Thursday, October 6th 2022

AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter

AMD (NASDAQ:AMD) today announced selected preliminary financial results for the third quarter of 2022. Third quarter revenue is expected to be approximately $5.6 billion, an increase of 29% year-over-year. AMD previously expected revenue to increase approximately 55% year-over-year at the mid-point of guidance. Preliminary results reflect lower than expected Client segment revenue resulting from reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain.

Revenue for the Data Center, Gaming, and Embedded segments each increased significantly year-over-year in-line with the company's expectations. Gross margin is expected to be approximately 42% and non-GAAP(*) gross margin is expected to be approximately 50%. AMD previously expected non-GAAP gross margin to be approximately 54%. The gross margin shortfall to expectations was primarily due to lower revenue driven by lower Client processor unit shipments and average selling price (ASP). In addition, the third quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses.
Third quarter operating expenses are expected to be approximately $2.4 billion and non-GAAP operating expenses are expected to be approximately $1.5 billion. Non-GAAP operating expenses are lower than previous expectations of $1.6 billion driven by lower variable compensation expenses in the quarter.

"The PC market weakened significantly in the quarter," said AMD Chair and CEO Dr. Lisa Su. "While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5 nm data center and graphics products later this quarter."

This update does not present all necessary information for an understanding of AMD's financial condition as of the date of this release, or its results of operations for the third quarter of 2022. As AMD completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make judgments in a number of areas. It is possible that AMD may identify items that require it to make adjustments to the preliminary financial information set forth above and those adjustments could be material. AMD does not intend to update any financial information prior to release of its final third quarter financial statement information, which is currently scheduled for Nov. 1, 2022.

AMD Q3'22 Earnings Conference Call
AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) on Nov. 1, 2022 to discuss its third quarter 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.
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150 Comments on AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter

#76
hs4
This shows each manufacturer's share of the passmark sample as of October 1. Mobile CPUs are currently the mainstay of the client sector, and open data was already showing signs of depression.

I posted this elsewhere last week and the kind folks politely explained how wrong I was, using 2021 data.



Posted on Reply
#77
Palladium
ValantarThat's true - but all the more of an argument for the standard configuration to strike more of a balance, especially as performance-hungry enthusiasts are far more likely to know how to tune things than anyone else. And across hundreds of thousands if not millions of CPUs sold to everyone else every year, the difference in overall energy usage would be meaningful, while the performance difference wouldn't be noticeable for most of these users.
About time everyone realizes pushing chips to edge of oblivion at the factory is stupid and doubling it down outside is even more doubly so.
Posted on Reply
#78
LFaWolf
hs4This shows each manufacturer's share of the passmark sample as of October 1. Mobile CPUs are currently the mainstay of the client sector, and open data was already showing signs of depression.

I posted this elsewhere last week and the kind folks politely explained how wrong I was, using 2021 data.



I don't think this is an accurate reflection of market share. First, Alder Lake was launched last year and has been around for 10 months now. The new AMD gen just launched. So what are the AMD 20% CPU samples made up of? Second, perhaps AMD users that run whatever Passmark benchmark this is based on, already did that in 2021, and the majority of the benchmarks run were done by Alder Lake users in 2022?
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#79
hs4
LFaWolfI don't think this is an accurate reflection of market share. First, Alder Lake was launched last year and has been around for 10 months now. The new AMD gen just launched. So what are the AMD 20% CPU samples made up of? Second, perhaps AMD users that run whatever Passmark benchmark this is based on, already did that in 2021, and the majority of the benchmarks run were done by Alder Lake users in 2022?
My tally is based on the launch date of each SKUs. All the Intel's and AMD's CPUs in "2022 gen." category are announced at the same date, CES 2022 in January:
Intel: Alder lake-H/HX/P/U **does not include desktop model
AMD: Rembrandt (Ryzen 6000 series) and Barcelo (Ryzen 5xx5U) **Barcelo's internal code is same to Cezanne (Ryzen 5xx0U/H), both shares "CZN"
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#80
LFaWolf
hs4My tally is based on the launch date of each SKUs. All the Intel's and AMD's CPUs in "2022 gen." category are announced at the same date, CES 2022 in January:
Intel: Alder lake-H/HX/P/U **does not include desktop model
AMD: Rembrandt (Ryzen 6000 series) and Barcelo (Ryzen 5xx5U) **Barcelo's internal code is same to Cezanne (Ryzen 5xx0U/H), both shares "CZN"
Of course Intel will outpace AMD if that is your tally. Intel new platform has already launched, whereas AMD was still on the old 5xxx platform. If you are buying a new laptop, would you buy one with a processor of the latest platform, or a refresh of one that was launched 2 years ago?
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#81
RandallFlagg
hs4My tally is based on the launch date of each SKUs. All the Intel's and AMD's CPUs in "2022 gen." category are announced at the same date, CES 2022 in January:
Intel: Alder lake-H/HX/P/U **does not include desktop model
AMD: Rembrandt (Ryzen 6000 series) and Barcelo (Ryzen 5xx5U) **Barcelo's internal code is same to Cezanne (Ryzen 5xx0U/H), both shares "CZN"
So, your chart isn't wrong exactly, but not sure what it's supposed to prove that can't be shown from market share stats.

Intel has been gaining desktop market share since Q3 2020. This is one of the things I suspect a lot people don't know, but the information is out there.

Intel's Mobile share started losing share in Q2 2021, after AMD dipped a bit in 2020. That dip was probably due to insufficient supply, Intel was in its element churning out mass quantities of CPUs in 2020. Intel's server segment has been losing market share since Q3 2018.
Posted on Reply
#82
hs4
RandallFlaggSo, your chart isn't wrong exactly, but not sure what it's supposed to prove that can't be shown from market share stats.

Intel has been gaining desktop market share since Q3 2020. This is one of the things I suspect a lot people don't know, but the information is out there.

Intel's Mobile share started losing share in Q2 2021, after AMD dipped a bit in 2020. That dip was probably due to insufficient supply, Intel was in its element churning out mass quantities of CPUs in 2020. Intel's server segment has been losing market share since Q3 2018.
Mercury Research reports market share through Q2, with AMD's share of the mobile market reaching an all-time high. And the change in AMD's client segment from Q2 to Q3 was -53%.

I would speculate that AMD's market share growth in Q2 may have been due to cheap inventory clearance of older generation CPUs. A search for "New Arrival" on Amazon shows that Intel has 2/3 of the latest generation, while AMD has 2/3 of the older generation.

Amazon (US) - Laptops - Intel - Any New Arrival
116: Alder lake
59: Tiger lake
10: Atom (Gemini / Jasper lake)
6: Old generations (before 10th)

Amazon (US) - Laptops - AMD - Any New Arrival
7: Rembrandt (Zen3+)
1: Barcelo (Zen3)
8: Cezanne (Zen3)
4: Lucienne (Zen2)
5: Old generations (before Ryzen 4000)


Lisa Su said "Significant inventory correction across the PC supply chain," to explain the significant drop in sales this quarter.
Posted on Reply
#83
mb194dc
AMD will probably continue to gain market share from Intel. Especially in the server space.

The issue is the whole market is shrinking significantly. There is excess inventory, ultimately the excess demand from Covid has "gone".

Additionally, high inflation is restricting consumers budgets and pretty much no one with a modern CPU or GPU from last few years has much incentive to upgrade.

I'd expect chip sales to go below 2019 levels in the next year or two.
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#84
R0H1T
They're probably around or slightly below that level. This is what 3-4 quarter in a row where market is shrinking?
Posted on Reply
#85
Wirko
RandallFlaggSo, your chart isn't wrong exactly, but not sure what it's supposed to prove that can't be shown from market share stats.

Intel has been gaining desktop market share since Q3 2020. This is one of the things I suspect a lot people don't know, but the information is out there.

Intel's Mobile share started losing share in Q2 2021, after AMD dipped a bit in 2020. That dip was probably due to insufficient supply, Intel was in its element churning out mass quantities of CPUs in 2020. Intel's server segment has been losing market share since Q3 2018.
Tom's has data up to Q2 2022 now, too.
www.tomshardware.com/news/lowest-cpu-shipments-in-30-years-amd-intel-q2-2022-cpu-market-share
Posted on Reply
#86
lexluthermiester
It should be noted that revenue for this year is down for nearly everyone in this industry.. AMD is hardly alone.
Posted on Reply
#87
AsRock
TPU addict
the54thvoidThe PC component industry is out of touch with its user base. That's the problem. Specifically though, I see it as a GPU manufacturing problem. PSU, RAM, Storage options; these items, arguably, have far longer lifespans. But with GPU's (I feel) we're being pushed to upgrade, and companies are inventing/creating new gimmicks to justify their new, expensive products. Yeah, I mean Nvidia.

They'll need to readjust expectations. And we as consumers ought to vote with our wallets. Hypocrisy from a 2080ti owner, I know, but that was my one extravagant splurge.
Out of touch for sure, like who in the hell wants to upgrade from a AM4 to a AM5 platform when the motherboards are like $250+ DDR5 requirement. In fact by the looks of it sales are really good for AM4 still today.

The cost is crazy to upgrade even more so when i could just pick up a 5800X3D and call it a day.

They never expected this and at the very least should of had DDR4 compatibility and actually made the IHS right in the 1st place, as i know i don't want to deal with the bad cooling with only one real option to keep it cool is to void the warranty.

I gett he feeling people are settling in on whats good enough. Even if i was to replace my other PC i still build another AM4 platform, AM5 is just not worth it.
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#88
RandallFlagg
AsRockOut of touch for sure, like who in the hell wants to upgrade from a AM4 to a AM5 platform when the motherboards are like $250+ DDR5 requirement. In fact by the looks of it sales are really good for AM4 still today.

The cost is crazy to upgrade even more so when i could just pick up a 5800X3D and call it a day.

They never expected this and at the very least should of had DDR4 compatibility and actually made the IHS right in the 1st place, as i know i don't want to deal with the bad cooling with only one real option to keep it cool is to void the warranty.

I gett he feeling people are settling in on whats good enough. Even if i was to replace my other PC i still build another AM4 platform, AM5 is just not worth it.
To add, If you look into the details of the AM5 platform / chipset / motherboard features, really most of the major feature sets that sets AM5 apart from AM4 are only available to the very high end motherboards so far.

As example, the lower end X670 motherboards don't have a PCI 5 x16 slot, they're using PCIe 4 x16 apparently to save on cost. Most of them will simply have a PCIe 4 x16 and one PCIe 5 x4 to CPU.

I'm also seeing that none of the B650 boards will have PCIe 5 x16 based on AMDs high level diagrams of B650 connectivity. It appears this is at AMDs behest since there's no technical reason I can think of why it couldn't exist as that connectivity comes from the CPU, not the chipset.

To make matters a bit worse, the bandwidth to the chipset on all of the AMD Zen 4 chipsets is half of what it is to a Z690 or Z790. You could literally saturate that chipset<->CPU bus with a single PCIe 4 x4 m.2 SSD. So all of those connections its capable of driving are nice, as long as you only use a couple of those devices at once. Meanwhile most of the PCIe 5 lanes are not used.

Basically unless you get a $450+ motherboard, a bunch of what you pay for with Zen 4 \ AM5 is going to waste.

So with that backdrop, it makes total sense that the two best selling AM5 motherboards at Microcenter are a $699 X670E Crosshair Hero and the $999 Crosshair Extreme. I pulled this up for multiple locations across the country and these are always the two most popular :

Posted on Reply
#89
cvaldes
AsRockOut of touch for sure, like who in the hell wants to upgrade from a AM4 to a AM5 platform when the motherboards are like $250+ DDR5 requirement. In fact by the looks of it sales are really good for AM4 still today.
Theoretically it's possible that AMD motherboard vendors are selling lots of AM4 motherboards, but you still need to drop a processor into them. What are these people doing? Dropping in previously owned CPUs?

AMD's Client business missed by $1B in revenue. That means they didn't sell a bunch of Zen 3 (Ryzen 5000 series) parts: both desktop and mobile.
Posted on Reply
#90
pressing on
lexluthermiesterIt should be noted that revenue for this year is down for nearly everyone in this industry.. AMD is hardly alone.
True but some financial analysts are claiming that AMD is likely to have made a loss for Q3 2022. There is a big difference between loosing revenue and remaining profitable, and less revenue leading to losses.

It might be worth noting that Intel made a loss for Q2 2022, and they will be reporting on Q3 2022 on 27 October. AMD detailed numbers for the quarter come out on 1 November. Watch this space, I guess.
Posted on Reply
#91
Valantar
RandallFlaggI'm also seeing that none of the B650 boards will have PCIe 5 x16 based on AMDs high level diagrams of B650 connectivity. It appears this is at AMDs behest since there's no technical reason I can think of why it couldn't exist as that connectivity comes from the CPU, not the chipset.
No, it's a cost issue. PCIe 5.0 requires more PCB layers and higher quality board materials. AMD fully allows for PCIe 5.0 on B650 if board makers want to implement it - it just doesn't make sense in terms of price.
RandallFlaggTo make matters a bit worse, the bandwidth to the chipset on all of the AMD Zen 4 chipsets is half of what it is to a Z690 or Z790. You could literally saturate that chipset<->CPU bus with a single PCIe 4 x4 m.2 SSD. So all of those connections its capable of driving are nice, as long as you only use a couple of those devices at once. Meanwhile most of the PCIe 5 lanes are not used.
That's true - but hardly relevant in real world use cases. No, you won't have a good time running concurrent sequential benchmarks on several chipset-connected SSDs, but for anything else, that's plenty of bandwidth even if you have, say, a 4k120 capture card + the SSD that capture is being written to both connected through the chipset. Very few real world use cases actually utilize anywhere near a full PCIe 4.0x4 link for any significant amount of time.

Of course, there's also a major argument to be made for PCIe 5.0 being pointless in and of itself, for consumer use cases. Current GPUs are barely held back by PCIe 3.0x16, and literally nothing is limited by a PCIe 4.0x16 link. No GPU launching in the useful lifetime of these boards will be meaningfully bottlenecked by PCIe 4.0x16 compared to 5.0x16.
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#92
RandallFlagg
ValantarNo, it's a cost issue. PCIe 5.0 requires more PCB layers and higher quality board materials. AMD fully allows for PCIe 5.0 on B650 if board makers want to implement it - it just doesn't make sense in terms of price.
Do they? Have you looked at AMDs official B650 block diagram? If they allow it and it's up to the manufacturer, why would that diagram show it as PCIe 4 x16?
ValantarThat's true - but hardly relevant in real world use cases. No, you won't have a good time running concurrent sequential benchmarks on several chipset-connected SSDs, but for anything else, that's plenty of bandwidth even if you have, say, a 4k120 capture card + the SSD that capture is being written to both connected through the chipset. Very few real world use cases actually utilize anywhere near a full PCIe 4.0x4 link for any significant amount of time.
So PCIe 5 isn't really useful is the argument, but we need to pay for it anyway right.

In any case, I don't really agree with you. There's a super common daily use for high chipset bandwidth. It's called doing a backup.
Posted on Reply
#93
R0H1T
pressing onsome financial analysts are claiming that AMD is likely to have made a loss for Q3 2022.
There's almost zero chance for that, they'd have to lose in the console segment/GPU's & Xilinx for a (total) net loss!
Posted on Reply
#94
cvaldes
R0H1TThere's almost zero chance for that, they'd have to lose in the console segment/GPU's & Xilinx for a (total) net loss!
Based on their preliminary revenue numbers (a table in post #1), they are up 29% YoY in total revenue as three out of their four major business units reported gains. It's really the Client business (CPUs) where their forecast missed badly.

Gross margin took a dip (300-400 basis points at first glance) but it seems unlikely they would have a net loss. A deceleration in profit growth is inevitable though.
Posted on Reply
#95
AsRock
TPU addict
RandallFlaggTo add, If you look into the details of the AM5 platform / chipset / motherboard features, really most of the major feature sets that sets AM5 apart from AM4 are only available to the very high end motherboards so far.

As example, the lower end X670 motherboards don't have a PCI 5 x16 slot, they're using PCIe 4 x16 apparently to save on cost. Most of them will simply have a PCIe 4 x16 and one PCIe 5 x4 to CPU.

I'm also seeing that none of the B650 boards will have PCIe 5 x16 based on AMDs high level diagrams of B650 connectivity. It appears this is at AMDs behest since there's no technical reason I can think of why it couldn't exist as that connectivity comes from the CPU, not the chipset.

To make matters a bit worse, the bandwidth to the chipset on all of the AMD Zen 4 chipsets is half of what it is to a Z690 or Z790. You could literally saturate that chipset<->CPU bus with a single PCIe 4 x4 m.2 SSD. So all of those connections its capable of driving are nice, as long as you only use a couple of those devices at once. Meanwhile most of the PCIe 5 lanes are not used.

Basically unless you get a $450+ motherboard, a bunch of what you pay for with Zen 4 \ AM5 is going to waste.

So with that backdrop, it makes total sense that the two best selling AM5 motherboards at Microcenter are a $699 X670E Crosshair Hero and the $999 Crosshair Extreme. I pulled this up for multiple locations across the country and these are always the two most popular :

Well they did skimp on the AM4 boards to as the second PCIe-slot is only x4 in a lot of cases. Seems like some thing being pushed and is not really needed.
cvaldesTheoretically it's possible that AMD motherboard vendors are selling lots of AM4 motherboards, but you still need to drop a processor into them. What are these people doing? Dropping in previously owned CPUs?

AMD's Client business missed by $1B in revenue. That means they didn't sell a bunch of Zen 3 (Ryzen 5000 series) parts: both desktop and mobile.
You have tons of options going for AM4 and ram prices are really nice too, Hell a old? Zen2 chip will meet most peoples needs and they are fairly cheap too, well you can get the 3900X for $350 with cooler shipped and if your just a gamer your talking a lot less than that.
Posted on Reply
#96
cvaldes
AsRockYou have tons of options going for AM4 and ram prices are really nice too, Hell a old? Zen2 chip will meet most peoples needs and they are fairly cheap too, well you can get the 3900X for $350 with cooler shipped and if your just a gamer your talking a lot less than that.
LOL, I contributed to AMD's revenue quarters ago. They aren't getting anything from me in the immediate future.

Right now there are four desktop PC builds in the house, all Ryzen (three are Zen 3 builds, my daily driver desktop PC is Zen 2, 3700X). AMD has earned plenty from me as an individual consumer.
Posted on Reply
#97
ARF
LFaWolfMaybe there will be major price cut of AM4 and AM5 in the coming months. That would be awesome
More awesome would be if we get the graphics cards back to normal. Because they are anything but normal now. :banghead: :mad:

A 335-mm^2 chip today:



vs a 366-mm^2 chip back in 2015:

Posted on Reply
#98
Valantar
RandallFlaggDo they? Have you looked at AMDs official B650 block diagram? If they allow it and it's up to the manufacturer, why would that diagram show it as PCIe 4 x16?
B650 and X670 are PEG PCIe 4.0 minimum; B650E and X670E are PEG PCIe 5.0 minimum. All platforms can support m.2 PCIe 5.0 - though this depends on the board implementation, obviously. As the similarly named chipsets are otherwise identical in terms of features, B650E is B650 with PCIe 5.0.
RandallFlaggSo PCIe 5 isn't really useful is the argument, but we need to pay for it anyway right.
Uh ... did I claim that these two factors were somehow logically linked? They're both facts, whether you like them or not. PCIe 5.0 costs more to implement, so yes, one would need to pay (extra) for it for boards implementing it. It is also not really useful for consumers. Its lack of a real-world use doesn't have the power to magically remove the costs of implementing it.
RandallFlaggIn any case, I don't really agree with you. There's a super common daily use for high chipset bandwidth. It's called doing a backup.
... and you are doing a backup of a chipset-connected storage device to another chipset-connected storage device? That sounds like a rather unusual use case IMO. OS drives generally go in the primary, CPU-connected m.2 slot, and backup drives generally aren't m.2 anyway - I really can't imagine there are many people with a primary OS m.2 drive, a secondary m.2 drive for whatever, and a tertiary backup m.2 drive, and who also need daily backups of whatever is on that secondary m.2 drive. And, of course, the obvious solution even if this edge case is indeed what is happening: run your backups when you're not using the PC (unless they're running on the fly, in which case the amount of new data at any given time won't be sufficient to create any kind of lasting bottleneck).
ARFMore awesome would be if we get the graphics cards back to normal. Because they are anything but normal now. :banghead: :mad:

A 335-mm^2 chip today:



vs a 366-mm^2 chip back in 2015:

This is hardly a surprise, nor just caused by greed. BOM costs for GPUs are massively higher, not only due to ~2-3x cost increases for many materials, but these GPUs have much more VRAM, much more expensive VRAM, beefier (and more expensive) VRMs, higher quality PCBs to accommodate higher speed VRAM and PCIe, and of course TSMC 7nm is still a rather expensive process node, while TSMC 28nm was cheap even when new, and especially four years into mass production. TSMC has also been raising prices due to running out of capacity, which pushes things even further.

Chip production isn't as simple as saying "the same die area should cost the same over time" - you need to take other factors into consideration as well, and you really can't ignore the BOM cost increases from more and more advanced componentry. That doesn't mean the last generation of GPUs isn't overpriced - it is, and it was clearly not designed for cost optimization. There is still quite a bit that can be done to bring down prices at the design and development stages (lowering PCB quality requirements through design tweaks; narrowing RAM buses, etc.), but some of that has also already been done.
Posted on Reply
#99
ARF
ValantarThis is hardly a surprise, nor just caused by greed. BOM costs for GPUs are massively higher, not only due to ~2-3x cost increases for many materials, but these GPUs have much more VRAM, much more expensive VRAM, beefier (and more expensive) VRMs, higher quality PCBs to accommodate higher speed VRAM and PCIe, and of course TSMC 7nm is still a rather expensive process node, while TSMC 28nm was cheap even when new, and especially four years into mass production. TSMC has also been raising prices due to running out of capacity, which pushes things even further.

Chip production isn't as simple as saying "the same die area should cost the same over time" - you need to take other factors into consideration as well, and you really can't ignore the BOM cost increases from more and more advanced componentry. That doesn't mean the last generation of GPUs isn't overpriced - it is, and it was clearly not designed for cost optimization. There is still quite a bit that can be done to bring down prices at the design and development stages (lowering PCB quality requirements through design tweaks; narrowing RAM buses, etc.), but some of that has also already been done.
What about scalping, like profit margin going from 30% in 2015 to 230% now in 2022? Let's be honest? ?
ValantarB650 and X670 are PEG PCIe 4.0 minimum; B650E and X670E are PEG PCIe 5.0 minimum. All platforms can support m.2 PCIe 5.0 - though this depends on the board implementation, obviously. As the similarly named chipsets are otherwise identical in terms of features, B650E is B650 with PCIe 5.0.
No one has ever asked them for the PCIe 5.0 marketing BS. So now, they have to take it back and remove it in order to cut the costs.
Posted on Reply
#100
the54thvoid
Super Intoxicated Moderator
you need to take other factors into consideration as well, and you really can't ignore the BOM cost increases from more and more advanced componentry.
@Valantar - there is a flaw in that logic which is the componentry which was cutting edge back then, also cost a lot. Each new advance in technology carries a cost - we saw it with HBM, but the cost wasn't astronomical. What we're seeing now is being unequally skewed by shareholder appeasement (following what was expected after mining income). If JSH or Lisa Su suddenly became charitable, they'd be kicked off the board.
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