AMD lowers third-quarter revenue guidance to $5.6 bn

Chipmaker Advanced Micro Devices (AMD) said it expects third-quarter revenue of about $5.6 billion. That compares with its forecast in August of $6.7 billion, plus or minus $200 million.
“The PC market weakened significantly in the quarter,” AMD Chief Executive Officer Lisa Su said in a news statement. She said macroeconomic conditions drove PC demand lower than expected.

AMD said third quarter revenue is expected to be approximately $5.6 billion, an increase of 29 percent. AMD previously expected revenue to increase approximately 55 percent at the mid-point of guidance.

Preliminary results reflect lower than expected Client segment revenue resulting from reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain, AMD said.

Research firm IDC says global shipments of PCs are forecast to drop 12.8 percent in 2022 to 305.3 million units while tablet shipments will drop 6.8 percent to 156.8 million. The market for PCs and tablets is forecast to decline 2.6 percent in 2023 before returning to growth in 2024, IDC’s forecast indicated.

Lisa Su said AMD’s data center, embedded, and gaming segments maintained strong growth.

Research firm Gartner said worldwide IT spending is projected to increase of 3 percent to $4.5 trillion in 2022. IT spending in 2022 will be at a much slower pace than 2021 due to spending cutbacks on PCs, tablets and printers by consumers, causing spending on devices to shrink 5 percent.

Spending on Data Center Systems will grow at 11.1 percent in 2022 and 4.4 percent in 2023. Cloud consulting and implementation and cloud managed services are expected to grow 17.2 percent in 2022, from $217 billion in 2021 to $255 billion in 2022, helping to drive the overall IT services segment to 6.2 percent growth in 2022, Gartner said.

AMD is the latest chipmaker to be hit by the sector’s slump. Last week memory chip maker Micron Technology warned of tougher times and said it was cutting its Capex investments in fiscal 2023 by over 30 percent to a total of $8 billion.

Nvidia and Intel delivered much worse than expected earnings in their latest reports.

AMD said its earnings will be released Nov. 1.

“I think AMD is showing that nobody is safe from the post-pandemic PC downturn, and those inventory corrections are also impacting the company,” said Anshel Sag, chip analyst at Moor Insights & Strategy. “Overall, this looks to be more of a cyclical correction within a single, albeit large, business unit rather than a structural or strategic one.”