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.
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.
"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.
150 Comments on AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter
What are they thinking I don't know? Most Europeans have money now either for the heating bills or for the food... who is going to buy computer parts?
Hopefully Raptor lake brings some price pressure to the market.
Full shelves will also help with the price reduction initiative:).
In fact, we can't saturate PCIe 3.0 to the max today, most people still use old-fashioned HDDs and SATA SSDs.
PCIe 4.0 is still a dream. PCIe 5.0 is a ridiculous expensive nightmare and will be so for the next 5 years.
Unless MS finds a way to make PCIe 5.0 actually work.
There is also an increasing culture for shareholder appeasement, yes, but that is stacked on top of steadily increasing BOM costs, which are in turn stacked on top of inflation. Corporations very obviously need to check their greed, but they also need to start designing more cost-optimized products and stop chasing performance in a way that throws all cost considerations to the wind, as we've been seeing for the past couple of generations now.How on earth would MS "find a way to make PCIe 5.0 work"? Literally none of the issues with PCIe 5.0 are related to OS support. It's unnecessarily fast, no consumer hardware can reasonably make use of it, and it's expensive due to physics. None of that is fixable by MS in any way.
Except I have saturated pciex 3, 4x pciex 3 nvme in one x16 got there in reality though even I didn't. Keep it in use it Was pointless in any of my uses hopefully direct storage helps.
en.wikipedia.org/wiki/Moore%27s_second_law
This was a joke, right? DS has nothing to do with PCIe 5.0 - it will work on PCIe 3.0 even. And its main benefit is getting data more quickly to your GPU, bypassing the cpu as a decompression step, not making better use of PCIe bandwidth in and of itself. It'll lead to increases in SSD reads as the CPU's decompression won't bottleneck things any more, but that speedup will be major even on 3.0, and the difference between that and higher speed SSDs is likely to be small.Makes sense. And I'd expect it's trajectory to be the opposite of the first Moore's Law, i.e. I'd expect fab cost increases to trend above 2x while transistor counts trend (well) below 2x.
What I meant is you are paying for it on the chip, but can't use it unless you *also* pay for it on the motherboard. It's great that Zen 4 has 24 PCIe 5 lanes, but when the motherboard only uses 4 of those in PCIe 5 mode it's a completely neutered point.This is not unusual at all. I would bet the most typical configuration *right now* will be 2-3 m.2 SSDs and 1-2 SATA SSDs. SATA SSDs these days would be the most likely target - cheap with larger capacity. Putting them into a RAID 1 config wouldn't be too unusual either.
However, the trend is moving towards having all m.2, and it's moving that way fast. Almost everything now has 3 m.2 slots, and many midrange and up have 5. There's no reason to buy SATA anything now, as $140 gets you a cheap 2TB m.2.
Moreover, not only is all of this traffic going to go across you chipset, most if it will go across your chipset twice.
And this is most likely why Intel has quadrupled the IO bandwidth to the chipset since the Z390/490 days.
I will never put so large cooling on an SSD. It is stupid and underengineered:
ASRock Unveils Blazing M.2 PCIe Gen 5 SSD Cooler With Active Fan Heatsink, Compatible With Z790, X670E & B650 Motherboards (wccftech.com)
AMD's stupidity is infinite. Just release X670 with PCIe 4.0 and then in 5 years return to the PCIe 5.0. Maybe by then there will be more efficient manufacturing processes, so that everything will run cooler and quieter.
No, it's not the time now to oversupply with something that you don't even know if will work ever.
PCIe 5.0 might be DOA as is.
I agree that 5.0 might just be pointless. Basically standard for hardware that doesn't exist yet. Future proofing for 10 years into future? bruh
But here are pretty decent PCIe 4.0 drives that should last in the next 10 years or more.
I'm of the same opinion and have been for a while... although you might disagree with the following: i'm over the mooon seeing AMD being hit hard in the revenue department but for the joy to make sense it has to apply to both Intel/Nvidia too, otherwise it sucks! All these hardware throttlers pinching our hard earned dosh need a slap in the face. I've been waiting for a long time for these tech giants to feel the ripples turning into waves with buyer despondency. NVIDIA is always 1st on that list but it seems the pocket-rich continue to grease that self-indulgence war engine.
With power consumption rapidly increasing and small pockets of performance uptick per each generation (gaming), it was obvious these companies were dead set on winning the performance crown at the helm of anything/everything. Like all mightier-than-thou empires, the empirical demise (ok ok overly dramatic) .......ffs, at this point i dont even know where im going with this lol.... erm, in short let them run themselves into the ground i suppose... if its helps lowering prices, introducing less useless embellished feature boards and delivering cost-effective products within the buyers means, i'm all for it!!
And then there's the workloads - say you're loading into a game. Even if you're filling the entire VRAM of an RTX 4090 with assets directly from your SSD, that's, what three seconds of peak sequential read with a PCIe 4.0 drive? Or six seconds with a 3.0 drive, or 1.5 seconds with a 5.0 drive. The point being: who cares about those differences? Of course, game loads today are nowhere near saturating even a 3.0 bus, which DirectStorage will hopefully improve upon. But beyond that, who cares? Differences will be negligible anyhow - no game will require you to be streaming in more than 3.5GB/s of assets at any point in the foreseeable future, so anything above PCIe 3.0 will at best cut loading times by a second or two. I'm very much looking forward to DS being widely adopted, but I don't see it making PCIe 3.0 drives obsolete in any way.The thing is, there's no foreseeable future that isn't already covered by PCIe 4.0 (and arguably even 3.0) for consumers. PCIe 5.0 is very useful to enterprise and HPC, but consumers just don't run workloads where those types of drive speeds (or capacities to match the speeds) are relevant, and NAND isn't fast enough in random workloads for that to change.