Following its return to growth in 2016 and operating profit in 2017, US microprocessor supplier AMD is entering the profit zone in 2018 and ending six consecutive years of losses. In both PCs and servers, it is gaining market share over its main competitor Intel.
This is a historic milestone for AMD. After six consecutive years in the red, costing Intel more than $3.8 billion, Intel’s challenger of X86 microprocessors in the core of PCs and servers is finally turning green. It closes 2018 with a net profit of 337 million US dollars and a turnover of 6.48 billion US dollars, compared to a net loss of 33 million US dollars and a turnover of 5.25 billion US dollars in 2017. It is almost back at the peak of its turnover of 6.57 billion US dollars in 2011.
AMD 2018 race will continue in 2019?
“In 2018, we achieved our second consecutive year of revenue growth, market share gains, gross margin and profitability based on the performance of our products,” said Lisa Su, the Company’s CEO, in a statement. Most importantly, we have more than doubled our shipments of EPYC processors for data center equipment and achieved record sales of our graphics processors. ”
AMD relies on third parties as compared to Intel
In contrast to Intel, which produces its own circuits, AMD presents itself as a “fabless” player who is satisfied with the development of its chips and then entrusts its production to three semiconductor foundries: American GlobalFoundries, Korean Samsung Foundry and Taiwanese TSMC. It was beaten by its two largest competitors, Intel in microprocessors for generic processing and Nvidia in graphics processors, and plunged into four years of decline and stagnation, resulting in the loss of 35% of its sales. The return to growth and profit in the last two years is almost a miracle.
Bullish trend forecast for AMD in 2019?
In 2016, it ends the decline in sales and returns to growth. In 2017, it ended five consecutive years with operating losses. And in 2018, it completes the recovery by turning green. And this is clearly reflected in its market position. Whether desktop PCs, laptops or servers, it raises its head everywhere. According to Mercury Research, the market share by volume at the end of 2018 rose to 15.8% for desktop PCs, from 12% at the end of 2017 to 12.1% for laptops, from 6.9% last year, and to 3.2% for servers and other data centers, from 0.8% at the end of 2017.
Revenge to Intel and Nvidia
With the Ryzen and EPYC microprocessors with Zen architecture and the Radeon graphics processors with Vega architecture, the Group, which employs 10,100 people worldwide, has managed to eliminate its technological backlog and continue its offensive. This generation of chips is manufactured at GlobalFoundries in 14 nm FinFET technology, i.e. with 3D transistors and 14 nanometer etching, just like Intel’s, which is considered the absolute market reference for its most advanced processors. Previously, they lagged three generations behind their competitors with planar transistor technology and 28 nanometer etching.
AMD has successfully delivered its Epyc processor to the data centers of Microsoft, Amazon Web Services and the Chinese Internet giant Baidu. And it supports Sony’s PS4 and Microsoft’s Xbox One game consoles. These two vendors represent their two largest customers with 19% and 11% of revenue in 2018, respectively. This could be a situation of fragility. Lisa Su promises to accelerate the innovation train by introducing this year a new generation of Zen-based processors and Radeon Vega-based graphics processors in 7-nanometer technology at TSMC, while Intel is still waiting for these 10-nanometer circuits to go into series production. This is an opportunity to take technological revenge on its main competitor, which is about ten times larger with 107,000 employees and $70.8 billion in revenue in 2018.