Following the keynote press conference, a Q&A session on any topic related to the company with AMD CEO, Dr. Lisa Su, was scheduled by AMD. Given that the American multinational semiconductor company launched several products just as the previous year ended, supply issues are tight for end-users. This was an opportunity for reporters to ask the CEO about production demand against supply, AMD’s future strategies, and business acquisitions.
According to a report by AnandTech, “This roundtable was a little different than most. Despite the whole discussion being on the record, AMD requested that we (or any of the press) did not post a full transcript of the call.”
The initial question to Lisa was about the emergence of ARM-based models that are encroaching on the traditional x86 market. If x86 is still focusing purely on high-performance compute, it might stand to be overtaken by Arm with its year-on-year expected performance gains from its roadmap ranging from 30% to 50%. The goal was to learn how AMD plans to approach the competition.
Lisa Su: “AMD’s focus is about high performance and significant generational improvements; x86 is a strong ecosystem and we continue to invest heavily. Custom designs [like ARM] are in the market and are purpose-built for use. If anything, it is a validation of how much the demand for computing is growing. We see a larger opportunity for customized solutions for specific workloads, and AMD has a strong semi-custom division to meet those opportunities.”
Lisa’s answer cited the fact that as the industry is growing, it gives more opportunities for specialized products. Not to say that we disagree with the part where Arm is being called purpose-built but the development of the Arm server ecosystem is for broad workloads, not simply specific markets.
She was further asked about the M1 chip, which is a clear building block for the company to move forward into desktops, workstations, and potentially the enterprise market and the potential of this to affect the relationship between Apple and AMD.
Lisa Su: “The M1 is more about how much processing and innovation there is in the market. This is an opportunity to innovate more, both in hardware and software, and it goes beyond the ISA. From our standpoint, there is still innovation in the PC space – we have lots of choices and people can use the same processors in a lot of different environments. We expect to see more specialization as we go forward over the next couple of years, and it enables more differentiation. But Apple continues to work with us as their graphics partner, and we work with them.”
Given the notable lack of hardware on the shelves for end-users and enthusiasts, a large part of the Q&A discussion was centered around supply and demand. Also at a time when AMD has built out a number of products including consoles for two partners, in a very compressed time frame, it stands to reason that if users cannot buy the newest ‘leading performance hardware’, there are going to be complaints.
Lisa Su: “This is the result of a demand focused environment, rather than manufacturing issues. There is tightness in the supply chain due to demand, and that invariably puts pressure on our consumer, PC, and gaming product lines. As it relates to our semiconductor production, we’re putting in additional capacity to meet this unexpected demand. It will take time to catch up, but that’s what we’re seeing.”
Lisa refused to believe that this high demand environment and capacity ceiling would potentially cap AMD at 22% market share. She talked about the substrate shortages, simply due to the increased demand, and that the ecosystem is working to also build additional capacity (including AMD investments), but that will take time and continue through this year.
The question is always if AMD is still producing as many CPUs and GPUs as it can and when this level of supply will improve to meet this increase in demand.
Lisa Su: “We are shipping lots of parts, and volumes in all segments are increasing, and that will happen through 2021. There will be tightness in the first half of the year, but alongside consumers, we also ship to OEM partners. There is some real-time prioritization between end-user and OEM, but we understand that consumers want more and it’s very high on our priority list to meet this high demand.”
Lisa did give us information about how production level decisions happen in advance with AMD launching a host of products in Q4 2020, including Ryzen 5000, Radeon RX 6000 GPUs, two games consoles, and also started shipping its next-gen EPYC Milan processors.
Lisa Su: “One of the things that was important with Cezanne (Ryzen 5000 Mobile) is that we were shipping for production in early 2021. With the OEM cycle of those products, enabling them to get the first batches of hardware in Q4 was vital for launch through the first quarter and the first half of 2021. This is how AMD matches its product cadence, and the choice on hardware manufacture is one of timing. It’s nothing fundamental, it’s not design limited, it’s all about making the right bets (sometimes months in advance) and enabling market estimation of demand. We had to enable millions of console APUs as well, and there is higher demand than we thought here as well. Working with OEM partners like Sony and Microsoft means enabling different strategies as well.”
Lisa clarified that the current 8-core on mobile, 16-core on desktop and 64-core on enterprise were not fundamental functional limits for these markets, she said, “There will be more core counts in the future. It will come as we scale the rest of the system.”
Pivoting to more business operations, the $35 billion in an all-stock acquisition of Xilinx by AMD’ came into the conversation. The deal announced last year has had its share of pros and cons, questioning if the merger is timed correctly, deemed a right fit, and if it makes sense to remove the competition from the market.
Lisa Su: “We’re excited about closing the Xilinx deal; it’s the next big step in the story for AMD. There’s going to be a lot of technology going forward, and AMD has made good progress in recent years – we have deep customer partnerships, and we’re building trust to be behind the most important platforms. We want the largest enterprises to trust AMD as their supplier, and the Xilinx acquisition will help this. Xilinx is the right next step – we have the desire to have a much bigger footprint, and Xilinx will help AMD execute on its base business. Xilinx CEO Victor Peng will join us as part of that strategy, and we expect a seamless transition saying laser-focused on execution. This is what leaders have to do – we have to expand and scale. AMD can do both.”
In the end, Lisa was asked about AMD’s future and how AMD’s strategy will develop based on recent improvements made from the competition.
Lisa Su: “For our Ryzen 5000 Mobile parts, we’ve stated that we will have 150+ design wins in 2021, which is 50% more than what we saw with Ryzen 4000 Mobile. Those numbers include our commercial system deployments, and we’re working hard enabling our security solutions in our Ryzen PRO platform – we already have a number of designs from top OEMs coming later this year. There will be new initiatives around Ryzen Pro as well. On the enterprise side, we are broadening our focus on EPYC, which means to say that we will have business solutions targeted to different vertical markets. This enables a faster time-to-market for those customers to deploy our solutions. We also started shipping Milan to OEM partners in Q4 last year as a lead up to this. More of this will come as we formally launch Milan in Q1.”
If we combine last year’s Q4 with this year’s Q1 (and Q2), AMD is experiencing higher-than-expected demand for its product line, and it seems like it needs to order more from TSMC (as well as develop its substrate supply chain) to enable this. Even though AMD expects a tight supply through the first half of the year, it does not view this as a theoretical ceiling on its market share numbers.
Lisa is clear that the company is working hard on Zen 4, Zen 5, and RDNA3 for the longer roadmap. Also, future processors seem set to have higher core counts too.