Subject: Editorial | January 30, 2019 - 09:19 PM | Josh Walrath
Tagged: Vega, ryzen, RX, quarterly earnings, Q4, Intel, EPYC, amd, 7 nm, 2018, 10 nm
Today AMD announced their earnings for Q4 as well as the annual results of 2018. The company had revenue of $6.48 B and a net income of $337 M. This is a pretty significant improvement from 2017 with revenues of $5.25 B and a net loss of $33 M. While Intel’s quarter and annual earnings dwarf what AMD has done, the company has improved its position financially. AMD’s guidance from Q3 earnings indicated that revenue would be down for Q4 as compared to the previous quarter, and results matched those expectations. Q4 revenue came in at $1.42 B with a net income of $38 M. This fell within the range of $1.4 to $1.5 that AMD was expecting. This is compared to the relatively strong Q3 which had revenues of $1.65 B and a net of $102 M.
Annually this is probably the best overall year since 2011 for AMD. The company looks to be running quite lean and has shown that it can achieve profits even in down quarters. It also helps that AMD has been able to get much better terms from GLOBALFOUNDRIES and has successfully amended their wafer agreement so that AMD can pursue manufacturing products at other foundries at 7nm without penalty or royalty payments to GLOBALFOUNDRIES. While GF’s sub 10nm development is now shuttered, the company will still be producing 12/14nm products which will include the upcoming I/O chiplets for use with the next generation Ryzen series as well as EPYC 2. The amended agreement sets purchase targets through 2021, but the agreement itself lasts through 2024.
The primary revenue driver for the company is of course the CPU and GPU markets. Ryzen has continued to provide strong numbers for AMD and has lead to greater numbers shipped as well as higher ASPs. Years of Bulldozer based parts eroded ASPs to nearly unsustainable numbers, but the introduction of Ryzen nearly two years ago has strengthened the foundation of the company and their revenue stream. AMD has reported no inventory issues with either leftover stock of the first generation Ryzen parts or the latest Ryzen 2000 series. There is some fluidity here as EPYC processors utilize the same dies (though more heavily binned) as well as the HEDT Threadripper CPUs that have become popular in workstation applications. Multiple products at a pretty extreme price range utilizing the same basic die is a pretty good way to avoid excess inventory issues, but it is a little scary if demand picks up in one of those areas and there are not enough chips to supply these multiple product lines.
GPUs are not in as good of shape as CPUs. The crypto boom was good for the GPU market, but as soon as that dropped then AMD was left with quite a bit of inventory and a much lower demand. This is partially offset by increases in sales of datacenter GPUs, but AMD looks to be trying to get of as much of this inventory before large scale production of Navi based parts goes into full swing. Current Polaris based parts are competitive for their price points and users can expect a very solid product for the market ranges they represent.