AMD CEO: Our CPUs gained market share over past 5 quarters
Su said that Santa Clara, California-based AMD has gained share against its big rival Intel with its Zen-based architecture, which handle 52 percent more instructions per clock cycle than the previous generation. Since March 2017, AMD has introduced 10 different families of chips based on the Zen architecture across the Ryzen PC, Ryzen Mobile notebook, Ryzen Threadripper gaming processor, and Epyc server brand names.
“Our new products gained share and significantly expanded gross margin, leading to our most profitable year since 2011,” Su said. ”
AMD’s market share has historically been small in x86 processors, but it has grown. Market researcher Mercury Research said that AMD’s third quarter 2018 market share for x86 processors (for personal computers) was 10.6 percent, compared to just 8 percent in the fourth quarter of 2016. That may not sound like much of a gain, but it’s the main reason AMD reported revenues of $6.28 billion in 2018, up 23 percent from a year earlier.
But Su acknowledged “near-term graphics weakness,” as demand for graphics processing units (GPUs) has stalled for multiple reasons. AMD has said that the single-digit revenue share of GPU sales related to cryptocurrency has disappeared in recent months. But AMD is also lagging behind Nvidia in shipping new 7-nanometer GPUs. AMD has been shipping mid-range GPUs, which have been piling up in inventory during the past quarter due to the crypto bust. In Q4, crypto-related GPU revenue was “negligible,” AMD said.
Above: AMD introduced the third-generation of Ryzen chips, for shipment in mid-2019.
But AMD will begin shipping its first 7-nanometer GPU, the Radeon VII, in the first quarter, starting February 7. That chip won’t go head to head with Nvidia’s real-time ray tracing chips, dubbed RTX, and so AMD has priced its chip below Nvidia’s. On the other hand, Nvidia said it had lower initial demand for the RTX chips in part because few games are using it now.
As AMD ramps the 7-nanometer GPUs and its 7-nanometer processors, dubbed Ryzen 3 and the “Rome” version of Epyc, the company expects to see solid growth in 2019, Su said. She said Rome remains on track for shipment at mid-year. She also noted AMD’s Epyc wins with customers such as Microsoft Azure, P&G, the University of Stuttgart, and Lawrence Livermore National Labs.
“We feel very good about the competitive positioning of Rome,” Su said.
Earlier today, AMD said revenue was up 6 percent from a year ago to $1.42 billion, slightly off from expectations, while earnings per share were 8 cents, about flat compared to a year ago. In after-hours trading, AMD’s stock price was up 3.5 percent.
For the first quarter ending March 31, AMD expects revenue to be $1.25 billion and non-GAAP gross profit margin to be about 41 percent, or the same as in the fourth quarter. For the full year, AMD expects single-digit revenue growth for revenues, and that non-GAAP gross profit margin will be more than 41 percent. AMD said that it expects “continued softness” in the graphics channel and seasonality across businesses in the first quarter.
“After coming off of what I considered a successful CES 2019 showing headlined by CEO Lisa Su, today AMD announced its Q4 2018 earnings, full-year 2018 results, and forecast,” said analyst Patrick Moorhead at Moor Insights & Strategy, in an email. “Unlike some of the other earnings announcements we have seen so far, AMD appears to have bucked many of the trends like China and purchase pauses impacting other earnings announcements….No longer are we asking if ‘AMD will survive’ or ‘if AMD will be back.’ AMD is back for a while and now it’s up to AMD to prove it has staying power.”
Above: Radeon VII announcement at CES 2019
AMD’s rivals Nvidia and Intel reported weaker-than-expected quarters for the end of the year. Intel hit its Q4 profit targets, but revenue was lower than predicted, due in part to PC chip shortages and lower data center demand.
(Nvidia formally earnings on February 14, but it preannounced weak results on Monday). Nvidia was hampered by the cryptocurrency bust, which has decreased demand for GPUs for crypto mining, as well as weaker-than-expected demand for gaming GPUs such as its new RTX cards. Data center demand was also weak for Nvidia.
But Su said that CPU and GPU-related data center revenue has grown meaningfully. PC client CPU shipments grew more than 50 percent in Q4 compared to a year earlier. At CES 2019, the big tech trade show in Las Vegas in early January, Su said that Acer, Asus, Dell, HP, Huawei, Lenovo and Samsung all launched notebooks powered by AMD’s new second generation Ryzen Mobile processor with Radeon Vega graphics.
She said the number of new Ryzen systems will increase 30 percent in 2019 from 2018, with the number of Ryzen laptops increasing in 2019 by more than 50 percent over 2018.
Su said that Google had chosen AMD’s Radeon GPUs for the cloud-based platform, Project Stream, which enables players to tap the cloud to play high-performance games on any device. AMD is planning to introduce next-generation “Navi” GPUs later in the year.
Bob Swan, acting CEO of Intel, said in the company’s recent earnings call, “We’re going into 2019 with every expectation to compete to protect our share position across our entire business. So we’re going to – we’re obviously investing in the capital required to ensure we don’t constrain customers’ growth. We’re continuing to invest in R&D. And third, we’re going to invest to protect our competitive position both on the PC side and the data-centric side.”
He added that he expects “supply-demand balance to improve by mid-year.”
As for CPU shortages that hampered Intel, Su said that has been at the low end of the market. But AMD is focused on high-end Ryzen processors, she said. She expects channel softness for GPUs to start clearing up in the second quarter.
“From my view, the shortages are temporary,” Su said. “But we see this as consistent share gain. We believe we gained share in the fourth quarter too.”
On the semi-custom chip side, Su said AMD customers Microsoft and Sony have now shipped more than 120 million consoles.
AMD has roughly 10,000 employees.
