AMD again set a record for quarterly revenue, but the deficit does not promise to win

AMD again set a record for quarterly revenue, but the deficit does not promise to win

AMD has released financial results for the fourth quarter and for the entire last year, demonstrating unprecedented agility. Revenue increased in all columns of the report: the company strengthened its position both in the direction of customer products and in the segment of corporate, embedded and semi-custom solutions. As a result, AMD was able to report that its total quarterly revenue exceeded $ 3 billion for the first time.

AMD revenues for the fourth quarter of 2020 were $ 3.24 billion, which exceeds the result of the third quarter by 16%, and the result of the fourth quarter of 2019 by an impressive 53%. At the same time, AMD’s annual revenue for the entire 2020 reached $ 9.76 billion, improving the 2019 figure by 45%.

The main contributor to AMD’s revenues in the last quarter was the segment of client processors and graphics products. The quarterly revenue in this area is $ 1.96 billion, which speaks of an 18% growth both compared to the third quarter and the fourth quarter of 2019. Growth in this segment has been driven by outstanding sales of Ryzen processors. However, the increase in the share of mobile offerings in AMD’s sales has led to a slight decrease in the selling price of the average processor compared to a year ago. But the Zen 3 architecture began to smooth out this negative trend for the company, and in a quarterly comparison, the average selling price returned to growth.

In the server, embedded and semi-custom segment, where AMD includes not only EPYC processors, but also chips for game consoles, revenue for the fourth quarter reached $ 1.28 billion, which speaks of 13% growth from the last quarter. But if we compare this figure with revenue in the fourth quarter of 2019, then the growth will be 176%, which, as you might guess, is due to the release of a new generation of Microsoft and Sony game consoles. However, AMD also mentions new deals for the supply of EPYC processors, for example, for Alibaba, AWS and Oracle.

Naturally, during the quarterly report, the topic of deficit could not be ignored. According to the head of the company, Lisa Su (Lisa Su), underdelivery affects primarily products for gaming applications (CPU, GPU and console chips) and budget solutions. Demand here clearly exceeds supply, but the situation will not improve until TSMC has additional production capacities, which will have to wait at least until the middle of the year.

For the first quarter of 2021, AMD predicts retention of revenue at the taken level of $ 3.2 billion, and for the entire coming year the company plans to earn more than in 2020 by 37%. AMD believes that four factors should help achieve these targets. First, there is widespread adoption of the Ryzen 5000 mobile processors, which are already being used by laptop manufacturers twice as much as their predecessors at the time of their launch. Second, sales of Radeon RX 6000 series graphics solutions with the new RDNA 2 architecture will continue to grow in the first half of the year. Third, the upcoming release of Milan-generation EPYC processors in March. Finally, an increase in sales of semi-custom chips for game consoles in the first half of the year is predicted to be a somewhat unusual trend.

After the publication of the quarterly report, AMD stock price remained practically unchanged, as the results were fully in line with investors’ expectations. Intel shares also showed little reaction.

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