Lisa Su, President and Chief Executive Officer of Advanced Micro Devices Inc. (AMD).
Bridget Bennett Bloomberg Getty Images
AMD And Intel They are fierce rivals in a tough chip market, but one has a brighter near-term outlook than the other. While Intel expects declines across the board, AMD’s data center business is growing with the introduction of a new chip, and its acquisition of specialty chip maker Xilinx is also helping growth during the pandemic.
On Tuesday, AMD said it expects sales of $5.3 billion in the March quarter, down 10 percent from a year ago.
That’s not a great outlook, but it’s much stronger than Intel’s guidance for the March quarter. Last week, Intel said it expected sales of about $11 billion, down 40 percent from last year.
Neither chip maker provided full-year guidance due to economic uncertainty. “We want to be obviously cautious this year given the macro environment,” AMD CEO Lisa Su told analysts on the company’s earnings call.
But the stock market reflects how the two companies diverge.
It fell more than 7 percent in extended trading after last week’s Intel report. AMD rose less than 2 percent after reporting earnings on Tuesday.
Both companies are facing a slump in the PC market after two years of high sales during the Covid pandemic, as people bought new computers for work or school from home.
AMD’s PC chip group revenue fell 51 percent year-over-year in the fourth quarter. Intel fell 36 percent, but from a larger base. Overall, AMD CEO Lisa Su said on Tuesday that she expects the total PC market to decline by 10 percent in 2023, but said that AMD actually gained market share in the fourth quarter.
“It’s fair to say that we believe the first half will certainly be lower given the level of customer inventory. We expect it to improve in the second half,” Su said.
When it comes to data center chips, companies diverge dramatically.
Intel’s data center group sales fell 33 percent to $4.3 billion from a year ago, in part due to the late release of its latest server chip family, the Sapphire Rapids.
AMD’s data center business is growing strongly, however, up 42% year over year to $1.7 billion. AMD released its latest data center chips, the fourth-generation Epyc processors, in November. AMD expects its data center business to grow this year while PC chips and gaming GPUs decline.
AMD’s data center business is also facing tough macroeconomic conditions, but on Tuesday, Sue signaled to investors that its gains will come at the expense of Intel.
“In the Embedded and Data Center segments, we believe we are well-positioned for revenue growth and share gains in 2023 based on the strength of our competitive position and leadership,” Su said.
AMD also succeeded in acquiring Xilinx in 2020 for $35 billion. Xilinx, which makes processors that perform specialized tasks such as encoding or video compression, was the main contributor to AMD’s $1.4 billion in embedded sales, which the company said were up 1,868 percent year over year.
