The semiconductor and computer processor manufacturer, Advanced Micro Devices (AMD), has ended 2023 on a high note, according to its Q4 earnings report. The company’s revenue for the quarter reached $6.2 billion, which marks a 10% year-on-year increase. This aligns with analyst estimates and showcases AMD’s strong performance in the market.
Driving Revenue Growth
AMD attributes its revenue growth to its data center and client segments. The company has experienced significant and record-breaking growth in its data centers, mainly due to the rising popularity of its AMD Instinct GPUs and the strong demand for EPYC CPUs. On the other hand, the client segment remained flat compared to the previous year, but the sales of the AMD Ryzen 7000 Series processors during the holiday season provided a boost to the quarterly results.
Challenges in Gaming and Embedded Segments
Unfortunately, not all segments of AMD’s business experienced the same level of success. The gaming and embedded segments saw significant declines, driven by broader market trends. In the gaming segment, higher sales of Radeon GPUs partially offset the decrease in revenue from semi-custom sales to console manufacturers. Similarly, the embedded segment slowed down due to inventory reduction activities in various end markets.
Despite these challenges, AMD’s total revenues for 2023 amounted to $22.7 billion, marking a 4% year-on-year decrease. The growth in the data center and embedded segments was not enough to compensate for the lower revenues from the client and gaming segments.
Data center growth of 7% was primarily driven by the demand for AMD Instinct GPUs and 4th Gen AMD EPYC CPUs. The acquisition of Xilinx for $35 billion in stock contributed to the embedded segment’s growth of 17%. On the other hand, the client and gaming segments contracted by 25% and 9% respectively due to the decline in PC and console demand.
Future Outlook
Looking ahead, AMD expects its Q1 revenue to reach $5.4 billion, with a possible variance of $300 million. Data center revenue is projected to remain flat, with a seasonal decline in server sales offset by increased Instinct GPU revenue. However, the company anticipates a decline in client, embedded, and gaming segment sales.
“We now expect annual revenue to decline by a significant double-digit percentage year-over-year as supply caught up with demand in 2023 and we enter the fifth year of what has been a very strong console cycle,”
– CEO Lisa Su, Advanced Micro Devices
