AMD posts record revenues thanks to strong demand and improved supply

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Due to its very strong portfolio of client and server processors as well as growing demand for PCs and servers, AMD has achieved 50% year-over-year revenue growth for five consecutive quarters. In the company’s third quarter of fiscal 2021, AMD was in a particularly good position as it managed to increase the supply of its latest high-demand products. As a result, the company posted its new record revenue.

(Image credit: AMD)

Another record quarter

In the quarter ended September 25, 2021, AMD earned $ 4.313 billion (up 54% year-over-year), which is more than AMD earned for the full year 2016. The company’s gross profit for the quarter was $ 2.086 billion, while its net profit reached $ 923 million, compared to $ 320 million in the same period. a year ago. AMD’s gross margin remained at 48%, while earnings per share reached $ 0.75.

“AMD had another record quarter, with revenue growth of 54% and a doubling of operating profit year-over-year,” said Dr. Lisa Su, President and CEO of ‘AMD. “Shipments of 3rd Generation Epyc processors increased significantly during the quarter as our data center sales more than doubled year over year. Our business accelerated dramatically in 2021, growing faster than the market thanks to our industry-leading products and consistent execution. “

(Image credit: AMD)

AMD’s cash, cash equivalents and short-term investments stood at $ 3.608 billion at the end of the quarter, up $ 1.837 billion year-on-year. With a lot of money in its pocket, AMD can invest in securing additional production capacity to support its long-term growth. In particular, the company has invested in packaging and testing facilities, as they are one of the main bottlenecks for the semiconductor industry today.

(Image credit: AMD)

Speaking of bottlenecks, it should be noted that AMD inventories at the end of the third quarter stood at $ 1.902 billion, which is the result of an improved offering by AMD’s partners and maybe a mixture of more expensive products.

“Our supply chain team performed extremely well in a challenging environment providing additional supplies throughout the year, supporting our strong sales,” said AMD CEO. “We are also making significant investments to secure additional capacity to support our long-term growth. “

IT and graphics company

(Image credit: AMD)

AMD complained that it could not meet demand for all of its products due to production constraints at subcontractors. As a result, the company must focus on the production and supply of high-end parts, such as high-end APUs and processors for commercial machines, games and workstations.

This policy paid off in the third quarter of 2021, as the company’s C&G business unit achieved net sales of $ 2.398 billion (up 44% year-on-year) as well as net profit of $ 2.398 billion (up 44% year-on-year). $ 513 million (up 34% year-on-year). AMD specifically noted that during the quarter it sold many Ryzen Threadripper Pro processors for workstations thanks to their unique combination of core count, memory support, and PCIe lane count.

“We are also seeing strong growth in the workplace,” said Su. “According to IDC, Ryzen Threadripper Pro processors are now powering the best-selling workstations in their class in North America and the EMEA region. “

AMD has also delivered its next-generation Instinct MI200 computing GPUs which will be installed in the future Frontier exascale supercomputer.

“Data center graphics revenues have more than doubled year over year and quarter over quarter, with shipments of our new AMD CDNA2 GPUs for their Frontier,” said Lisa Su.

Workstation processors and data center GPUs are expensive and come with a huge premium. AMD has therefore considerably increased ASPs and achieved record profitability for its C&G segment. Meanwhile, AMD admits that its fourth quarter data center GPU sales will be down sequentially as there are no longer any large customers to adopt CDNA 2 GPUs at this time.

AMD management also said it had increased unit shipments of its Radeon RX 6000 GPUs in the third quarter (which we will need to verify with independent analysts), which has also contributed to sales growth and the increase in ASPs (compared to the second quarter of 2021 and the third quarter of 2020). ). Over the past few weeks, AMD’s high-end Radeon RX 6900 XT and Radeon RX 6800 XT have become widely available from major retailers (albeit at high prices), so it looks like AMD is increasing shipments of its GPUs.

“Our RDNA 2 GPU sales increased significantly during the quarter,” said the head of AMD. “As we ramp up production and expand our portfolio from top to bottom with the launch of the mid-range Radeon RX 6600 XT cards […]. ”

Company, embedded and semi-personalized company

AMD

(Image credit: AMD)

AMD’s Enterprise, Embedded and Semi-Custom business unit achieved third quarter revenue of $ 1.915 billion, up 69% year-on-year and 20% growth in QoQ. The BU’s operating income reached $ 542 million, up 284% from the same period a year ago and 36% sequentially.

During the quarter, AMD 3rd Generation Epyc processor shipments exceeded the Company’s 2nd Generation Epyc processor sales, which clearly had a positive impact on Average Selling Prices (ASP) and profitability. of the society. To date, AMD partners have developed over 100 server designs based on Epyc 3rd Generation processors and as these designs increase, processor shipments will continue to increase.

“The 3rd generation Epyc processors continue to scale up faster than the previous generation and contributed the majority of our servers’ CPU revenue during the quarter,” said AMD CEO. “In the cloud, several hyperscalers have expanded their deployments of 3rd Generation Epyc processors to power their internal workloads, and Microsoft Azure and Google have both announced several new instances powered by AMD. CloudFlare, Vimeo and Netflix all recently announced new deployments powered by Epyc processors with Netflix highlighted. how they doubled their streaming throughput per server, while lowering their total cost of ownership. ”

Microsoft and Sony traditionally buy the most SoCs for their consoles in the third quarter in a bid to prepare for the holiday season. As a result, AMD’s EESC unit has driven growing demand for servers, the growing adoption of its latest Epyc 7003 series processors, and the seasonality that favors gaming consoles.

Interestingly, AMD expects its console business to grow further in the fourth quarter, a rather unprecedented turn of events that will further contribute to the EESC’s growth in the fourth quarter.

Outlook

As demand for PCs, servers and consoles remains strong and the supply situation improves, AMD is very optimistic about its outlook for the fourth quarter. The company expects its revenue to increase to $ 4.5 billion ± $ 100 million, an increase of about 39% from the fourth quarter of 2020 and a 4% increase from a quarter to quarter. AMD attributes its growth in the third quarter to growing demand for Epyc processors as well as SoCs for consoles. The company also expects its non-GAAP gross margin to be 49.5% in the fourth quarter of 2021.

AMD expects its revenue for the year to be around 65% higher than the previous year and to set a new all-time high.


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