Lisa Su, president and chief executive officer of Advanced Micro Devices Inc. (AMD).
Bridget Bennett Bloomberg | Getty Images
AMD and Intel they are fierce competitors in a difficult market for chips, but one has much brighter short-term prospects than the other. While Intel is expecting a slowdown across the board, AMD’s data center business is growing with the introduction of a new chip, and its pandemic-era acquisition of xilinx that making the specialty chip is also contributing to growth.
On Tuesday, AMD said it expects $5.3 billion in sales in the March quarter, which would be a 10% year-over-year decline in sales.
That’s not a rosy outlook, but it’s much stronger than Intel’s guidance for the March quarter. Last week, Intel said it expects about $11 billion in sales, which would be a 40% year-over-year decline.
Neither chipmaker gave guidance for the full year, citing economic uncertainty. “We have to be cautious obviously going into the year just because of the macro environment,” AMD CEO Lisa Su told analysts on the company’s earnings call.
But the stock market is reflecting how the two companies are diverging.
After Intel’s report last week, it fell more than 7% in extended trading. AMD rose less than 2% after its earnings report on Tuesday.
Both companies are facing a downturn in the computer market, after two years of elevated sales during the Covid pandemic, as people bought new computers to work or go to school from home.
AMD’s PC chip group revenue fell 51% on a year-over-year basis in the fourth quarter. Intel fell 36%, but from a larger base. Overall, AMD CEO Lisa Su said on Tuesday that she expects the total PC market to decline by 10% in 2023, but said that AMD has actually gained market share in the fourth quarter.
“It’s fair to say that we believe given where we are with customer inventory levels, the first half will certainly be lower. We expect some improvement in the second half,” said Su.
Companies differ more dramatically when it comes to data center chips.
Sales for Intel’s datacenter group fell 33% from a year earlier to $4.3 billion, partly due to a late release of its latest server chip family, Sapphire Rapids.
AMD’s data center business is growing strongly, however, up 42% on an annual basis to $1.7 billion. AMD released its latest data center chips, the fourth-generation Epyc processors, in November. AMD expects its data center business to grow this year while PC chips and graphics processors for games decline.
AMD’s data center business also faces tough macroeconomic conditions, but on Tuesday, Su showed investors that its gains will come at Intel’s expense.
“In our Embedded and Data Center segments, we believe we are well positioned to grow revenue and gain share in 2023 based on the strength of our positioning and competitive leadership,” said Su.
AMD was also successful with its acquisition of Xilinx in 2020, which it bought for $35 billion. Xilinx, which makes processors that perform specialized tasks such as encryption or video compression, was the main contributor to $1.4 billion in sales for AMD’s integrated division, an annual increase of 1,868%, according to the company .
