Advanced Micro Devices (AMD) reported revenue of $9.76 billion, operating income of $1.37 billion and net income of $2.49 billion for full year 2020.
AMD on Tuesday beat quarterly revenue estimates and forecast robust 2021 sales on strong demand for its chips used in PCs, data centers and gaming consoles from companies and customers adapting to remote working.
The US-based technology company has been prying away central processor market share from main rival Intel. Manufacturing operations of Intel have stumbled in recent years while contract factories used by AMD such as Taiwan Semiconductor Manufacturing (TSMC) grabbed a lead in making faster chips.
AMD also supplies chips for gaming consoles, which boosted its fourth-quarter sales as devices from Microsoft and Sony debuted during the holiday season quarter. But the consoles were in persistently short supply at retail outlets because of a global chip shortage that affected AMD and other players.
Quarterly Financial Segment Summary
Computing and Graphics segment revenue was $1.96 billion, up 18 percent year-over-year and quarter-over-quarter primarily driven by strong sales of Ryzen processors.
Client processor average selling price (ASP) was lower year-over-year due to a higher mix of Ryzen mobile processor sales. Client processor ASP was higher quarter-over-quarter driven by Ryzen desktop processor sales.
Radeon graphics product ASPs were higher year-over-year and quarter-over-quarter.
Enterprise, Embedded and Semi-Custom segment revenue was $1.28 billion, up 176 percent year-over-year and 13 percent quarter-over-quarter driven by higher semi-custom and EPYC processor sales.
AMD projected first-quarter revenue to be about $3.2 billion, plus or minus $100 million.
AMD forecast 2021 sales of $13.37 billion.
AMD said it expects first-quarter and full-year gross margins of 46 percent and 47 percent respectively, which were in line with Wall Street estimates but “a little underwhelming” given AMD’s booming revenue growth, Kinngai Chan of Summit Insights Group said.
AMD chief executive Su said the company’s margin outlook was higher than 2019 and 2020 and largely reflected how many server chips it expects to sell. She said that the company’s console chips tend to be below the 45 percent gross margin mark the company hit for the full year of 2020, while server chips tend to be above it.
“It’s how much server do we sell versus consoles,” she said. “Depending on the quarter, you’ll have a bit of mix change in the business, but overall we’re actually pleased with the margin progression.”
Su said that AMD thinks console chip sales will be above normal levels in the first quarter, when they typically decline after the holiday shopping season in many parts of the world. She said she expects the tightness of overall AMD chip supplies to ease somewhat in the second half of the year.
AMD’s fourth-quarter revenue rose to $3.24 billion.
Revenue in the computing and graphics unit, where it supplies processors and graphics chips for PCs, was $1.96 billion.
In the company’s enterprise and semi-custom segment, which includes data center processor chips and gaming console chips, revenue was $1.28 billion.
AMD’s graphics chips have also seen a surge in demand from cryptocurrency miners.