Lisa Su

AMD Downgrades Q3 Income by $1.1 Billion, Cites Weak PC Market

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(Picture credit score: AMD )

AMD pre-announced parts of its Q3 earnings efficiency right now, revising its projected income from $6.7 billion in the course of the quarter to $5.6 billion, a $1.1 billion discount. AMD additionally warned traders that its non-GAAP gross margin would weigh in at 50%, a discount from the projected 54%. The corporate cited decrease gross sales within the shopper PC market than anticipated and important stock corrections within the PC provide chain. Nonetheless, it famous that its knowledge heart, gaming and embedded segments are nonetheless performing to expectations.  

AMD’s warning lowers its income projections from a year-over-year development price of 55% to 29%, so the corporate will proceed to broaden regardless of the headwinds. AMD particularly known as out decrease shipments and lowered common promoting costs (ASPs) for its shopper processors because the supply of the income miss. This downside has additionally vexed different semiconductor producers like Intel and Nvidia because of bulging inventories as demand recedes.

The surplus stock forces retailers and OEMs to then reduce costs to maneuver stock, thus leading to lowered ASPs. The lowered ASPs additionally issue into AMD’s lowered gross margin, which is now anticipated at 50% as an alternative of 54%. AMD can also be taking $160 million in fees for the “stock, pricing, and associated reserves within the graphics and shopper enterprise.”

AMD’s shortfall comes within the wake of an spectacular Q2 efficiency that discovered its income rising 70% year-over-year because it continues to chew away market share from Intel though gross sales of desktop CPUs had been the bottom in 30 years. Nonetheless, the corporate’s Q2 disclosures foreshadowed potential looming points — most analysts felt that the corporate’s Q3 steerage was already beneath expectations.


(Picture credit score: AMD)

AMD’s revised projections name for its shopper enterprise unit, which contains its shopper CPU enterprise, to be down 53% quarter-over-quarter and 40% year-over-year. In the meantime, its gaming enterprise, which encompasses its shopper GPUs operations, will stay flat. 

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