AMD

What chip shortage? For two years running now, the global semiconductor industry hasn't been able to produce enough chips to meet demand.

The fast-growing data-center business and addition of Xilinx will lessen AMD’s exposure to PCs going forward. Fellow high-growth chip maker Nvidia NVDA 3.73% also has lost about a third of its market value this year in a sector-wide selloff, but it still carries a premium of 93% to the broad index. But PCs still account for more than half of AMD’s revenue, according to consensus estimates by Visible Alpha. Fears of sales in that sector slowing after a pandemic bump have put a cloud over the chip maker’s shares. AMD isn’t immune to the shortage; Chief Executive Officer Lisa Su noted on the company’s conference call Tuesday that the majority of chips made by Xilinx use 16-nanometer processes or older for which production capacity is sharply constrained by the limited availability of necessary tools. Then there is Advanced Micro Devices. AMD 9.10% AMD saw revenue soar 71% year over year to nearly $5.9 billion in the first quarter. Two of those— ON Semiconductor and NXP Semiconductors NXPI 4.41% —reported year over year revenue growth of 31% and 22% in their respective first-quarter reports this week.

Shares of AMD surged over 9 percent today, in concert with a NASDAQ rally but buoyed even further based on revenue growth across every one of the company's ...

Taking the analysis a step further, we can also see that gross profit for the quarter with Xilinx in the mix (a $559 million contribution for the partial combined quarter) is up 28% for the quarter versus last year. In conjunction with CPU and GPUs, FPGAs can offer critical acceleration in many applications and can also adapt and change configuration and optimization on the fly without dropping a packet. The final pillar of strength that was obvious in AMD’s earnings announcement was that it included six weeks of Xilinx revenue in its Q1 results. However, it was the guidance here that impressed me the most, as AMD expects full year 2022 revenue of roughly $25.4 billion, which is an increase of approximately 60% over 2021, and a huge increase over its prior annual guidance of about 31%. “Sales for this game console generation continue to outpace all prior generations, and we expect 2022 to be a record year for our semi-custom business,” Su noted. My view is that AMD’s winning ways are a combination of market share gains in key, more profitable business areas, and that its masterful move to acquire Xilinx is already showing signs of cohesive strength.

AMD is gaining ground at the largest buyers of computer processors, owners of the giant data centers that are the backbone of the Internet.

Its products are some of the most expensive items coming out of the Taiwanese factories, in theory making it better placed to get the supplies it needs. AMD is also the second-largest maker of graphics chips used in add-on cards by PC gamers. The return of Covid-related lockdowns in parts of China also has squeezed the supply of components needed to complete devices, Intel said. That compares with an average estimate of $24.1 billion. The first quarter also included contributions from Xilinx. The latest forecast suggests that AMD still has momentum. Investors have been particularly wary of chipmakers that made rapid gains over the past three years, fearing that a collapse is near. AMD has reduced its expectations for the personal computer market this year. Unlike Intel, which manufactures its products in-house, AMD works with Taiwan Semiconductor Manufacturing Co., giving it access to better technology. “Each of our businesses grew by a significant double-digit percentage year-over-year,” AMD Chief Executive Officer Lisa Su said in a statement. Despite AMD’s rapid growth, investors have shunned the stock this year, part of a broader pullback for semiconductor shares. AMD’s outlook contrasts with a recent forecast from Intel, which was hurt by an accumulation of inventory at some of its PC customers.

Even without AMD's acquisition early this of Xilinx, the company hit a record first fiscal quarter 2022, and Xilinx makes the record even better.

For its first fiscal quarter of 2022, which ended March 26, AMD reported total revenue of $5.9 billion, up an impressive 71 percent over the $3.4 billion the company reported for its first quarter of fiscal 2021. “[Since the Xilinx deal] closed, we have seen tremendous excitement from our customers, partners, and employees, and we expect to see significant product and revenue synergies. “And we see multiple opportunities to leverage our expanded technology portfolio to deliver even stronger products. “Turning to server, we had another record quarter as revenue more than doubled year over year and increased by a double-digit percentage sequentially. “Our computing and graphics segment revenue increased 33 percent year over year to $2.8 billion driven primarily by the ramp of our latest Ryzen and Radeon products. We are well positioned to accelerate our growth in commercial notebooks in 2022 based on the expanded number of design wins on track to launch. ... Development of our higher core count Bergamo processors optimized for high throughput cloud workloads continues to progress well, with shipments on track to begin in the first half of 2023.” In desktop we expanded our processor portfolio with the introduction of seven new Ryzen CPUs, including the Ryzen 5800X3D CPU, which is the industry‘s fastest gaming CPU and first desktop processor featuring 3D stack chiplets. “Our enterprise embedded and semi-custom segment revenue increased 88 percent year over year to $2.5 billion driven by record server, semi-custom, and embedded processor sales. Sales for this game console generation continued to outpace all prior generations, and we expect 2022 to be a record year for our semi-custom business. We reached a significant inflection point in our journey during the first few months of 2022 as we took several major steps that fundamentally reshape our business.” “Longer term, I‘m incredibly excited about our additional growth opportunities as we add the Xilinx and Pensando teams,” she said.

The semiconductor industry continues to choke on a mix of robust demand and constrained supply, and now a PC market slowdown is affecting almost every ...