AMD predicts strong demand for data centers and gaming chips in 2021

Advanced Micro Devices has beaten quarterly revenue estimates and forecasts strong sales in 2021 amid strong demand for its chips used in PCs, datacenters and game consoles from businesses and customers alike. remote work.

The company snatched market share from mainframe rival Intel Corp, whose manufacturing activity has fallen in recent years, while contract factories used by AMD, such as Taiwan Semiconductor Manufacturing Co, have taken the lead in manufacturing faster chips.

The company also supplies chips for game consoles, which boosted sales in the fourth quarter, as new devices from Microsoft and Sony debuted in the holiday quarter. But consoles were still in short supply at retail outlets due to a global shortage of chips that affected AMD and other carriers.

According to Refinitiv, the company forecast first-quarter revenue of around $ 3.2 billion, plus or minus $ 100 million, while analysts estimate an average of $ 2.74 billion.

AMD was forecasting revenue of $ 13.37 billion for 2021, which is higher than analysts’ estimates of $ 12.28 billion.

There is a decline in equities

The company’s shares, which had doubled last year, fell around 2% on long-term trading.

Analysts attributed the decline to AMD’s gross margin forecasts. AMD said it expected gross margins of 46% for the first quarter and 47% for the year, which was in line with Wall Street estimates, but “a little disappointing” given AMD’s strong revenue growth, said Kinngai Chan of the Summit Insights Group.

In an interview with Reuters, AMD chief executive Mr. Su said the company’s margin outlook was higher than in 2019 and 2020 and largely reflected the number of server chips it had she plans to sell. She said the company’s console chips tend to be below the 45% gross margin the company hit for 2020, while server chips tend to be above that margin.

“This is the amount of servers we sell versus consoles”, she said. “Depending on the quarter, there will be a change in the business mix, but overall we are satisfied with the increase in the margin.”

In a conference call with investors, Su also said that AMD believes console chip sales will be above normal levels in the first quarter, while they typically decline after the Christmas shopping season in many. regions of the world. She said she expected AMD’s overall chip supply problem to ease somewhat in the second half of the year.

AMD’s fourth-quarter revenue reached $ 3.24 billion, beating analysts’ estimate of $ 3.03 billion, according to IBES data from Refinitiv. Excluding items, the company earned 52 cents per share, beating estimates of 47 cents.

Revenues from the computing and graphics unit, where it supplies processors and graphics chips for PCs, amounted to $ 1.96 billion, compared with $ 1.8 billion according to analysts’ estimates, according to data from FactSet.

In the enterprise and semi-customs segment of the company, which includes data center processor chips and game console chips, revenue was $ 1.28 billion, compared with $ 1.24 billion. dollars according to analysts’ estimates.

AMD’s graphics chips have also seen increased demand from crypto-currency mines.

Source : AMD

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