Opinion: Salute Lisa Su: AMD’s data center business is a real rival to Intel
Advanced Micro Devices Inc. finally gave investors a first-hand look at its data center business on Tuesday, and Wall Street should be pleased with the business Lisa Su & Co. has rebuilt.
In AMD’s first quarterly report AMD,
to include a long-desired breakdown of server business, the chipmaker reported $1.5 billion in quarterly revenue, about a third of the disappointing $4.6 billion that Intel INTC,
reported last week. While a company much smaller than its rival wouldn’t normally be considered a success, AMD’s market share was below 1% when this column first featured Su’s server efforts in late 2018. and the two companies are heading in radically different directions.
AMD’s data center business has grown 85% in the past year as its Epyc server chips continue to find customers and Xilinx is digested, while Intel’s business has surprisingly decreased by 16%. Intel CEO Pat Gelsinger was forced to discuss a further delay in the rollout of a new server chip, codenamed Sapphire Rapids, which was due to be relaunched in the factory for (hopefully) production in volume by the end of the year. Even if able to meet the new deadline, Gelsinger won’t have much time before facing new competition: Su said AMD’s next data center chip, dubbed Genoa, is still on the way. on track for 2023 with cloud-optimized capacity and more. cores.
Full earnings coverage: AMD stock slips as revenue forecast drops below Street consensus
Many analysts on Tuesday asked about the current trajectory of AMD’s server business with half-hearted references to its biggest rival – given the recent quarter at “your biggest competitor”, “given the macroeconomic backdrop current” and given “some concerns related to both business and cloud spending.” Su said data center activity remained strong and that while AMD gained share of market, she noted AMD’s share was even smaller, with plenty of room for growth as Intel struggled.
“We’ve certainly gained a lot of market share, so we represent a bigger share of the market. But we are still underrepresented,” Su said. “And visibility with our customers, especially our large cloud customers [in the] second half of this year to next year, is very good. And we’re really planning for the next four to six quarters, and that gives us good visibility.
The news wasn’t all good, as concerns over the near future sent shares tumbling 6% in after-hours trading. Su admitted that cloud spending has slowed down a bit in China, with Alibaba Group Holdings Ltd. BABA,
is expected to report a sharp deceleration in the growth of its cloud business. “But certainly with the North American cloud, they’ve been very strong this year, and the outlook is strong for next year,” she said.
Learn about the cloud boom coming back to earth
The personal computer segment was the biggest concern – AMD’s PC business grew 25% to $2.2 billion, driven by strong sales of its Ryzen chips, but that growth is expected to wane as the PC boom continues to falter. Su said the company’s guidelines called for PC business to be down in the mid-teens, weighing down the stock.
Intel is facing the same macro issues with slowing cloud growth and PC pause, but AMD is in a much better position than its underdog rival to deal with them right now. If Su can continue to release new products in time that truly rival or even exceed what Intel produces, AMD should continue to gain market share, as we will see if the cloud and data center markets are as resilient to the recession that tech executives would have us believe.
No matter where AMD goes from here, however, Su should be applauded for rebuilding a true Intel rival on all fronts, but especially in the high-margin server/data center space. It was the goal of a few CEOs who came before her, but she is the only one to have actually achieved it, as evidenced by Tuesday’s results.