AMD said it nearly doubled its revenue for 2021’s first quarter over the same period last year due to fast-growing sales of the chipmaker’s Ryzen and EPYC processors – a sign that the company’s momentum against x86 rival Intel isn’t letting up.
The company’s stock price was up roughly 3.8 percent in after-hours trading Tuesday following the release of its first-quarter financial report. The company said its revenue that quarter, which covers sales from January to March, grew 93 percent year-over-year to US$3.4 billion, beating Wall Street’s expectations by US$270 million. Its net earnings were 52 cents per share, 8 cents higher than what Wall Street analysts were hoping for.
The first-quarter momentum prompted AMD to increase its forecast for full-year revenue growth to 50 percent from the 37-percent figure it gave in the previous quarter.
Lisa Su, AMD’s CEO and president, said on the company’s earnings call that it has “entered a high-performance computing megacycle with the strongest products and deepest customer relationships” in the chipmaker’s 51-year history.
She said AMD’s client CPU revenue, which includes its high-end Ryzen brand, is “growing significantly faster” than the PC market as demand for new computers remains strong. That fast growth, which helped AMD’s Computing and Graphics segment increase revenue by 46 percent year-over-year, led the company to believe it has gained client CPU market share against Intel, according to Su.
AMD has seen a groundswell of support in the ultra-thin, gaming and commercial PC market segments, with sales of premium PCs driving the company’s CPU revenue share to double over the last two years, the CEO added. In the commercial segment, Su said, the chipmaker’s Ryzen Pro processors grew in the “strong” double digits from the previous quarter, thanks to “high-volume wins” from Fortune 500 companies across the aerospace, automotive, electronics and engineering verticals.
On the data centre side, Su said AMD set another record for EPYC server CPUs, with sales more than doubling from the same period last year. That, along with strong sales for semi-custom products powering the new Xbox and PlayStation consoles, drove a 286 percent year-over-year increase in revenue for AMD’s Enterprise, Embedded and Semi-Custom segment.
While AMD’s new third-generation EPYC CPUs “successfully ramped into production across multiple cloud and enterprise customers,” Su said, first-quarter data centre sales were more weighted to the company’s second generation of EPYC, which is still satisfying the needs of many workloads. This is a different dynamic from when first-generation EPYC customers simply upgraded to the second generation, she added.
“We would expect by the third quarter that it would cross over and [third-generation EPYC] Milan would perhaps be higher than [second-generation EPYC] Rome,” Su said. “Now obviously, these things change a little bit as customers go through their ramps, but that’s sort of what we see.”
Su said AMD’s improved full-year revenue forecast reflects improved supply and visibility with customers for the company’s products. However, she added, the company is continuing to deal with supply constraints, which are reflected by low inventories across the entire channel, as the semiconductor industry deals with broader shortages.
“There’s plenty more that we would like to do to get more capability in the supply environment, and so we’re working closely with our partners across the board,” Su said.
AMD saw momentum with its graphics products, with revenue growing in the double digits year-over-year on the client side and data centre GPU revenue also growing over the same period, he said.
“We are making great progress on our data centre GPU roadmaps and expect revenue to grow in the second half of the year as we begin the production ramp of our next-generation AMD Instinct GPU to support multiple HPC wins – including Frontier, the first U.S. exascale supercomputer,” Su said.
On the earnings call, Su faced questions from multiple analysts about the rise of companies, both competitors and customers, using or designing Arm-based processors that are challenging AMD and Intel on performance and total cost of ownership.
Su said it’s expected that more players are entering the computer chip space as workload optimization becomes more important. But she added that the company feels very confident about its future roadmap and its ability to remain competitive.
“Our focus is to continue to optimize solutions across the data centre and across the PC ecosystem [and] make sure that what we have is very competitive addressing what customers needs are,” she said.
Marc Fertik, vice president of technology solutions at Ace Computers, an Elk Grove Village, Ill.-based system builder that sells Intel- and AMD-based systems, told CRN that the data centre and HPC segments are seeing more interest in AMD-based solutions largely because of EPYC’s high core counts and PCIe 4.0 industry-first support.
However, Fertik added, he expects Intel’s new third-generation Xeon Scalable processors, code-named Ice Lake, to put a dent in AMD’s EPYC momentum because its improved core counts and PCIe 4.0 support will put Intel closer to feature parity with AMD when the semiconductor giant’s server chips become generally available soon.
“Intel’s trying to get back to a level-playing field, so once they prove they have availability and prove we can configure it competitively, it will be more of a horse race again,” he said. “It hasn’t been a horse race for a year. I think that we will see it balance it out, and people will be less reluctant to switch [to AMD] once Ice Lake is [available].”