AMD Conference Call CEO Prepared Remarks

AMD's CEO, Dr. Lisa Su, started the financial call with the following report:

2019 marked another major milestone in our multi-year journey. We delivered record annual revenue of $6.73 billion and significantly increased both gross margin and net income as we successfully introduced and ramped the strongest product portfolio in our 50-year history. We grew client and server processor annual revenue by $1.5 billion in 2019, driven largely by the strong demand for our 7nm Ryzen and EPYC processors powered by our “Zen 2” processor core. Looking at the fourth quarter, we ended the year very strong with quarterly revenue increasing 50 percent year-over-year to a record $2.13 billion while also significantly increasing net income.

Computing and Graphics Segment

Fourth quarter revenue increased 69 percent year-over-year to $1.66 billion. Ryzen processor adoption accelerated sharply in 2019, helping to drive significant double-digit percentage increases in client processor annual unit shipments, ASP and revenue. We ended 2019 with our highest quarterly client processor unit shipments in more than six years based on strong demand for Ryzen desktop and mobile processors. In desktop, we had a very strong holiday period as our 2nd and 3rd generation Ryzen processors consistently held top sales spots at the largest global etailers and retailers. We launched our Ryzen 3950X processor and the 24 and 32 core versions of our 3rd generation Ryzen Threadripper processors in November. Our 16-core Ryzen 3950X processor is the world’s fastest mainstream desktop processor, while our latest Threadripper CPUs offer unmatched performance for the high-end desktop market. In January, we expanded our leadership position in the HEDT market with the launch of our flagship 64-core Ryzen Threadripper processor which is the world’s highest performance desktop processor.

In mobile, we had our eighth straight quarter of strong double-digit percentage year-over-year revenue growth as we expanded the number of AMD-powered laptops available from major OEMs. We began shipping our Ryzen 4000 mobile processors powered by our “Zen 2” core at the end of the fourth quarter. These new processors double the performance-per-watt of our prior generation and deliver leadership single threaded, multithreaded and graphics performance for thin and light notebooks, while enabling the industry’s first ultrathin laptops with 8 cores. Initial systems featuring the Ryzen 4000 processors are expected to launch later this quarter and more than 100 AMD-based consumer and commercial laptops are planned for 2020 from Acer, Asus, Dell, HP, Lenovo and other major OEMs.

In graphics, fourth quarter unit shipments grew by a strong double-digit percentage year-over-year, driven by sales of our Radeon RX 5000 series GPUs featuring our new RDNA architecture. We further expanded our portfolio of RDNA GPUs with the introductions of the 5500XT and 5600XT desktop graphics cards, highlighted by strong third-party reviews that clearly establish the 5600XT as the most powerful gaming GPU available for under $300. We launched our RadeonTM 5000M mobile GPUs in the quarter as well, and we are seeing solid design win momentum based on their strong performance and power efficiency. The first laptops powered by the new GPUs are available now – including the recently updated Apple MacBook Pro – and we expect many more notebooks featuring our Radeon 5000M GPUs to launch throughout 2020.

Data center GPU revenue increased sequentially driven by cloud VDI and game streaming deployments. We announced a major update to our open source GPU computing software stack in the fourth quarter featuring performance optimizations, expanded development tools and support for the most popular machine learning frameworks. We continue making strategic software investments to make it easier for developers to tap into the full capabilities of our Radeon Instinct accelerators for HPC and AI applications. For the year, data center GPU revenue grew by a strong double-digit percentage as we continued to make progress growing our presence in this important part of the market.

Enterprise, Embedded and Semi-Custom Segment

Revenue of $465 million increased 7 percent year-over-year as EPYC processor revenue growth offset declines in semi-custom revenue. Semi-custom sales continued to soften in the quarter in advance of the next-generation console launches from Sony and Microsoft planned this year. For 2020, we expect first quarter semi-custom revenue to be negligible and the ramp of next-generation semi-custom products to start in the second quarter with revenue to be heavily weighted towards the second half of the year.

In server, revenue grew by a strong double-digit percentage as unit shipments and ASP increased sequentially driven by demand for our 2nd Gen EPYC processors. Our 2nd gen EPYC processors are ramping significantly faster than the first generation as we see particularly strong pull for our higher core count models where our performance and TCO advantages are the most significant. Cloud adoption with the largest providers continues to accelerate, driven by the expanding use of EPYC processors to power their critical internal workloads as well as a significant increase in the number of AMD-powered instances publicly available. Shipments to cloud providers increased sequentially by a significant double-digit percentage to support expanding buildouts at Amazon, Google, Microsoft, Oracle and Tencent. Microsoft announced the availability of four new virtual machines and AWS announced two new EC2instances powered by 2nd Gen EPYC processors. In the enterprise, Dell began shipping their full portfolio of servers powered by our latest EPYC processors. We have doubled the number of EPYC processor platforms in market to more than 100 offerings in the quarter. These new platforms are driving increased enterprise customer engagements, broadening our sales pipeline considerably. In HPC, we secured multiple large wins in the quarter based on our unmatched performance and scalability, highlighted by French, German and UK national supercomputing center deployments as well as the San Diego Supercomputing center.

We are pleased with the significant traction and momentum in our server business and remain on track to achieve our goal of double-digit percentage unit share by mid-year based on the growing demand for our 2nd Gen EPYC processors.

Summary

I am very proud of our 2019 accomplishments as the successful ramps of our latest Ryzen, Radeon and EPYC processors resulted in record annual revenue and substantial increases in gross margin and net income. I want to take a moment to recognize the more than eleven thousand AMDers around the world whose focus and determination enabled us to achieve these results.

We enter 2020 well positioned to continue gaining share across the PC, gaming and server markets based on having an unmatched portfolio of leadership products spanning from desktops to laptops, data centers and game consoles. With more than twenty 7nm designs in production or development, we are very excited about our next wave of products that can accelerate our growth in 2020 and beyond.

We are still in the early stages of our journey and remain focused on meeting our commitments as we establish AMD as the high-performance computing and graphics leader.

AMD's FY2019 Financial Report AMD Conference Call CFO Prepared Remarks
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  • alufan - Wednesday, January 29, 2020 - link

    if your old enough to remember AMDs 64 bit chips wiped the floor with Intel for a while and they got very rich very quick and like Intel at the moment probably had a few years of complacency, Intel brought out core2duo and it literally put AMD in the doldrums for a good 10 years and with the added efforts of ATI which they bought meant cuts, nil budgets etc to the point they bled cash for years, but remember they were cash rich FABs etc just like Intel, this Ryzen generational step may well be the equivalent blow to Intel from AMD but I doubt it Intel is more diverse, it will however have a significant effect in the next year or so especially when the Commercial markets start to move over which they will. Reply
  • supdawgwtfd - Wednesday, January 29, 2020 - link

    Intel got into big trouble during that time for screwing AMD over too don't forget.

    AMD did not in fact make as much money as they should of.
    Reply
  • Spunjji - Thursday, January 30, 2020 - link

    When was that ever in doubt? :) Reply
  • Vesperan - Wednesday, January 29, 2020 - link

    "Yes. In 2019, we launched our new architecture in GPUs, it's the RDNA architecture, and that was the Navi based products. You should expect that those will be refreshed in 2020 - and we'll have a next generation RDNA architecture that will be part of our 2020 lineup"

    So - expect the 5500/5600/5700's to become a rebadged 6500/6600/6700's - with a RDNA2 Radeon RX 6900 XT on top?

    I love AMD, but Polaris was used for a long while - so can we assume the current Navi chips will be too?
    Reply
  • Spunjji - Thursday, January 30, 2020 - link

    That's what I took from it. I don't think AMD's current chip design strategies can facilitate top-to-bottom product refreshes anymore. It'll be interesting to see whether that changes as their financial situation improves. Reply
  • ksec - Wednesday, January 29, 2020 - link

    This is a much better Report than the usual one from Anandtech, I was wondering. Turns out it was Dr. Ian doing the wonderful work!

    On the report itself. I am not happy with this performance. But this also shows how small is the "prosumer market ". Most of it are now in Server, Notebook, And Business Desktop. All of these are Long term contract and lock down as explained. But AMD are not hammering hard enough. On the other hand I think as much as I hate Intel they are defending those ties pretty damn well.
    Reply
  • TheJian - Wednesday, January 29, 2020 - link

    I believe the highest quarter on record for margin was 56.8 or 58.6%. IIRC it's either 2001 or 2005/2006. They made about a billion that year.

    AMD made about a billion NET that year IIRC. That was back when they knew how to PRICE a winner. Currently the company is run by idiots that do not know how to take advantage of winning products, no competition, less watts/heat. Pricing at anything more than 10% discount is retarded (you are winning for crying out loud) and even pricing at exactly the price of the other guy is questionable when they other guy is facing shortages and fab problems.

    As a stock I just dumped ALL AMD, as it is priced for perfection, which currently would be somewhere between 1.2-1.6B. That is NET INCOME for the Q, not revenue! So yeah, SELL. I did Friday...LOL. Predicting a wishy washy year is also down to BAD MANAGEMENT. You priced your entire year for failure and well, you have it. We should be seeing 1B net income Q's every Q with 15% more silicon (heck should see that TODAY and 2B net income Q's if that 15% is really going to double AMD's silicon at tsmc). They booked the entire extra 30,000 wafers per month TSMC will have supposedly. Currently 110K wafers and AMD is 4th out of top 5 customers. I can't see how AMD would be over 30K already (not with apple, HS, and Qcom in front of them), so that should mean doubling (more actually by far at TSMC it seems) of AMD's silicon pool from TSMC right? No too much coming from GF these days, so that should allow AMD to double revenue (easily) if you are using that silicon to attack HIGHER margin stuff and pricing them correctly to begin with.

    AMD will get punished for this Q as they should, and for bad year predictions. You should be predicting double revenue by xmas 2020 or you are just stupid with pricing. That is why analysts are pissed. How can you NOT guide UP massively with an intel shortage and products that anyone with a brain wants vs. Intel, and no end in sight for the fab lead for AMD now. TSMC 5nm is on track (better than 7nm track), so nothing will change for Intel until tsmc 3nm maybe. Someone please explain why they are NOT making 1B a quarter with all this data? You are dumb AMD.

    "DK: I don't think I've actually said that - I said some of our graphics products are below corporate average from a gross margin standpoint, in addition to the semi-custom have been below average."

    You're fired.

    "As it relates to the pricing environment, we're expecting a competitive pricing environment, and that's the way we built our model. We've always expected that the competition will be very aggressive on both the CPU as well as the GPU side - that is part of the inherent model or for the company."

    LOL, you're fired. YOU made the price environment suck by starting a war that caused both Intel and NVDA to drop pricing immediately, instead of higher pricing that would have caused them to sit and wait to see how many you would take in sales, THEN respond with price cuts IF NEEDED. YOU, however, chose to price so low EVERYONE had to CUT in most cases even before you launched! That is Fing stupid on it's own, never mind doing it in a shortage of silicon...holy cow you are dumb! YOU ARE FIRED. I couldn't fire you so I fired your stock. I could point out even more stupid comments and excuses (silicon going to barely double digit margin products, fing stupid if that silicon could sell in a 1000% margin server chip!) but nobody at AMD is listening anyway. Avoid the stock until they pull their head out of their butts and price what the market will BEAR, not their dumb models. Jeez, did they hire climate change people to predict pricing? We know they can't predict today's weather, let alone 10-50yrs from now...LOL. Do I sound angry? HEH. Yeah, I'd like AMD to act like a real company that is working for shareholders. Heck, I'd be ok with simply RATIONAL pricing in this market. But you went freaking stupid with pricing. Servers same story (even worse). Intel was expected to slap a 25-50K price on 56c. I expect under 10k now that you price your FASTER chip with LESS watts at 7K...YOU ARE FIRED. That should be 50K until Intel gets their 56 core out the door in QUANTITY. IF they priced it at 50K I wouldn't have dropped my price a dime from 50K until you did! What part of making money do you guys NOT GET? IDIOTS.

    Intel set a record because they moved all available silicon they could sell to SERVER and HEDT. This is the RATIONAL way to operate if SHORT on your products. Apologize to customers but do what SAVES YOU, just like Intel did. AMD needs to stop acting like a homeless beggar, and start pricing like a winner.

    It is comic they just had their HIGHEST revenue on record for a Q, yet they made more for the year with basically 1/2 this revenue for the year a decade ago...LOL. Intel pulling 20B net income from 80% of the market on 70B revenue TTM. AMD, 6B revenue but only 209m NET INCOME TTM. Can anyone see the problem here? The person asking questions is right, why are you not in the 50%+ margins (and I think he means 55% not 50! INtel/NVDA at 64%)? Heck dump consoles and we should be asking why are you not in the 60% range! You are BARELY breaking even on the best products you've had since well over a decade ago when you charged rational pricing with 50%+ margins and REAL net income. Last 3yrs, 4B revenue, 5B, now 6B. WOW, that's awesome, oh wait...Profits for that extra 2B revenue grew NONE. Uhh, YOU ARE FIRED. For the love of god AMD, FIRE someone! YOU are your own enemy. Nobody at Intel or NV wants to lower pricing, they constantly try to hike a new product on TOP of old. YOU SHOULD TOO if at all possible (and it is POSSIBLE in a shortage!). IDIOTS. I could go on for days on AMD stupidity, but I have to find a new stock to buy now...LOL. Good luck if you didn't sell last week.
    Reply
  • eva02langley - Wednesday, January 29, 2020 - link

    Is that a joke? At this moment, there is rumor of Intel at TSMC and global foundries. AMD just consolidated their business for good. They are not going anywhere and the stock IS NOT collapsing and it's back at 47$ proving the valuation was quite close to the actual stock price.

    By the way I bought at 11$, so go cry me a river.
    Reply
  • Carmen00 - Wednesday, January 29, 2020 - link

    Impressive. To summarise: you rage-quit on AMD stock, which you agree is going to go up, because you object to them not price-gouging when they had the chance? Yes, it seems like you've reached the pinnacle of rationality. Congratulations.

    Now if you don't mind, I'm going to return to financially backing the company that seems to be performing quite well without bending its customers over. Y'know, building up good-will and reputation and all those other things that don't appear on a balance sheet, but are sometimes considered to be useful to think about.
    Reply
  • haghands - Thursday, January 30, 2020 - link

    It's so tight to see this weirdos completely naked rage at AMD for NOT viciously raping their customer. My man is straight up giving the pursuit of wealth a horrifically bad name lol. Holy hell I hope he never gets hold of any kind of meaningful power, even if its just, like, being a fast food manager. Reply

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