AMD Reports Q2 2020 Earnings: Notebook and Server Sales Drive a Record Quarterby Ryan Smith on July 28, 2020 5:30 PM EST
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- Financial Results
Continuing our look at tech industry financial results, AMD this afternoon is celebrating setting some new records in its Q2’2020 financial results. Enjoying a continuing turn-around in its fortunes t hanks in big part to its Zen series of CPU architectures and resulting products, the company has just closed the books on the first year of sales of its Zen 2-based desktop processors, with EPYC following close behind. At this point AMD is now setting quarterly revenue records, and the company is expecting to grow its revenue further over the coming months.
For the second quarter of 2020, AMD reported $1.93B in revenue, a 26% jump over the same quarter a year ago. As a result, Q2’2020 was AMD’s best quarter ever, built on the back of record notebook and server revenue. Overall, all of AMD’s metrics have improved in a year-over-year basis, with net income up $122M (349%) to $157M, while the company’s all-important gross margin improved by 3 points to 44%. In fact the only real knock that can be made on AMD’s quarter is that they didn’t pass their Q1’2020 net income or gross margin, which was due to increased semi-custom shipments, which aren’t as profitable for the company.
|AMD Q2 2020 Financial Results (GAAP)|
|Earnings Per Share||$0.13||$0.03||$0.14|
Once again the flag bearer for AMD is their Computing and Graphics segment, which encompasses their desktop and notebook CPU sales, as well as their GPU sales. That division booked $1.37B in revenue for the quarter, $427M (45%) more than Q2 of 2019. The segment’s operating income as up significantly as well, jumping from just $22M a year ago to $200M this year.
These numbers come as AMD closes the book on their first year of Zen 2 product sales – the first retail chips hit store shelves at the very start of Q3’2019. Since then AMD has grown their desktop chip sales significantly, and combined with laptop sales the company is reporting their best client processor revenue in more than 12 years. As previously mentioned, laptop sales saw record revenue – doubling last year’s numbers – thanks in part to AMD shipping a record number of notebook chips.
|AMD Q2 2020 Computing and Graphics|
As for product average selling prices (ASPs), AMD is reporting that client processor prices are up on a year-over-year basis (thanks again to Zen 2). However they have dropped on a quarterly basis due to a greater mix of Ryzen Mobile sales.
Meanwhile AMD’s GPU division looks to have once again been the laggard. While AMD doesn’t break out revenue numbers to specific divisions, on the subject of ASPs they note that GPU ASPs are down on both a year-over-year and quarterly basis, due to lower channel sales. On their earnings call, AMD has noted that while mobile GPU sales are up by double digits, this was more than offset by declines in desktop GPU sales. Overall, with AMD’s Q2’2019 being a somewhat soft quarter for GPU sales to begin with as consumers awaited their heavily-teased Navi architecture products, I’m surprised to see that AMD’s ASPs still slipped this year.
|AMD Q2 2020 Enterprise, Embedded and Semi-Custom|
Finally, AMD’s Enterprise, Embedded, and Semi-Custom segment saw a very solid Q2, as the group enjoyed an uptick in EPYC processor sales. In fact AMD has finally, albeit belatedly, finally captured a double-digit share of the server processor market, a major goal for the company. Fittingly, on a year-over-year basis, EPYC revenue has doubled.
None the less, the odd grouping of server CPUs with semi-custom (console) chips means that revenue actually dropped on a year-over-year basis thanks to lower semi-custom sales. The upshot, at least, is that it’s a significant improvement over Q1, where the group ended up in the red. Meanwhile AMD has started production of the PS5 and Xbox Series X SoCs, so revenues here should significantly improve next quarter, but those are still lower margin products.
Looking forward, like much of the rest of the tech industry AMD is looking towards a strong second-half of the year, as the company has been able to successfully weather the immediate challenges from the coronavirus pandemic. As a result, AMD is increasing its full-year projections, and the company is now calling for 32% revenue growth over 2019, and a gross margin of around 45%.
Driving this growth for AMD will be a mix of the slow expansion of server products, as well as new products launched in the second-half of the year. AMD is expecting EPYC sales to continue to grow and for the company to gain market share there as more server vendors further ramp up their EPYC server production. Meanwhile AMD is reiterating that it’s expecting to begin shipping its Zen 3-based “Milan” EPYC processors late this year. AMD’s upcoming CDNA-based data center GPUs are also set to launch around at time.
As for the consumer side of matters, AMD is expecting continued sales success with its consumer products, particularly Ryzen Mobile. None the less, all eyes are going to be on AMD’s future products, as AMD is reiterating their 2020 launch plans. The company reports that it’s on track to launch Zen 3 client CPUs in late 2020, and the company’s eagerly-anticipated RDNA2 products, which will eventually encompass a full stack refresh, will launch in late 2020 as well.
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Memo.Ray - Tuesday, July 28, 2020 - linkGood to see them continue to grow!
vFunct - Wednesday, July 29, 2020 - linkThey need their own CPU architecture now if they want to continue to grow. X86 is so inefficient and high-end ARM server CPUs are coming online, and the market in 5 years might be completely different. Maybe they could build off of RISC-V, but likely they'll need something completely custom.
Intel is going to face the same problems, with competition from ARM servers. But at least they have a broad line of support IP - Optane (great for databases), FPGAs (great for EDA accelerators), Xe (for AI), QuickAssist Technology (web servers), QuickSync video (server video transcoding), AVX-512, etc..
AMD will need a broad line of server IP to compete in the long term. An efficient CPU isn't going to be enough.
Samus - Wednesday, July 29, 2020 - linkAMD is in no position to make a new architecture. Even Intel failed with IA64. Maintaining x86 compatibility is the cornerstone to these companies chip business. This is specifically why AMD built on top of x86 when they developed AMD64 (or as Intel would call it when they implemented it, x86-64.)
Fortunately AMD also has more diversity with their GPU business (which is significantly larger than Intel's other ventures such as networking, embedded, AI, etc.) But realistically neither of these companies are venturing away from x86 in the consumer space for a long time.
Data centers might be another story. Who knows, I'm no expert, but Anapurna\Amazon has spent billions and apparently it paid off for them, but that combined with other ARM competition means the market has a lot of players. Sometimes it's nice to be in a market when you only have one other player.
medi05 - Wednesday, July 29, 2020 - linkIntel has failed with IA64 exactly because "x86 is inefficient" is a myth.
Nowadays and for years, CISC > RISC since we can afford cramming insane number of transistors into tiny chips.
AVX-512 is barely alive and "quick sync video" is a funny mention, as it is basically an optimized codec.
quadrivial - Wednesday, July 29, 2020 - linkIf x86 were efficient, Atom would have stood a chance against ARM (it even launched on a better manufacturing node). The fact that ARM has done in a half decade what took Intel 20+ years also speaks to an architecture that is much easier to optimize and iterate on.
IA64 had *very* different issues. They argued that a "sufficiently smart compiler" could optimize their code. That essentially required solving the halting problem which is provably unsolvable and as expected, despite using VLIW GPUs for decades, the problem was never really solved (the big reason for moving to less-fixed architectures).
Intel already knew what a disaster EPIC would be from their i860 failure. That raises the interesting question about why they'd push tech they already knew was bad. As a result of all the Itanium marketing, all their upcoming RISC competitors were shut down (PA-RISC, Alpha, etc) or moved on to specialty markets (MIPS with network switches, PowerPC or SPARC very-parallel supercomputers, etc). Who knows if this was intentional, but in practice, Intel managed to make hundreds of billions more off its monopoly for only a couple billion in investments (probably nowhere near as much as they spent on their illegal anti-AMD campaigns over the years).
linuxid10t - Thursday, July 30, 2020 - linkThe Atom is and was plenty efficient. It was the ecosystem surrounding it that doomed it to failure. For example, with the N270 they had a 2.5 watt CPU paired with a 15 watt chipset. The wonkiness doesn't end there either, the other CPUs for even more mobile devices had Imagination chipsets which weren't supported worth a hill of beans. As far as available devices, that was an uphill battle from the start in mobile because ARM was already heavily entrenched with near full market dominance. This meant compatibility was always going to be difficult for Intel on mobile where operating systems like Android, iOS, and various embedded Linuxes are dominant.
As far as how ARM caught up in performance so quickly, it is because there was never actually any reason why it couldn't be other than it wasn't the target market. There is also a matter of hindsight and poaching. The engineers at ARM weren't working in the dark. They already knew what works and what doesn't. Intel and AMD were pathfinding in the high performance space so of course it was going to take longer.
rahvin - Sunday, August 2, 2020 - linkThere is nothing about ARM arch that makes it better or special in comparison to x86. You'd be foolish to believe there is.
ARM's success in the low power, low price market has much more to do with the ARM business model and Intel's refusal to compete than it does to any functional realities of the silicon CPU market.
kingmouf - Wednesday, July 29, 2020 - link"Fortunately AMD also has more diversity with their GPU business (which is significantly larger than Intel's other ventures such as networking, embedded, AI, etc.) But realistically neither of these companies are venturing away from x86 in the consumer space for a long time."
This is simply not true... from Intel's latest quarter results: IoT is $816M, Mobileye $146M, Programmable Solutions (former Altera business) $501M, Non-volatile memory $1.7B... only these are bigger than all AMD combined. And I am not even sure if Intel puts their networking products in these categories....
dotjaz - Wednesday, July 29, 2020 - linkAnd surely Intel's empire can rely on what you listed to survive then. I mean losing x86-64 related products is merely 90% revenue, so diverse.
dotjaz - Wednesday, July 29, 2020 - linkDiversity is measured against its own size, not the competition.