Thursday, February 2nd 2023
AMD Restrained CPU and GPU Sales in 2H-2022 to Avoid Unsold Inventory
AMD in its Q4-2022 earnings release call disclosed to investors that it "undershipped" chips in the second half of 2022 to keep prices (margins) high and save itself from unsold inventory, in the wake of a steep slump in the PC market. "We undershipped in Q3, we undershipped in Q4," AMD CEO Dr Lisa Su told investors. "We will undership, to a lesser extent, in Q1 [sic]," she added.
Major chipmakers are experiencing an unprecedented slump in demand compared to the spike in demand during the COVID 19 pandemic lockdowns. With high energy prices and the ebb in the pandemic causing much of the white-collar workforce to return to office, there's no longer the kind of demand the PC industry saw in 2021. On the other hand, undersupplies artificially hold prices high, with graphics cards and desktop processors still being unreasonably pricey compared to previous generations. AMD calculated that it would rather make less revenues on fewer chips shipped, than end up with a bloated unsold inventory that it would have to sell at a thin margins, or even at a loss. The company on Tuesday beat expectations to report good Q4-2022 results, which received a thumbs-up from investors.
Source:
TechSpot
Major chipmakers are experiencing an unprecedented slump in demand compared to the spike in demand during the COVID 19 pandemic lockdowns. With high energy prices and the ebb in the pandemic causing much of the white-collar workforce to return to office, there's no longer the kind of demand the PC industry saw in 2021. On the other hand, undersupplies artificially hold prices high, with graphics cards and desktop processors still being unreasonably pricey compared to previous generations. AMD calculated that it would rather make less revenues on fewer chips shipped, than end up with a bloated unsold inventory that it would have to sell at a thin margins, or even at a loss. The company on Tuesday beat expectations to report good Q4-2022 results, which received a thumbs-up from investors.
200 Comments on AMD Restrained CPU and GPU Sales in 2H-2022 to Avoid Unsold Inventory
We know the same thing happens to 4090 as well.
AMD aren’t benevolent especially as a publicly listed company however I’d much rather support open standards than proprietary stuff which has no longevity. Oh, and a second (major) player doesn’t hurt the industry either even if things are fairly static at the moment.
They all crap from time to time, gravity do it`s thing and the dump get`s it way down to earth.
All of us get hit but you can choose not to smile back and 'stay loyal' when they $*@# you in the face.
70 Ti, 80 and 90 from 40 series are insanely priced, inventory is low for a reason and that's to keep the prices at the same level.
For example:
This has been available for over an hour now at NBB. If this was 3080 two years ago (at €700) it would fly off the shelf in seconds.
Like someone has already said, corporations aren't our friends, they're here to make $$$.
I like AMD , and I think 7900XT is an Okay card in terms of performance
But I will never, never paying 899 for that
That card should be 699 reference and 749 for AIB
Does everyone forget that the 40-series was delayed because the 30-series was still selling and the used market was flooded with cards? Remember the covid boom? Notice the inflation?
www.techpowerup.com/296610/nvidia-geforce-rtx-40-series-could-be-delayed-due-to-flood-of-used-rtx-30-series-gpus
They need to maintain the market prices so that they do not have to write down their inventory, which would have a big consequence to the balance sheet and perception of value in the current gen chipsets. This is a game of poker being played strategically with the CEO and CFO thinking very carefully about window-dressing the financial accounts and the product strategy. Remember, AMD cannot just "make fewer". The fabs are contracted in advance to production yield commitments, they can't just say "let's manufacture 20% fewer than we planned".
Moreover, AMD has to play a game of hold-em, where their deliberate extension of the product life cycle indicates that AMD does not have something ready in the pipeline for their next step, but needs to extend the life of the existing product generation.
It means 2023 and maybe 2024 too, will be very boring in terms of new GPU. Performance is getting stuck. They are hitting the Moore's limit. They've got contractual commitments to certain volumes of these chips.
They need to buy time. They need a new architecture. The must be very relieved than Intel ARC is lacklustre.
If these cards weren't so big and thirsty, this would be an ideal time for them to release a line of Crossfire-linked cards. Card B only works in crossfire setup, no independent output. Cheaper.
Do you really think this is an isolated, unique thing in the business world? At least AMD is admitting what they're doing here. Are we forgetting how Intel locked out AMD from the OEM market with BRIBES? Just to name one incident.
money.cnn.com/blogs/legalpad/2007/02/suit-intel-paid-dell-up-to-1-billion_15.html
I despise all this treating-a-brand-as-a-rock-star-oh-they-used-to-be-my-friend kind of f-boyism. Companies change beacuse they have to. Remember when Nvidia had a seemingly different point of view compared to today? I guess not.. (first 20 seconds)
Helping Nvidia becoming a monopoly won't help you personally. (Although I'm not saying they make bad products, and if you would have been a Nvidia fan I wouldn't say anything here.)
They're all equally bad. Sometimes they're a bit better, or worse, from a consumer point of view. They're never your friend, so don't treat them like a friend. You did and now you're sad.
Regarding this market situation ... I'd just comment that AMD is an unique position as they can use same chiplets in both R, T and E. R has poor sales (also) because DDR5 is too costly - probably AMD mispredicted that prices would drop much more one full year after the introduction of Alder Lake. Mobos too of course, it's unclear how much blame AMD has in that. So they just need to maintain some presence in the market and wait for better times. Meanwhile, chiplets go to E, and some best ones get hoarded for T.
a) you don't want the retailers having large inventories on retail shelves. There is a risk they won't order, will discount, will return unsold. AMD wants to keep their order book unfulfilled, ie. there are orders that have not yet been completed, and not have an empty order book. What looks better? We sold a million last quarter, but have no orders this quarter. Or, we sold 500,000 last quarter and have orders for 500,000 next quarter. The second looks much better, and also means you can price the second quarter like the first.
b) there is wiggle room in the supply chain - Fab - AMD - distribution - OEM - distribution - retail, and wiggle room in the VALUE CHAIN 100$ - 200$ - 300$ - 400$ - 600$ - 800$.
There are times when you "park" inventory at one end of the value chain rather than at the other end of the value chain. Including inventory classified lower down the chain even within the same corporate holding (AMD).
c) think about the balance sheet, cashflow, profit, write-downs, inventory valuations, and tax implications of all these options, especially when you put this in the mix across all product lines. The CEO and CFO are hard at work "window dressing" the accounts to paint a picture and manage these strategy, product, financial and fiscal issues. Assimilator said something interesting about Zen 4. Only AMD insiders will truly know.