TL;DR:
- AMD foresees a strong finish to the year, driven by the launch of AI chips that will compete with Nvidia’s semiconductors.
- The flagship MI300 AI chips are in high demand and poised to challenge Nvidia’s advanced H100 chips.
- AMD plans to comply with US export controls while exploring opportunities to cater to the growing demand for AI solutions in China.
- The company expects its data center business, including MI300 chips, to surpass previous sales figures.
- AMD’s forecasted current-quarter revenue is about US$5.7 billion, with an optimistic outlook.
Main AI News:
Advanced Micro Devices (AMD) is gearing up for a robust year-end performance, driven by the impending launch of its groundbreaking artificial intelligence (AI) chips, poised to challenge Nvidia’s semiconductor dominance. The market has responded favorably, with AMD shares surging approximately 3% in after-hours trading.
CEO Lisa Su disclosed that AMD is set to escalate the production of its flagship MI300 AI chips in the fourth quarter. With the H100 chips from Nvidia already commanding the market, the MI300 series is primed to provide stiff competition. Su expressed satisfaction with the high level of customer interest, highlighting the company’s strengthened collaborations with top-tier cloud providers, leading AI firms, and major enterprises during the third quarter.
Investors are keeping a close eye on the upcoming release of the MI300 chips, projected to be a game-changer in the thriving AI chip industry. As optimism swells, Jenny Hardy, a portfolio manager at GP Bullhound, a firm holding both Nvidia and AMD stock, pointed out that Nvidia is grappling with supply constraints, opening an opportunity for AMD’s chip.
Nonetheless, AMD faces a unique challenge in the lucrative Chinese market. The MI300 chips have exceeded the performance limits allowed for export to China, under regulations issued in October. In contrast, Nvidia and Intel have already taken measures to comply with US Commerce Department restrictions by creating specialized chips for the Chinese market. AMD is now contemplating a similar strategy for both its MI300 and older MI250 chips.
Lisa Su emphasized the company’s commitment to full compliance with US export controls while acknowledging the potential to cater to the growing demand for AI solutions in China. AMD is positioning itself to meet the needs of its customer base in the region.
Despite not providing a detailed full-year forecast, AMD expects its data center business, including MI300 chips, to surpass the impressive US$6.04 billion sales of 2022. With sufficient components for the MI300 chips, an aggressive launch is anticipated in the fourth quarter, followed by a steady supply in 2024.
In addition, the older MI250 chip continues to garner considerable interest and remains a viable option for less complex AI tasks.
The second quarter saw AMD’s data center business revenue decline by 11% to US$1.32 billion, while revenue from the client business fell 54% to US$998 million compared to US$2.2 billion the previous year. However, the decline in PC shipments has slowed down, and demand is now showing signs of improvement.
Analysts expect significant growth in the Data Center and Client segment revenues during the third quarter, driven by increasing demand for AMD’s EPYC and Ryzen processors, though partially offset by declines in the Gaming and Embedded segments.
With an eye on the future, AMD is prepared for what lies ahead, forecasting a current-quarter revenue of about US$5.7 billion, with room for variation up to US$300 million. Analysts polled by Refinitiv, on average, anticipate revenue to reach US$5.82 billion.
Conclusion:
AMD’s strategic move to ramp up the production of AI chips and target the Chinese market indicates its determination to secure a strong foothold in the competitive AI chip industry. The company’s ability to meet customer demand and explore opportunities in China positions it as a formidable contender against Nvidia, especially considering the latter’s supply constraints. With a positive forecast and promising sales projections, AMD is poised to capitalize on the surging market for AI chips, offering investors an attractive proposition for future growth.
