The semiconductor industry continues to choke on a mix of robust demand and constrained supply, and now a PC market slowdown is affecting almost every company’s bottom line, but it’s always sunny in Santa Clara, California, home of chip giant AMD, at least according to AMD CEO Lisa Su.
The company continued a string of strong quarterly earnings reports this week, saying that revenue for the first quarter of 2022 jumped 71% year over year to a record of $5.9 billion. That figure beat analyst estimates and AMD’s own first quarter outlook of around $5 billion in revenue, though part of the jump is tied to the recent addition of several new revenue channels via the acquisition of Xilinx, a deal which AMD closed during the first quarter.
Su said during AMD first quarter earnings call that the company benefited from six weeks of revenue from Xilinx during the quarter, amounting to about $559 million. “Excluding Xilinx, revenue grew 55% year over year to a record $5.3 billion, gross margin expanded 5 percentage points to 51% and operating income more than doubled to a record $1.6 billion,” she said.
Revenue rose across all segments, including client compute, cloud, enterprise and data center. Data center revenue now represents a “low 20s” percentage of AMD’s overall revenue, according to Su, who added that she expects AMD's recently announced acquisition of Pensando to further help the company's performance in this segment.
And AMD’s outlook suggests the good times will continue. The company expects revenue for the second quarter of around $6.5 billion, which would be a year-over-year increase of almost 70%. AMD also increased its already bullish outlook for full-year revenue from $21.5 billion–a figure that seemed to stun analysts when first mentioned during the company’s year-end 2021 earnings call–to $26.3 billion.
AMD seems to be skirting by every market pothole, if Su’s positive comments are to be taken as gospel.
Like other semiconductor industry leaders, she acknowledged that the PC market is slowing down after several quarters of robust growth during the pandemic, but the effect has been minimal. “There is some softness in the PC market,” she said, according to the Motley Fool earnings transcript. “But we had, for the last number of quarters, actually been shifting our mix to the higher end or the more premium segments of the PC market, and so that's where more of our exposure is.”
Su also acknowledged the ongoing chip and materials shortage and how recent lockdowns in China have exacerbated the situation, but even regarding this worldwide challenge, Su’s view of how AMD is navigating the environment stands in sharp contrast compared to the more concerned comments by Intel and others.
Su said AMD’s close collaborations with suppliers are helping. “That's one of the reasons we can increase our guidance the way it is,” she said. “You mentioned the China COVID situation [a reference to an analyst question that cted the lockdowns in China]. From our standpoint, we haven't had any significant impact on our own shipments in our own supply chain.”
Su added, “We have been working with some customers that have had some customer build delays and that is contemplated in our second quarter guidance. We're going to continue to work on supply optimization with the addition of Xilinx, some of the, let's call it, more mature nodes. 16-nanometer and above wafer supply is still somewhat constrained. We're working with sort of the larger scale of AMD to try to bring more supply on board there, as well as continuing to ramp our overall capacity to support a very strong next few quarters.”
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