AMD Restrained CPU and GPU Sales in 2H-2022 to Avoid Unsold Inventory

[Crackong]

4070 ti and 4080 never went out of stock once.

That simply means they are overpriced and nobody wants them right now. (Same goes to AMD 7900XT)

4070ti and 4080 exist for one sole purpose -> upsell the 4090.

 

[Space Lynx]

Typically, yes. It happens with almost every GPU launch ever.

Maybe the 4070ti and 4080 haven't been out of stock at launch because people weren't exactly stepping on each other to buy them, ever thought of that ? One of them is over 1200$ and the other was a failed attempt at falsely advertising a product, so they didn't exactly have the best prospects of being top sellers.

there is always a market. 4090 is sold out constantly for example. i think nvidia just targeted their numbers in production better for the 4070 ti and 4080. we would need transparency on supply of each one made direct from nvidia though to know for sure.

That simply means they are overpriced and nobody wants them right now. (Same goes to AMD 7900XT)

4070ti and 4080 exist for one sole purpose -> upsell the 4090.

not necessarily. we would need more data to know that for sure.

where as what we have here, is AMD actively admitting make sure they didn't supply enough 7900 XTX to meet demand, at least that is how I read it from the TechSpot article.

 

[Scrizz]

4070ti and 4080 exist for one sole purpose -> upsell the 4090.

Facts! The more you buy, the more you save.

 

[Crackong]

where as what we have here, is AMD actively admitting make sure they didn't supply enough 7900 XTX to meet demand, at least that is how I read it from the TechSpot article.

So the point to blame is AMD being honest?

We know the same thing happens to 4090 as well.

 

[bobsled]

4070 ti and 4080 never went out of stock once.

Because those products are a horrible price to performance value. It’s simple and has nothing to do with huge volume production.

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.

 

[Space Lynx]

So the point to blame is AMD being honest?

I appreciate AMD's transparency in this case, though more data is needed to know if this was intentional or not, according to the TechSpot article this was just Lisa Su trying to calm down investors, maybe this wasn't actually supposed to be for us to read about. Again, more data would be needed before I could agree or disagree with you in this matter.

you replied before I finished my post...
If you don't get my post, that's ok too.

Fair.

 

[Vya Domus]

4090 is sold out constantly for example.

I doubt that's the case but even if it's true it doesn't mean anything. If the 4090 is out of stock then that must mean Nvidia is undershipping it lol.

 

[Dirt Chip]

So the point to blame is AMD being honest?

We know the same thing happens to 4090 as well.

The point is not to loyal yourself to a giant tech company whether it NV, AMD, Intel and so on.
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.

 

[Chomiq]

How exactly do you increase your margins by shipping less products ?

Keep the price high while demand is mediocre? Sell off remaining AM4 inventory in the meantime and then dump AM5 cpus.

I doubt that's the case but even if it's true it doesn't mean anything. If the 4090 is out of stock then that must mean Nvidia is undershipping it lol.

Exactly, Nvidia is doing the same thing, that's why their last PR nonsense was "If you're a budget (sic) buyer there's always the 30-series that's available for purchase".
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 $$$.

 

[Frick]

How exactly do you increase your margins by shipping less products ?

It's over time. Selling exactly the right amount of cards at a higher price is better than having a bunch of stuff sitting on shelves. Even if they manage to sell it off eventually (with discounts), $500 now is better than $500 in 12 months for the same thing. It is also AMD undershipping, meaning it's nothing we as customers necessarily see directly, but their partners. Fiscally for them it's sound. Me I'd love for all chip makers to make too much stuff amd progress too quickly so that I this year could buy a 7900XT at like €600 but the bean counters aren't that dumb. Do not flood the markers, it's bad for (their) business.

 

[Vya Domus]

Keep the price high while demand is mediocre? Sell off remaining AM4 inventory in the meantime and then dump AM5 cpus.

How exactly does that give AMD higher margins ? Assuming retailers increase the prices, that money goes to them not to AMD.

It's over time. Selling exactly the right amount of cards at a higher price is better than having a bunch of stuff sitting on shelves.

That does not increase your margins, the margins are the same, you just sell more products.

 

[Crackong]

The point is not to loyal yourself to a giant tech company whether it NV, AMD, Intel and so on.

That's true.

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

 

[ixi]

Undershipped xD. How about to put good price on devices...

 

[claes]

How exactly does that give AMD higher margins ? Assuming retailers increase the prices, that money goes to them not to AMD.

Amd controls supply, not the resellers

That does not increase your margins, the margins are the same, you just sell more products.

That assumes there’s demand. If not, the resellers have to clear inventory at a loss. If you create demand by limiting production you can increase prices.

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?

https://www.techpowerup.com/296610/...layed-due-to-flood-of-used-rtx-30-series-gpus

 

[Frick]

That does not increase your margins, the margins are the same, you just sell more products.

If supply exceed demand it might not be. Plus AMD saves money on not making the things or keeping the things. It's why JIT (just in time) stock is a massive thing: stock is literally only an expense until the time you sell it and see the money in your accounts, and in uncertain times trimming the stock is a very attracrive prospect.

 

[kondamin]

Maybe I should just look for a nice used 5950x and not buy anything new.

 

[lemonadesoda]

If AMD have "undershipped" to maintain retail prices - that is only half the story.

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.

 

[SL2]

why not? AMD provided me with affordable memories as a child and teen. so I was happy to be loyal to them. until today. now my money goes to Intel and Nvidia. so good luck to their shareholders, lot of people like me who will now be eyeing Intel and Nvidia moving forward. because there is no good guy anymore, AMD used to be, but not anymore. and since it is now an even playing field, I'd rather go Nvidia, at least with Nvidia I won't be drawing 90 watts while I watch youtube as I would with a 7900 XTX LOL - I was willing to overlook that initially, cause of the memories AMD afforded me growing up when I couldn't afford Intel and Nvidia.

Not anymore, even playing field, have fun AMD! My money is going elsewhere now since all the companies are the same for once.

This is just naive and gullible reasoning. One brand used to be your favorite, and that's why you hold them to a higher standard? So bitter.

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.

FORTUNE: Legal pad

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.

 

[maxfly]

Shes already told us why the are doing this. They are playing the numbers game. YOY 22-23 their profits would look like shit if the simply cranked out every die available during the first/worst quarter of the year. It would tank the visuals. 1st quarter is ALWAYS the slowest. She knows they can't compete with 1st qtr 2022s artificially bloated numbers. The numbers her shareholders will compare this year to. So they constrain supply, sell fewer units at more profit, keep prices high and shareholders are happier.

 

[Wirko]

I appreciate AMD's transparency in this case, though more data is needed to know if this was intentional or not, according to the TechSpot article this was just Lisa Su trying to calm down investors, maybe this wasn't actually supposed to be for us to read about. Again, more data would be needed before I could agree or disagree with you in this matter.



Fair.

See, your anger has a half-life of about five hours, which is actually quite good, and you're coming back to rational thinking.

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.

 

[T1beriu]

This doesn't make any sense? How do you avoid unsold inventory by restraining sales?!

 

[Assimilator]

Methinks the good doctor is being a little economical with the truth to cover up for Zen 4's poor sales numbers. I think the reality is that Zen 3 supply only was cut to promote Zen 4, but now that AMD has figured out nobody is buying the latter, they're going to reopen the flood gates on the former until A620 arrives. It's a great place to be when you're competing with yourself, and AMD hasn't really been there before so they're still figuring this all out.

This doesn't make any sense? How do you avoid unsold inventory by restraining sales?!

Shortages generate demand, whether those shortages are true or induced. Demand drives up sales and possibly prices.

 

[Dirt Chip]

See, your anger has a half-life of about five hours, which is actually quite good, and you're coming back to rational thinking.

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.

RTE?

 

[T1beriu]

Shortages generate demand, whether those shortages are true or induced. Demand drives up sales and possibly prices.

Shortages generate demand?! Wtf?! It's the other way around!

 

[lemonadesoda]

This doesn't make any sense? How do you avoid unsold inventory by restraining sales?!

The unsold inventory they are referring to is in the supply chain, distribution network, on retail shelves.

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.