AMD posted a US$64 million loss in terms of overall operating income — mainly due to its acquisition of Xilinx — but large gains in the vendor’s data centre, embedded and gaming segments provided an encouraging note.
Total revenue rose by 29 per cent for the third quarter of 2022, to US$5.56 billion from US$4.31 billion one year ago.
Gross profit also rose in year-on-year terms, from US$2.08 billion in last year’s third quarter to US$2.35 billion for the past three months. The decline in operating income was caused by much higher operating expenses, which more than doubled in the third quarter, rising from US$1.14 billion a year ago to US$2.42 billion in the most recent figures.
AMD chalked the higher expenses up to its acquisition, in February 2022, of semiconductor company Xilinx, which cost the company roughly US$50 billion. Additionally, higher spending on research and development (R&D) also cut into AMD’s margins.
Investors appeared to focus on the good data centre and embedded segment news, as AMD shares rose 3.7 per cent to US$61.83 at one point.
Data centre uptake helps compensate for PC market decline
Like the rest of the semiconductor industry, AMD’s growth was slowed somewhat by the decline in PC sales. That part of the company’s business declined from US$1.69 billion in the third quarter of 2021 to US$1.02 billion this year.
However, other parts of AMD grew significantly to compensate for that decline, with the vendor’s data centre net revenue rising from US$1.1 billion last third quarter to US$1.6 billion in the latest numbers, which represents a 45 per cent increase.
The Xilinx acquisition also helped bolster AMD’s numbers in the embedded sector – which is unsurprising given Xilinx’s focus on that area. The third quarter of 2021 saw AMD make just US$79 million in net revenue from embedded products, while the latest quarter showed US$1.3 billion in the same segment.
The vendor said that it credits growth in the data centre market to positive sales numbers for its EPYC processors, which have helped it take substantial market share away from Intel.
While the server processor market has largely belonged to Intel over the past decades, that company’s market share has fallen from 98 per cent five years ago to 88 per cent, as of May of this year.
AMD’s estimates for future revenue are bullish, with the company predicting a roughly 14 per cent year-on-year rise for its fourth quarter, to a total of approximately US$5.5 billion. AMD also stated that it expects growth both in year-over-year and sequential terms for its embedded and data centre businesses.