The days of AMD loosing money and market share to their competitors, Intel and Nvidia might be a thing of the past. Despite falling short on revenue projections, AMD, unlike Nvidia, managed to meet earnings projections of 8% per share. This is all while predicting a stronger-than-expected 2019 in its guidance. This news resulted in AMD’s stock rising by about 10%. The company also announced that it had updated its Wafer Supply Agreement (WSA) with Global Foundries to more favorable terms.

AMD CEO

AMD’s 2018 revenue came in at $6.475 billion, a 23% year-over-year increment. Their overall 2018 results saw the company’s highest profitability since 2011! The good news was further augmented by a significant reduction to the debt they had.

Ryzen and Radeon

The fourth quarter was a key contributor to team red’s success in 2018 which increased 6% over 2017 to $1.42 billion. Almost all of it can be credited to the 50% YoY growth of Ryzen, with unit shipments of its desktop processors now making up 80% of its client compute sales. AMD CEO Lisa Su said the company expects Ryzen sales to improve by 30% next year along with a 50% increase in notebook sales, with the latter addressing a key pain point in the largest segment of the PC market.

AMD Epyc

The enterprise market wasn’t ignored either. AMD doubled its EPYC sales over the previous quarter, mainly to cloud compute platforms like Amazon & Azure, as it climbed to record revenue growth in its data center business. The improved EPYC sales, paired with the growth of Ryzen, contributed to a richer mix of products with high average selling prices. AMD CEO Lisa Su said that the company had an increased consumer & enterprise CPU market share in 2018.

Radeon Vega

However, like Nvidia, global GPU oversupply had a negative impact on their quarterly earnings, a problem to slide into the second quarter of 2019. The oversupply is a direct result of the downfall of the blockchain market. The company also isn’t projecting any meaningful blockchain-derived revenue in the near future. Unlike Nvidia, AMD’s CPU and GPU product lines protected them from being hit hard. They also noted that its 7nm Radeon Instinct GPUs are already enjoying a brisk uptake.

TMSC

Now to that aforementioned Wafer Supply Agreement. Global Foundries’ sudden exit from 7nm production earlier this year put AMD in a tough spot, as it had no choice but to source 7nm wafers from TSMC for its third-gen Ryzen and 7nm Radeon Instinct GPUs. The old WSA stated that in exchange for lower pricing, the WSA compels AMD to buy a certain number of wafers from Global Foundries each year, or face penalties.

Those penalties also apply if the company purchases wafers from another foundry. The new seventh amendment to the agreement guarantees that AMD will continue to purchase a pre-determined number of wafers from Global Foundries until 2021, but the agreement now only applies to 12nm and larger nodes. Meanwhile, AMD is free to source 7nm wafers from TSMC without penalty.

Source

Further reading:

Leave a Reply