AMD Reports Third Quarter 2020 Financial Results

[AleksandarK]

AMD (NASDAQ: AMD) today announced record revenue for the third quarter of 2020 of $2.80 billion, operating income of $449 million, net income of $390 million and diluted earnings per share of $0.32. On a non-GAAP* basis, operating income was $525 million, net income was $501 million and diluted earnings per share was $0.41.

"Our business accelerated in the third quarter as strong demand for our PC, gaming and data center products drove record quarterly revenue," said Dr. Lisa Su, AMD president and CEO. "We reported our fourth straight quarter with greater than 25 percent year-over-year revenue growth, highlighting our significant customer momentum. We are well positioned to continue delivering best-in-class growth as we further extend our leadership product portfolio with the launches of our next generation Ryzen, Radeon and EPYC processors."



Q3 2020 Results

• Revenue was $2.80 billion, up 56 percent year-over-year and 45 percent quarter-over-quarter driven by higher revenue in both the Enterprise, Embedded and Semi-Custom and Computing and Graphics segments.
• Gross margin was 44 percent, up 1 percentage point year-over-year and flat quarter-over-quarter. The year-over-year increase was primarily driven by EPYC and Ryzen processor sales. Gross margin was flat quarter-over-quarter as an increase of Ryzen and EPYC processor sales was offset by a higher percentage of semi-custom revenue.
• Operating income was $449 million compared to $186 million a year ago and $173 million in the prior quarter. Non-GAAP operating income was $525 million compared to $240 million a year ago and $233 million in the prior quarter. Operating income improvements were primarily driven by revenue growth, including an increase in Ryzen and EPYC processor sales and semi-custom product sales.
• Net income was $390 million compared to $120 million a year ago and $157 million in the prior quarter. Non-GAAP net income was $501 million compared to $219 million a year ago and $216 million in the prior quarter.
• Diluted earnings per share was $0.32 compared to $0.11 a year ago and $0.13 in the prior quarter. Non-GAAP diluted earnings per share was $0.41 compared to $0.18 a year ago and $0.18 in the prior quarter.
• Cash, cash equivalents and short-term investments were $1.77 billion at the end of the quarter.

Quarterly Financial Segment Summary

• Computing and Graphics segment revenue was $1.67 billion, up 31 percent year-over-year and 22 percent quarter-over-quarter. Revenue was higher year-over-year driven by a significant increase in Ryzen processor sales partially offset by lower graphics revenue. Revenue was higher quarter-over-quarter driven by a significant increase in Ryzen processor sales and an increase in graphics revenue.
• Client processor average selling price (ASP) was lower year-over-year due to a higher mix of mobile processor sales. Client processor ASP was higher quarter-over-quarter driven by higher desktop and mobile processor ASPs.
• GPU ASP was lower year-over-year due to product cycle timing and higher quarter-over-quarter due to product mix.
• Operating income was $384 million compared to $179 million a year ago and $200 million in the prior quarter. The year-over-year and quarter-over-quarter increases were driven by higher Ryzen revenue.
• Enterprise, Embedded and Semi-Custom segment revenue was $1.13 billion, up 116 percent year-over-year and 101 percent quarter-over-quarter. Revenue was higher year-over-year and quarter-over-quarter due to higher semi-custom product sales and increased EPYC processor sales.
• Operating income was $141 million compared to $61 million a year ago and $33 million in the prior quarter. The year-over-year and quarter-over-quarter increases were primarily driven by higher revenue.
• All Other operating loss was $76 million compared to operating losses of $54 million a year ago and $60 million in the prior quarter.

Recent PR Highlights

• AMD introduced the AMD Ryzen 5000 Series desktop processors, extending AMD leadership across gaming, single-threaded, and multi-threaded performance as well as power efficiency. Powered by the new "Zen 3" core architecture, the new processors deliver a 19 percent generational increase in instructions per cycle (IPC), the largest since the introduction of "Zen" processors in 2017.
• AMD EPYC processor adoption continues to grow as data center customers harness our differentiated performance and features for cloud computing, high-performance computing (HPC), hyperconverged infrastructure (HCI), virtualization and more.
• AMD EPYC processors are now being used by the Azure Data Explorer data analytics platform to improve real-time analysis on large volumes of data streaming from applications, websites, IoT devices and more.
• Oracle announced plans to offer cloud instances based on next-generation AMD EPYC processors, codenamed "Milan."
• Cloud service providers continued to announce the availability of new instances based on AMD EPYC processors, including AWS C5ad instances for compute intensive workloads, Google Cloud Confidential VMs featuring AMD Secure Encrypted Virtualization, and Microsoft Azure VMs which use AMD EPYC processors to power Office 365 applications.
• AMD announced growing ecosystem support for virtualization solutions based on VMware and Nutanix software from Dell, HPE and Lenovo.
• VMware announced support for AMD Secure Encrypted Virtualization - Encrypted State technology in its latest version of vSphere.
• Northern Data is leveraging AMD EPYC and AMD Radeon Instinct processors for one of the world's largest GPU-based distributed computing clusters for HPC applications at sites across Norway, Sweden and Canada.
• AMD expanded its position in the consumer and commercial client markets with new products and growing adoption of AMD Ryzen processors by leading OEMs.
• OEM partners continued to launch new AMD-powered notebooks, desktops and Chromebooks, including new HP and Lenovo notebooks and desktops for the commercial, consumer and gaming markets and the first "Zen"-based Chromebooks.
• AMD announced new AMD Ryzen 4000 Series Desktop Processors with Radeon Graphics and AMD Athlon 3000 Series Desktop Processors with Radeon Graphics for the consumer market, as well as the new AMD Ryzen PRO 4000 Series and AMD Athlon PRO 3000 Series Desktop Processors for the commercial market.
• AMD and Apple announced the availability of new AMD Radeon Pro 5000 series GPUs for the updated 27-inch iMac, bringing compute performance, energy efficiency and features to a wide variety of graphically intensive applications and workloads.
• AMD announced additional high-performance technology contributions to assist in the global fight against the COVID-19 pandemic, including high-performance computing systems or access to cloud-based clusters powered by 2nd Gen AMD EPYC and AMD Radeon Instinct processors for 21 institutions and research facilities around the world.
• AMD announced its annual corporate responsibility update, highlighting how AMD and its technologies are addressing sustainable technological and scientific advancement, environmental and supply chain responsibility, workplace inclusion and community support.

Current Outlook
AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Cautionary Statement" below.

For the fourth quarter of 2020, AMD expects revenue to be approximately $3.0 billion, plus or minus $100 million, an increase of approximately 41 percent year-over-year and 7 percent sequentially. The year-over-year increase is expected to be primarily driven by the ramp of new Ryzen, EPYC and semi-custom products and growing customer momentum. AMD expects non-GAAP gross margin to be approximately 45 percent in the fourth quarter of 2020.

AMD now expects 2020 revenue to grow by approximately 41 percent compared to 2019, up from prior guidance of 32 percent. Non-GAAP gross margin is expected to be approximately 45 percent, consistent with prior guidance.

AMD Teleconference
AMD will hold a conference call for the financial community at 8:00 a.m. ET (5:00 a.m. PT) today to discuss its third quarter 2020 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. The webcast will be available for 12 months after the conference call.


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[FinneousPJ]

Amazing growth! Still, I think their stock is currently overrated at 250% y/y

 

[Dammeron]

Considering Intel's fail after fail, those results were expected.

 

[R0H1T]

Amazing growth! Still, I think their stock is currently overrated at 250% y/y

I'd argue it's underrated if anything, Intel's just on a downward spiral right now & their pain will not subside unless they get their act together. Combined with the recent spate of acquisitions Intel's cash cow & holy grail DCG is under some serious threat. If you thought their margins were slipping, just wait till these acquisitions are finalized

 

[Deleted member 24505]

Considering Intel's fail after fail, those results were expected.

Still $18 billion third quarter so not too shabby compared to AMD's 2.8 still AMD's are mostly up and Intels are mostly down. so good for AMD's investors

I'd argue it's underrated if anything, Intel's just on a downward spiral right now & their pain will not subside unless they get their act together. Combined with the recent spate of acquisitions Intel's cash cow & holy grail DCG is under some serious threat. If you thought their margins were slipping, just wait till these acquisitions are finalized

intels DCG third quarter-

DCG

$5.9 billion

down

7%

 

[R0H1T]

Okay, your point?

 

[Deleted member 24505]

Still $18 billion third quarter so not too shabby compared to AMD's 2.8 still AMD's are mostly up and Intels are mostly down. so good for AMD's investors



intels DCG third quarter-

DCG

$5.9 billion

down

7%

Intels $75 billion revenue this year 2020, anyone know what AMD's is?

Okay, your point?

so good for AMD's investors

 

[R0H1T]

AMD's on track to make probably $10 billion or so this year, unless you meant financial year?

 

[Deleted member 24505]

AMD's on track to make probably $10 billion or so this year, unless you meant financial year?

Well no doubt, Intel is getting it in the neck from investors etc, and AMD are doing really well. Good. If zen 3 is as good as it seems, it will only get better for 2021

 

[Jomale]

Amazing growth! Still, I think their stock is currently overrated at 250% y/y

sorry, that is BS.
Intel is

 

[Chrispy_]

Well no doubt, Intel is getting it in the neck from investors etc, and AMD are doing really well. Good. If zen 3 is as good as it seems, it will only get better for 2021

The only thing overshadowing AMD's success is their utter dependence on TSMC. As they ramp up in sales and marketshare, their slice of TSMC's capacity will get more expensive.

It's great for TSMC but if they don't increase production capacity to match AMD's growth then the demand for TSMC's performance nodes will eventually cause intense competition between AMD and other people wanting that capacity.

 

[Deleted member 24505]

The only thing overshadowing AMD's success is their utter dependence on TSMC. As they ramp up in sales and marketshare, their slice of TSMC's capacity will get more expensive.

It's great for TSMC but if they don't increase production capacity to match AMD's growth then the demand for TSMC's performance nodes will eventually cause intense competition between AMD and other people wanting that capacity.

I'm correct in thinking Intel still fab their own stuff?

 

[Chrispy_]

I'm correct in thinking Intel still fab their own stuff?

Yes, but they are looking to outsource production now, rather than rely solely on their own fabs. Potentially TSMC will soon have AMD, Intel, Nvidia, Apple, Samsung, and Qualcomm all competing for capacity!

Samsung are always amusing to see in that list. Samsung monitors that use panels from their competitors, Samsung phones that use non-exynos processor designs, Many of their laptops use Hynix RAM, AUO or CMO panels, and Hynix SSDs...

Raja Koduri to Present at Samsung Foundry Forum amid Intel's Outsourcing Efforts

Intel's chief architect and senior vice president of discrete graphics division, Mr. Raja Koduri, is said to be scheduled to present at Samsung Electronics Event day. With a presentation titled "1000X More Compute for AI by 2025", the event is called Samsung Foundry SAFE Forum. It is a global...

www.techpowerup.com

 

[Punkenjoy]

Investor generally don't invest in present but in future. The high price for AMD vs Intel is the market think AMD have a better future than Intel.

That's it.

 

[FinneousPJ]

I'd argue it's underrated if anything, Intel's just on a downward spiral right now & their pain will not subside unless they get their act together. Combined with the recent spate of acquisitions Intel's cash cow & holy grail DCG is under some serious threat. If you thought their margins were slipping, just wait till these acquisitions are finalized

Well, then you should buy more AMD while I will refrain from buying. Time will tell who was right

sorry, that is BS.
Intel is
View attachment 173509

What is BS?

 

[Dave65]

Considering Intel's fail after fail, those results were expected.

Intel is not a fail, just ask Jay.

 

[yotano211]

My only fail is not buying enough amd stock back in the single digits. buy everything with Visa and mastercard debit/credit cards, own those stocks too.

 

[Frick]

In related news the Xilinx deal went official:

https://www.amd.com/en/press-releases/2020-10-27-amd-to-acquire-xilinx-creating-the-industry-s-high-performance-computing

Which seems a pretty good idea. Will be interesting to see what AMD is three years from now.

 

[Patr!ck]

Yes, but they are looking to outsource production now, rather than rely solely on their own fabs. Potentially TSMC will soon have AMD, Intel, Nvidia, Apple, Samsung, and Qualcomm all competing for capacity!

Samsung are always amusing to see in that list. Samsung monitors that use panels from their competitors, Samsung phones that use non-exynos processor designs, Many of their laptops use Hynix RAM, AUO or CMO panels, and Hynix SSDs...

Raja Koduri to Present at Samsung Foundry Forum amid Intel's Outsourcing Efforts

Intel's chief architect and senior vice president of discrete graphics division, Mr. Raja Koduri, is said to be scheduled to present at Samsung Electronics Event day. With a presentation titled "1000X More Compute for AI by 2025", the event is called Samsung Foundry SAFE Forum. It is a global...

www.techpowerup.com

Intel is also opening a brand new fab in 2020 https://www.tomshardware.com/news/intels-long-awaited-fab-42-is-fully-operational https://newsroom.intel.com/video-ar...arizona-fab-42-construction-b-roll/#gs.jfn3eq A company resorting to outsourcing for the production of their discrete GPUs while opening brand new fabs of their own is an indication of a growing and expanding company with multiple options at its disposal

 

[Chrispy_]

Intel is also opening a brand new fab in 2020 https://www.tomshardware.com/news/intels-long-awaited-fab-42-is-fully-operational https://newsroom.intel.com/video-ar...arizona-fab-42-construction-b-roll/#gs.jfn3eq A company resorting to outsourcing for the production of their discrete GPUs while opening brand new fabs of their own is an indication of a growing and expanding company with multiple options at its disposal

Let's just hope that third time's the charm for Intel. Their 10nm and 7nm fabs haven't exactly worked out for them!

 

[Patr!ck]

Let's just hope that third time's the charm for Intel. Their 10nm and 7nm fabs haven't exactly worked out for them!

Alder Lake and Sapphire Rapids samples are already shipping in Q4 2020. https://www.tomshardware.com/news/intel-alder-lake-sampling-sapphire-rapids That brand new fab isn't twiddling its thumbs.

 

[Chrispy_]

Alder Lake and Sapphire Rapids samples are already shipping in Q4 2020. https://www.tomshardware.com/news/intel-alder-lake-sampling-sapphire-rapids That brand new fab isn't twiddling its thumbs.

You may have better info than me, but last thing I read was that Intel are still struggling with both yields and clocks on 10nm and that 7nm early development is looking real bad, which is why Intel are doing the unthinkable: Selling off their entire NAND business and outsourcing CPU production to Samsung. Their original plan with 10nm failures was to fast-track 7nm but that hasn't worked, and they still don't have a viable process, hence the cashflow issues and outsourcing.

Intel's really not revealing too much about the success or failure of their 7nm development but all hints point towards it being as problematic as 10nm. For whatever reason, Intel have gambled on their foundry tech and lost, then doubled-down on 7nm and lost again.

 

[Patr!ck]

You may have better info than me, but last thing I read was that Intel are still struggling with both yields and clocks on 10nm and that 7nm early development is looking real bad, which is why Intel are doing the unthinkable: Selling off their entire NAND business and outsourcing CPU production to Samsung. Their original plan with 10nm failures was to fast-track 7nm but that hasn't worked, and they still don't have a viable process, hence the cashflow issues and outsourcing.

Intel's really not revealing too much about the success or failure of their 7nm development but all hints point towards it being as problematic as 10nm. For whatever reason, Intel have gambled on their foundry tech and lost, then doubled-down on 7nm and lost again.

Intel's 10nm node is a real node, right now. The 2021/2022 10nm lineups are finalized and will ship by next year. The remaining concern is 2022/2023 products that need to done on the 7nm node. Intel doesn't know where they will be with their 7nm node in 1 year, which is why outsourcing remains a potential option left on the table. 10 nm is fixed and this brand new fab will contribute to increase the production capacity of products based on that node. Intel is going at Samsung and TSMC because with such a high demand for their 10 nm CPUs their own fabs are not enough to produce both their CPUs and GPUs, and they need their first iteration of discrete GPUs to be on the latest nodes such as TSMC 6nm in order to be competitive with what NVidia and AMD will bring next year. If by next year their 7 nm node is fixed I can see Intel sticking with a 100% in-home CPU production while still resorting to outsourcing only for their discrete GPUs production.

Selling their QLC Nand business is a good move. QLC is cheap and has low profitability in the crowded SSD space. By selling that Dalian fab, they're also quitting China which is a politically unstable area right now. However Intel retained their "3D Xpoint" Optane memory business which sets them apart from the competition and bring them decent profit margins. Optane will continue to be produced at both Micron and Intel's own Rio Rancho fab.

Intel is now investing into high value businesses that match up with their vision as a high tech company https://newsroom.intel.com/news/int...performance/?linkId=100000018164935#gs.jfas2j