News AMD 3Q23 Results

[controlflow]

When a company GIVES away products in order to keep the competition from making sales, is that not anti-competitive behavior ? AMD won this suit before when Intel did something similar.

This is a very strange take.

As far as I can see, Intel is selling their Sapphire Rapids at nearly no profit or at cost. Their product isn't as good as Genoa and they know it. What would you want them to do instead?

In the past when Intel engaged in anti-competitive behavior, they were paying OEMs to essentially not sell AMD HW. That is obviously illegal but completely different from the current situation.

As an enthusiast and customer, I think this is great. This is literally the definition of competition. I want lower prices and for companies to sacrifice some margins for the benefit of customers. Be happy that these companies aren't engaging in some kind of subtle collusion or price fixing the way Samsung, SK Hynix and Micron seem to do in the way they try to avoid oversupply and race to the bottom scenarios in NAND and DRAM.

If you are a shareholder of one of these companies though, I can understand why you would be unhappy with this.

 

[Hans Gruber]

This is a very strange take.

As far as I can see, Intel is selling their Sapphire Rapids at nearly no profit or at cost. Their product isn't as good as Genoa and they know it. What would you want them to do instead?

In the past when Intel engaged in anti-competitive behavior, they were paying OEMs to essentially not sell AMD HW. That is obviously illegal but completely different from the current situation.

As an enthusiast and customer, I think this is great. This is literally the definition of competition. I want lower prices and for companies to sacrifice some margins for the benefit of customers. Be happy that these companies aren't engaging in some kind of subtle collusion or price fixing the way Samsung, SK Hynix and Micron seem to do in the way they try to avoid oversupply and race to the bottom scenarios in NAND and DRAM.

If you are a shareholder of one of these companies though, I can understand why you would be unhappy with this.

I do not want to taint people here. When you have your own accounting and you own your own fab. Margins/Profit/Loss are trivial and they can say whatever they want. It's not like buying silicon from a 3rd party like TSMC. When you cook the books, it's always good to have a great chef with lots of runny ink.

 

[Markfw]

This is a very strange take.

As far as I can see, Intel is selling their Sapphire Rapids at nearly no profit or at cost. Their product isn't as good as Genoa and they know it. What would you want them to do instead?

In the past when Intel engaged in anti-competitive behavior, they were paying OEMs to essentially not sell AMD HW. That is obviously illegal but completely different from the current situation.

As an enthusiast and customer, I think this is great. This is literally the definition of competition. I want lower prices and for companies to sacrifice some margins for the benefit of customers. Be happy that these companies aren't engaging in some kind of subtle collusion or price fixing the way Samsung, SK Hynix and Micron seem to do in the way they try to avoid oversupply and race to the bottom scenarios in NAND and DRAM.

If you are a shareholder of one of these companies though, I can understand why you would be unhappy with this.

Strange take ? The ONLY reason for them to virtually give them away is to try and stem the tide of market value to AMD. And this is not a sale, or a short duration thing, its been going on for YEARS. The have a superior product not selling as it should because the competitor is GIVING their CPUs away I think is illegal. So their only reason for this discount is make AMD not a competitor. Thats anti-competitive and illegal. Where am I wrong in my reasoning ? There is no other reason for AMD to be the superior product for like 5 years and gain virtually no market share.

 

[controlflow]

Strange take ? The ONLY reason for them to virtually give them away is to try and stem the tide of market value to AMD. And this is not a sale, or a short duration thing, its been going on for YEARS. The have a superior product not selling as it should because the competitor is GIVING their CPUs away I think is illegal. So their only reason for this discount is make AMD not a competitor. Thats anti-competitive and illegal. Where am I wrong in my reasoning ? There is no other reason for AMD to be the superior product for like 5 years and gain virtually no market share.

How is cutting prices to defend market share illegal? Companies get into price wars all the time for the purpose of protecting or gaining market share. What law does that violate? It is literally just competition. That is how the free market works.
AMD could have also cut prices further and they would have gained a lot more market share but instead they decided to beef up their margins. There is nothing illegal about either of those actions. Even now AMD appears to be optimizing more for higher margins as opposed to market share.

 

[jpiniero]

Intel is not giving Sapphire Rapids away, as evidenced by their rising ASPs.

 

[Markfw]

Intel is not giving Sapphire Rapids away, as evidenced by their rising ASPs.

OK. So I keep asking why AMD is not gaining more ground with a seriously better server CPU than Intel, and I get the reply " Well Intel is giving them away to keep market share" and in the stats on the quarterly results, I see that AMD is make much more on servers than Intel.

So which is it ?

 

[jpiniero]

OK. So I keep asking why AMD is not gaining more ground with a seriously better server CPU than Intel

That's the billion dollar question, isn't it.

 

[adroc_thurston]

OK. So I keep asking why AMD is not gaining more ground

Customer mix and margin targets plus some intertia in enterprise (and overall enterprise weakness).
Focus on revenue, not unit share.

 

[Abwx]

Intel is not giving Sapphire Rapids away, as evidenced by their rising ASPs.

If they were not sold at a loss they wouldnt have been in the red by 500M for DC during Q2 at roughly 2x AMD revenue, and yet, as you pointed it, they increased prices during Q2, wich mean that they were sold at even bigger loss during Q1, only during Q3 they got back to 0% margin and sold them at break even cost.

 

[jpiniero]

If they were not sold at a loss

As I mentioned in the other thread, Intel hides the cost of the new fabs in Client and Data Center. That's a massive number. It also doesn't help that Sapphire Rapids is such a chonker for a mediocre yielding node.

 

[adroc_thurston]

As I mentioned in the other thread, Intel hides the cost of the new fabs in Client and Data Center. That's a massive number. It also doesn't help that Sapphire Rapids is such a chonker for a mediocre yielding node.

No, SPR margins are indeed bad.
DCAI opinc is kinda heavily coasted by Altera having good quarters.

 

[jpiniero]

No, SPR margins are indeed bad.

The wafers should be "cheap", especially since sales are so low they would be idling the fabs otherwise. But it wouldn't surprise me if Intel was only getting one or two product per wafer... if we are going to assume we are talking about them mainly selling like the 52 or 56 core.

 

[H433x0n]

The wafers should be "cheap", especially since sales are so low they would be idling the fabs otherwise. But it wouldn't surprise me if Intel was only getting one or two product per wafer... if we are going to assume we are talking about them mainly selling like the 52 or 56 core.

What?

EMR is releasing SKUs that have 64 cores on 2 tiles. SPR has enormous dies with 1 core per tile disabled.

 

[Vattila]

Here are my at-a-glance segment results slides:

Source spreadsheet is available at my OneDrive.

It is good to see operating income in every segment again, with recovery in client and data centre markets. Hopefully, this should continue and add to the projected income from supercomputer APU and other HPC and AI sales in the quarter. However, as regards MI300, I suppose they are supply constrained this quarter, so there is little upside in the short term. It is going to take a while to ramp up the AI sales, I guess. But $2B for 2024 sounds great as a base target. Apparently, it was more than analysts expected.

So I keep asking why AMD is not gaining more ground with a seriously better server CPU than Intel

In general, enterprise is just notoriously conservative and resistant to change IT solutions, I guess.

In HPC, data centre and cloud, where performance and efficiency really matters, AMD is doing well, with some of these customers reportedly buying the majority of CPUs from AMD now — for their internal workloads, at least.

I have to say I'm quite surprised with this earnings report. Enterprise and embedded (Xilinx), as well as gaming (consoles) were underperforming in my opinion. Biggest surprise is Xilinx, to be honest.

On the Embedded segment, recall that Xilinx had an order backlog before the acquisition. The merger allowed them to ramp up delivery. And the networking market was hot, but has since cooled. So, it is only to be expected that there is some revenue pull-back. Hopefully, confidence in the networking market will return and segment revenue will hold around the billion mark. With the great operating margin in this segment, that is still a lot of solid income.

The Gaming segment will have a steady decline until the next console refresh, but this is as expected. The important thing here, of course, is to win and supply the next generation consoles. AMD looks well positioned in that regard, but we'll have to see how it turns out.

 

[TheELF]

OK. So I keep asking why AMD is not gaining more ground with a seriously better server CPU than Intel, and I get the reply " Well Intel is giving them away to keep market share" and in the stats on the quarterly results, I see that AMD is make much more on servers than Intel.

So which is it ?

AMD is operating on 4% margins, last quarter it was 0% ,q3 last year it was -1% ... if somebody is giving away their CPUs for free it's AMD, or at least it's also AMD.
They are not making more money on servers if no money is left over at the end of the day...
And for the question of why they can't gain market share, they just don't have any money to buy enough units from TSMC to create enough CPUs to increase their market share, they already use almost/all/more than of their gross profit as operating expenses.
And their operating expenses will only be going up, if they don't manage to increase their revenue drastically we are in for another decade of the same products over and over again like they did with bulldozer.

https://d1io3yog0oux5.cloudfront.net/_bb564a866bc41f45b16c329e8171eb02/amd/db/778/6935/file/AMD+Q3%2723+Earnings+Slides.pdf

 

[adroc_thurston]

AMD is operating on 4% margins, last quarter it was 0% ,q3 last year it was -1% ... if somebody is giving away their CPUs for free it's AMD, or at least it's also AMD.

GAAP numbers include goodwill amortization from Xilinx acq.

 

[Markfw]

AMD is operating on 4% margins, last quarter it was 0% ,q3 last year it was -1% ... if somebody is giving away their CPUs for free it's AMD, or at least it's also AMD.
They are not making more money on servers if no money is left over at the end of the day...
And for the question of why they can't gain market share, they just don't have any money to buy enough units from TSMC to create enough CPUs to increase their market share, they already use almost/all/more than of their gross profit as operating expenses.
And their operating expenses will only be going up, if they don't manage to increase their revenue drastically we are in for another decade of the same products over and over again like they did with bulldozer.

https://d1io3yog0oux5.cloudfront.net/_bb564a866bc41f45b16c329e8171eb02/amd/db/778/6935/file/AMD+Q3%2723+Earnings+Slides.pdf

In data center, their margin is 19%. Way to skew the numbers in your favorite way.

 

[jpiniero]

What?

EMR is releasing SKUs that have 64 cores on 2 tiles. SPR has enormous dies with 1 core per tile disabled.

I know. It's going to be another chonker. Instead of 4 400 mm2 dies, it'll be 2 800 ones.

 

[Joe NYC]

Just so we are clear, we are comparing projected revenue for AI products for both companies. It is fair if you want to call Intel's $2 billion projection for next year "BS" while trusting the AMD projected numbers but lets just be clear that there is little objectivity in that view. Fortunately, we won't have to wait long to see what actually happens.

Indeed, we will not have to wait long, because AMD is already in process of installing Mi300 for El Capitan.

In the meantime, it seems like the biggest customer for Gaudi will be - Intel itself. Building some sort of inhouse supercomputer.

And, BTW, Intel did not disclose the time frame for this pipeline, and how much of it will be Intel buying from itself.

Despite being already released, for 6 months, Intel doesn't seem to have any revenue for Gaudi. If there was any material revenue, we would never hear the end of it. But - nada...

You talk about performance, I can at least show you peer reviewed and 3rd party benchmarks for Gaudi 2 for both LLM training and inference that show competitive and viable performance from months ago. Where are the AMD values? AMD is even part of the MLCommons Consortium but has refused to participate in publishing anything. Perhaps AMD's solution will indeed turnout to be potent, but until I see peer reviewed data on standardized benchmarks I don't think your confidence is well founded.

Mi300 has not been released. I am sure we will get benchmarks.

I think the way to look at Gaudi is similar to Mi250 - both of which are trying to get any scraps of the AI market they can.

 

[Joe NYC]

Intel is not giving Sapphire Rapids away, as evidenced by their rising ASPs.

In fact, Intel said during their call that Xeon had record ASPs.

Which brings me back to what I said above, that some of the statements of Intel executives are borderline BS. This is clearly one of them. There is no way Intel ASPs are at record level.

That statement probably needs a full page of fine print and qualifications to not be an outright lie.

 

[Joe NYC]

OK. So I keep asking why AMD is not gaining more ground with a seriously better server CPU than Intel, and I get the reply " Well Intel is giving them away to keep market share" and in the stats on the quarterly results, I see that AMD is make much more on servers than Intel.

So which is it ?

Intel has an arsenal of shenanigans they pull to skew the market. The enterprise sales are more susceptible than sales to Cloud Service Providers (which is why cloud is AMD's strongest market).

Dell has been a co-conspirator of Intel in the, and the old habits die hard. Dell is still big in enterprise sales.

 

[Joe NYC]

Customer mix and margin targets plus some intertia in enterprise (and overall enterprise weakness).
Focus on revenue, not unit share.

One chart on revenue I have seen (from Dylan) has AMD at ~36%

AMD MI300 Ramp, GPT-4 Performance, ASP & Volumes

Order Volumes From Microsoft, Meta, Oracle, Google, Supermicro/Quanta direct, Amazon

www.semianalysis.com

BTW, looking at Intel datacenter revenue, is it conceivable that Intel could have, in this quarter, record Xeon ASPs? As Intel claimed during the conference call?

 

[TheELF]

GAAP numbers include goodwill amortization from Xilinx acq.

Goodwill is a completely different number and has nothing to do with the main numbers, it's part of the assets.
Amortization is something any company has to deal with, it's a expense like any other, it doesn't increase the money that AMD has available or can use for something.

AMD Reports Third Quarter 2023 Financial Results

Browse AMD’s company-wide and financial press releases.

ir.amd.com

September 30, 2023

December 31, 2022

Goodwill

24,186

24,177

In data center, their margin is 19%. Way to skew the numbers in your favorite way.

Data center is not a separate entity, for data center to survive all of AMD has to survive, for data center to be able to sell the CPUs at the price they do they need client, to shove the lesser ccxs to and make some additional money, otherwise data center CPUs would have much worse yield, be much more expensive, and would make much less money.
Way to stick your head in the sand in your favorite way.

 

[Joe NYC]

Goodwill is a completely different number and has nothing to do with the main numbers, it's part of the assets.
Amortization is something any company has to deal with, it's a expense like any other, it doesn't increase the money that AMD has available or can use for something.

AMD Reports Third Quarter 2023 Financial Results

Browse AMD’s company-wide and financial press releases.

ir.amd.com

September 30, 2023

December 31, 2022

No, @adroc_thurston is right. Goodwill is treated as an asset (Cost of XLNX purchase - XLNX book value) and needs to be amortized.

On GAAP, it looks like an expense, but it is not a cash expense. No money going out. AMD is keeping that money. It is just a paper deduction, which also helps lower the taxes, because it is treated as expense for tax calculation.

Your two values don't mean what you think they mean. The Goodwill asset from XLinx purchase is going down every quarter, but AMD bought some software companies, which likely added their Goodwill into total Goodwill, and as a result, it only seems to be unchanged.

 

[Abwx]

Data center is not a separate entity, for data center to survive all of AMD has to survive, for data center to be able to sell the CPUs at the price they do they need client, to shove the lesser ccxs to and make some additional money, otherwise data center CPUs would have much worse yield, be much more expensive, and would make much less money.
Way to stick your head in the sand in your favorite way.

You will agree that it cost the same RD for AMD and Intel to release a server CPU, so how is it that AMD has better margin out of barely 0.35x Intel s revenue..?..

Beside AMD has to pay for manufacturing costs at TSMC while manufacturing profit is internal for Intel, and yet they havemuch lower overall margin.

So it s you who are sticking your head in the sand, numbers are clear about this matter, if Intel made a 4.3bn revenue in DC for Q2 and a 500M loss it mean that they sold their product at 75% of their cost since they should also cash the manufacturing profit.