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
Can you point at some articles about Nvidia? I would love to see the titles, for example "Nvidia admits of keeping prices up to retain profit margins over 65%". Also I would love to see people's reaction. For example in TPU we are already at 7 pages. I wonder, did the article about Nvidia generated 2-3 pages of comments? AMD CAN NOT KEEP PRICES UP. ONLY NVIDIA CAN KEEP PRICES UP.
AMD 8% market share . Nvidia 90% market share
AMD 40% profit margin . Nvidia over 60% profit margin
AMD prices. Almost all under MSRP, people are educated to avoid AMD GPUs . Nvidia prices. Almost all OVER MSRP, because people are educated to buy no matter the price Fixed that for you. Because, let me ask you something.
If the company that controls 90% of the market and it's products are bought from everyone, DROPS prices, what whould you expect the company that controls 8% of the market and it's products are avoided almost from everyone will do?
When the next RTX 5090 comes at $2000 and AMD's top product is at $1200, don't forget to point your finger at AMD.
DAMN. I am reading some comments here and I wonder about the education in other countries.
AMD just fallow them: 1- higher prices gen to gen (but not as much as NV). Noe they reduce price but the lunch MSRP fallow the higher price trend and
2- trying to control the market price\ adjust their loss by undersupply like NV does but to lesser extent.
I think that's what outrage people- to see that AMD behave much like NV at the fundamental level just with some adjustments due to it's size and power.
From AMD perspective thay doing the right thing and I support them for that move on the 'academic level' of how to behave economically in rough times.
But as a consumer this tactic go against me, at least in the short term.
If AMD will not do the necessary changes Thay might fall into a hole just like a decade ago.
All in all, accept that AMD will behave much like NV the stronger thay will be.
It's a two player poker game and you need to play your hand as best as you can. No room for 'nice guy' at that table.
In any case by avoiding replying to my post and just blaming the article, it means that you know that I am right. You just afraid to admit it.
That makes you an Nvidia fanboy. You just try to hide it. Nvidia sells at 65% profit margin and AMD at 40% profit margin. AMD can't lower prices, because Nvidia has far greater room to reduce it's prices. And considering that consumers are today educated/brainwashed/decided to pay for Nvidia hardware even if that Nvidia hardware is costing more while offering lower performance, it's clear that AMD CAN NOT lower prices. It wouldn't help them at all.
So, for example, even if AMD drops prices by 20%, Nvidia can also drop prices by 20% and still maintain a much higher profit margin than AMD. And people will rush to pay for the Nvidia card anyway, even if it is higher priced, so why should AMD drop prices? How do i know it? Well AMD did dropped prices and people still buy Nvidia hardware, even when Nvidia not only didn't dropped prioces, but they maintain higher than MSRP prices.
With consumers having turned their backs to AMD, AMD should think of it's profit margins to maintain profitable and keep offering us at least a competitive platform in CPUs. If ever consumers decide to stop worshiping Nvidia, AMD can reenter the retail market at any time. Until then, consumers should stop winning and pay the prices Nvidia demands.
You're not worth giving a more detailed reply to, because you don't actually want a reasoned argument, more of a troll who will just argue round and round in circles, so I won't waste my time. You would have understood what I'm saying in my posts above otherwise.
Anyone looking at your posts here can see it.
Be good. Support Nvidia and Nvidia will support you.......definitely.....
The more you buy, the more you save.
If AMD can't compete and be on top of NV or Intel preformance wise, they must be cheap enough to be a good option.
Consumer don't need to take care of AMD, or any other company in it's size. AMD do need to take care of it's balance and margins. If by doing so it come against some of it's consumer, so be it.
Just don't try to put blame on the consumer for their situation. It's none of anyone responsibility.
In GPUs the situation is different. People buy the RTX 3050 over the RX 6600. People pay $1600 for the RTX 4090. It's not totally their fault. Press, Youtubers, posters, trolls, will send consumers to buy Nvidia cards. "Buy the RTX 4090, it's the fastest card, better value than the RTX 4080". "Buy the RTX 3050, it's more expensive and slower, but it comes with more features and better drivers. The AMD cards are full of problems". So, in the GPU market I DO blame consumers. Because now we have a monopoly. And as long as Nvidia enjoys 90% of market share, prices generation after generation will be going up. And performance will see a stagnation (at probably under $700) the type we seen when Intel was selling quad cores year after year.
Some people seems to love stagnation and monopoly and love to blame the company that is their only chance to avoid it (because Intel is 2-4 years away from becoming an Nvidia direct competitor).
This doesn’t make AMD strategy any better from a customer point of view.
AMD is 'undershipping' chips to balance CPU, GPU supply | PCWorld
Here is also a comment on reddit:
When it comes to CPU's however...the average person and fully made desktop vendor does not want the headaches they see associated with water cooling. So, that part of things is more an issue than 'enthusiasts' want to admit. That part is an unintended consequence of the race for the 'biggest/baddest/most heat producing' engine that powers everything...thus (among other possible reasons) the 65W CPUS which should put the average person who still wants high quality and fast desktops, back in the market.
There's a third option, stop going to extremes every time You sure? There's quite a few topics where you say Nvidia is all you can possibly look at ;)
I get the sentiment though, I suffer from that notion too. I really want to buy AMD, but they make it hard. We both might carry a few % of fanboyism. I mean even today, I truly hate Nvidia's guts, but I can't bring myself to spend 600 eur on an RX 6800. Simply because the deal feels meh. BUT if that perf/VRAM/spec was available at Nvidia for 600... I'd have bought one... I caught myself thinking that a few times now, scrolling through the offers lately. But when I look at green, I get half the VRAM for that money :D
Their GPUs are underperforming with RT which is becoming the new standard on games because why would game developpers use anything else than nvidia hardware when only 10% of their customers have AMD cards?
If they dont find a way to make their cards more competitive either by improving them or selling them at a lower price, they can close their GPU branch in 2 years.
If UK decides to slow production, no one will notice.
With AMD holding only 8% of the market and consumers rushing to buy anything with an Nvidia logo on it, even if AMD stops producing GPUs for the retail market, prices will remain about the same. (just taking a pass from your post, not replying specifically to you) With about everyone blowing out of proportions anything negative about AMD, it's easy to feel like that. I mean, RX 6000 series was looking as a great option for people not wanting to throw over $700 for a new GPU, especially after those price reductions. Then we have the rumor about RX 6000 cards dying from a driver. Who wasn't affected? Even me here, posting like an AMD fanboy and knowing that this rumor was BS, I would be having second thoughts after that BS on buying an RX 6800/XT or RX 69x0XT. We can blame AMD for it's bad reputation, either because of drivers (the delay of new drivers for RX 6000 is their fault), or other mistakes (vapor chambers on RX 7900XT/X), but in general they are the favorite target for everyone (press, youtubers, individuals) online, which makes consumers see them as a bad choice, while this isn't really true, or at least not in the degree most people assume. AMD had lowered prices substantially those last months. Tech press and consumers ignore them and those price reductions. On the contrary they where celebrating the price reductions on... RTX 3090 Ti. Consumers keep buying Nvidia cards above MSRP, tech press and youtubers ignore AMD GPUs in their articles/videos. I was looking at Jayz's latest video. He was talking about the price reduction of Intel's A750, comparing it with the RTX 3060 and never mentioning the existence of AMD models at the same price points.
AMD is a multi billion company, they should find a solution themselves how to fix things, because those last years in GPUs they are trying to compete in a hostile market. Everyone is against them. But what else can they do? They are already selling at much lower profit margin than Nvidia. Sell at cost? Sell at a loss? I have been called an Nvidia shill for screaming about RT performance on RX 7000. They should do that. Focus on servers, sell to OEMs, let consumers suffer Nvidia's pricing and have Youtubers and tech sites suffer a reduction of viewers/readers, because who wants to keep viewing/reading about new products from ONE GPU manufacturer?
Yes, NVIDIA make better performing graphics cards, TPU reviews show this, but I'm pretty scathing about their prices in several posts and I refuse to buy cards with melting connectors, even if they were reasonably priced - that's a really bad design fault which should trigger a recall. How NVIDIA get away with selling these defective cards I don't know. It's quite easy to see what the problem is, too. They're pushing a ton more power through smaller conductors, placed closer together. The opposite should have happened, then it would have been ok.
I'm definitely no fanboy of any brand, please believe me on that one.
1.6B gaming revenue (consoles + GPUs) for Crimson Red
1.57B gaming revenue from gaming GPU business for Filthy Green
Now, AMD's 1.6B includes about 5-7 million console APUs. At around $100 for a 300mm2-ish 7nm chip (with nothing else) it makes AMD GPU revenue share at 30-40% give or take.
And that's in terms of $$$.
For last gen GPUs, looking at mindfactory.de, AMD outsells green. Your comparison is... peculiar.
6800XT costs 650-ish Euro.
Which is about 20 Euro less than 3070Ti.
Which, besides having less VRAM, is a whole tier slower.
Anyhow, people tend to stick with the brand. Although, I've never heard about sticking with the brand one hates, but oh well, maybe you hate AMD even more. "drops fps by 40-50%" is a hard feature to ignore. It is Feb 2023 and beating 3090Ti at RT is nowhere competitive enough.
RTX 4080 MSRP: $1200
RTX 4090 MSRP: $1600
www.notebookcheck.net/Divisive-RTX-4070-Ti-reportedly-leads-the-GPU-sales-race-on-Mindfactory.682638.0.html
Here's a little sample size from my locale - note that 649 6800XT is a unicorn, most go >700.
But it still doesn't compare favorably to a 4070ti... You're looking at a >30% performance win at a 30% price increase then; with better featureset and perf/w
I'm ignoring the 3070ti altogether, and 3080 as well. Too hungry and too low on vram - Ampere is just a shite gen simple as. Going by this list... Arc it is? :D
I'm still sitting on my money for now... this is just a no go; whether Im spending 600 or 900. An 6800XT launched for 649 USD, go figure. I'm defo not paying that in 2023 - I'd have to drop to 10 FPS on my 1080 before I'll get that desperate.
Interesting analysis, and probably correct. Nice.
What a novel idea right?
Who would have thought... /sarcasm