She indicated that the shortages seemed to be easing, with a better landscape visible in 2022.

For the whole of 2021 AMD is now projecting revenue growth of 60 per cent, up from 50 per cent previously. Other important things to come were firmed-up, "We remain on-track to launch next-generation products in 2022, including our Zen 4 processors built with industry-leading 5nm process technology and our RDNA 3 GPUs," said Su. Last but not least, AMD's acquisition of Xilinx remains on track, with the deal expected to close before year-end.

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Posted by CAT-THE-FIFTH - Wed 28 Jul 2021 11:55
C&G driven by sales of Ryzen and Radeon chips to systems makers and DIYers – with higher average selling prices (ASPs) than ever before

Obviously helped by record price increases in their CPUs and GPUs?? So it tells me that even if production costs increased,etc the rate of retail price increases comfortably exceeded it. Expect even more price increases over time! ;)
Posted by kompukare - Wed 28 Jul 2021 12:55
CAT-THE-FIFTH
Obviously helped by record price increases in their CPUs and GPUs?? So it tells me that even if production costs increased,etc the rate of retail price increases comfortably exceeded it. Expect even more price increases over time! ;)

Yes, but they aren't addressing the whole market.

For GPUs they might reason that they have the consoles so developers will optimise for them. A bit complacent, but true.

For CPUs? Letting Intel have all the Celeron / Pentium / i3 market because it is not profitable enough? A very dangerous bit of complacency.

The last year was ‘special’ due wafer shortages, so it made sense to focus on getting the most out of each wafer.

Long-term? Those budget options are very important.

Designs and masks, etc. are fixed costs. So they really need volume even if that is at a lesser margin.

Artificially only addressing the high margin part of the market to look to Wall Street is very dangerous thinking.
Posted by philehidiot - Wed 28 Jul 2021 16:34
kompukare
Artificially only addressing the high margin part of the market to look to Wall Street is very dangerous thinking.

AMD have been doing that for a while. They had a strategy in GPU a while back where they identified the three most profitable areas and developed for those, leaving the halo products to Nvidia as they just weren't worth the R&D. It makes a lot of sense given their rapid expansion to target those immensely profitable areas first and then expand. Rather than trying to spread themselves thinly. Profitability breeds investment which gives the ability to spread out, but you have to maximise the potential of your smaller company before you can expand to compete.
Posted by kalniel - Wed 28 Jul 2021 19:41
kompukare
Artificially only addressing the high margin part of the market to look to Wall Street is very dangerous thinking.

Ah, yes, all those semi-custom chips for games consoles are famed for their margin ;)
Posted by CAT-THE-FIFTH - Wed 28 Jul 2021 19:56
kompukare
Yes, but they aren't addressing the whole market.

For GPUs they might reason that they have the consoles so developers will optimise for them. A bit complacent, but true.

For CPUs? Letting Intel have all the Celeron / Pentium / i3 market because it is not profitable enough? A very dangerous bit of complacency.

The last year was ‘special’ due wafer shortages, so it made sense to focus on getting the most out of each wafer.

Long-term? Those budget options are very important.

Designs and masks, etc. are fixed costs. So they really need volume even if that is at a lesser margin.

Artificially only addressing the high margin part of the market to look to Wall Street is very dangerous thinking.

They did the same during the Athlon 64 era to a lesser degree,so Intel kind of had a foothold in the market. Remember how they had socket 754,socket 939 and QuadFX?? ;)


kalniel
Ah, yes, all those semi-custom chips for games consoles are famed for their margin ;)

That is the thing though,to compensate for that they jacked up the pricing for consumer DIY parts. Another company did that for years too….Intel who were quite happy to give away billions of USD of Atom chips away,whilst tierising and charging for every feature on desktop/laptop platforms.

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