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Advanced Micro Devices, Inc. (AMD) Q4 2022 Earnings Call Transcript

Daniel Nenni

Admin
Staff member
It is interesting to compare and contrast it with the Intel call. Nvidia is next.

AMD was in a similar position as Samsung and Intel Foundries against TSMC. AMD for the longest time depended on the NOT Intel business. Customers that wanted to keep the Intel monopoly in check by having a viable alternative. Now AMD is beating Intel for the Most Competitive Chip business and no AMD is not in Intel's rear view mirror. :ROFLMAO:

It is interesting to note that AMD did not once mention TSMC, process nodes etc.... in the opening like Intel did because as we know having the best process does not always mean you get the best chip.

Interesting clips:

2022 was a strong year for AMD as we navigated the challenging macro environment to deliver best-in-class growth and record profitability driven by our Embedded and Data Center segments. We also transformed the company. We accelerated our Data Center business and closed our strategic acquisitions of Xilinx and Pensando, significantly diversifying our business and strengthening our financial model as our Data Center, Embedded product sales grew from $3.9 billion in 2021 to $10.6 billion in 2022.

Fourth quarter revenue increased 16% year-over-year to $5.6 billion, driven by significant growth in our Embedded and Data Center segments which accounted for more than 50% of overall revenue in the quarter.

On a full year basis, we grew annual revenue 44% to $23.6 billion. We set annual records for revenue, gross margin and profitability driven largely by a 64% increase in our Data Center segment revenue and the strong performance of our Embedded segment following our Xilinx acquisition.

Turning to the fourth quarter business results, starting with our Data Center segment. Revenue increased 42% year-over-year to $1.7 billion, led by increased adoption of our EPYC processors by cloud providers.

2022 was a very strong year for AMD. We had a record revenue, gross margin, profitability, and we generated significant free cash flow. The year was also highlighted by our strategic acquisitions of Xilinx and Pensando, expanding and diversifying our business portfolio. (GO XILINX!)

Now turning to our reportable segment for the fourth quarter. Starting with the Data Center segment. Revenue was $1.7 billion, up 42% year-over-year, primarily driven by strong growth in third-generation EPYC server processor revenue and the early ramp of fourth-generation EPYC processors.

Data center operating income was $444 million or 27% of revenue compared to $360 million or 32% a year ago. Higher operating income was driven primarily by stronger revenue, partially offset by higher R&D investment to support the top line revenue growth.

Client segment revenue was $903 million, down 51% year-over-year due to reduced processor shipments resulting from a weak PC market and significant inventory correction across the PC supply chain. Client operating loss was $152 million compared to operating income of $530 million a year ago or 29% of revenue, primarily due to lower revenue.

Gaming segment revenue was $1.6 billion, down 7% year-over-year due to lower gaming graphics revenue, partially offset by higher semi-customer product sales. Gaming operating income was $266 million or 16% of revenue compared to $407 million or 23% a year ago. The decrease was primarily due to lower graphics revenue.

Embedded segment revenue was $1.4 billion, up $1.3 billion from a year ago, primarily due to the inclusion of Xilinx Embedded revenue. Embedded operating income was $699 million or 50% of revenue compared to $18 million or 25% a year ago, primarily driven by the inclusion of Xilinx.

 
I'm kind of shocked their Q4 client was in the red this quarter. Even with inventory corrections, it is hard to imagine that ~80mm^2 N7 plus GF io die was being sold for a loss even at the blowout pricing we have seen over Q4. Same with the price correction for zen4 over the holidays. Maybe their cost of sale in laptop is really high as they try to get more design wins? Otherwise about what we should have expected, down quarter; but not nearly as painful as intel.

It is interesting to note that AMD did not once mention TSMC, process nodes etc.... in the opening like Intel did because as we know having the best process does not always mean you get the best chip.
Absolutely; although it does certainly help.
 
I agree. Intel used its process advantage for years successfully, especially in server CPUs.

Agreed, but now that Intel and AMD are using comparable processes, and possibly the same process, it is all about design. That may change at 18A / N2 but until then design wins and AMD is back in the game.
 
I'm kind of shocked their Q4 client was in the red this quarter. Even with inventory corrections, it is hard to imagine that ~80mm^2 N7 plus GF io die was being sold for a loss even at the blowout pricing we have seen over Q4. Same with the price correction for zen4 over the holidays. Maybe their cost of sale in laptop is really high as they try to get more design wins? Otherwise about what we should have expected, down quarter; but not nearly as painful as intel.


Absolutely; although it does certainly help.

Customers care about products, designs, features, availability, performance, and cost. Intel Foundry needs the best equipment but Intel Processors need the best design engineers. Without competitive products, Intel will be forced to do downsizing.
 
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