A Persistently Weak PC Market Prompts AMD To Miss Forecast, Shares Decline

The chipmaker Advanced Micro Devices estimated quarterly revenues below projections due to a sluggish PC market on Tuesday, overshadowing the company’s hope that the chip industry would start to recover in the second half of 2023.

Sales of PC and data centre chips for the first quarter were again below analyst expectations, and the company’s shares dropped more than 6% in extended trade.

Contrastingly, shares of rival Intel Corp. increased by about 3% in extended trade. Last week, Intel predicted that the PC market would begin to recover in the second half, increasing Intel’s margins along the way.

After Intel put off ramping up the shipping of Sapphire Rapids, its most potent data centre processor chip code, for more than a year, analysts watched AMD gain market share in the data centre. However, some analysts claimed AMD was now stalling.

“I think AMD’s days of taking large swaths of share will likely be over, and it will probably see a more aggressive market for data center competing with Intel,” said Anshel Sag, analyst at Moor Insights & Strategy. “AMD has great products in data center, but Intel still has a lot of customers who are still using Intel and deep (customer) relationships.”

Nevertheless, AMD CEO Lisa Su told investors during a conference call that the PC market and the company’s PC business had reached a bottom in the first quarter.

“We remain confident in our ability to grow in the second half of the year,” she said.

Su claimed that the MI300 processor, which will compete with Nvidia Corp.’s top artificial intelligence chips, will contribute to some of that increase. Su reported a rise in consumer interest in the semiconductor.

“We do believe that we will start ramping revenue in the fourth quarter with cloud AI customers, and then it’ll be more meaningful in 2024,” Su said. “Success for us is having a significant part of the AI overall opportunity,” she added.

The majority of the AI market is dominated by Nvidia, and analysts think that it will continue to keep that position.

“We believe MI300 will be used primarily on special projects or on a case-by-case basis,” said Summit Insights Group analyst Kinngai Chan, adding that the MI300 is likely to be inferior to Nvidia’s latest H100 data center chip for large language model applications, such as ChatGPT.

AMD projected revenue for the current quarter of $5.3 billion, plus or minus $300 million. Refinitiv’s poll of analysts found that they predicted $5.48 billion in sales.

In contrast to expectations of $5.30 billion, revenue for the first quarter of the fiscal year that started on April 1 came in at $5.35 billion.

(Adapted from MoneyControl.com)


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