In a tumultuous financial environment, chipmaker Advanced Micro Devices, Inc (AMD) became the most recent semiconductor business to falter. After the market closed today, AMD disclosed in a filing with the Securities and Exchange Commission (SEC) that its revenue from its client computing group will experience significant annual and sequential drops.
AMD, which has managed to weather the storm its larger rivals Intel Corporation and NVIDIA Corporation have faced throughout this year, has managed to weather the storm. In contrast to the 55% annual increase that it had anticipated in its forecast published with the earnings results of the second fiscal quarter of 2022, the firm revealed that it now expected to grow its revenue by 29% yearly.
The submission came in the shape of AMD, the second of the three major American chip manufacturers to do so, disclosing its preliminary third quarter profit figures. A similar strategy was used earlier in the year by NVIDIA Corporation, which decided to comfort investors by disclosing sharp declines in revenue before its official results were due. Analysts criticised Intel’s decision to surprise them with its earnings report before this happened.
According to AMD’s early financial data, the company now projects that its third fiscal quarter of 2022 would bring in $5.6 billion. Prior to today’s report, the company had forecasted $6.7 billion in revenue and a solid gross margin of 54% by the conclusion of its Q2 2022 results.
The Client division of AMD is mostly to blame for the decrease in revenue. AMD’s central processor units for conventional desktop platforms and laptops are represented by the Client segment after the company rearranged its reporting segments earlier this year. Apart from Client, AMD’s Data Center segment did well year over year; nevertheless, all of its segments, including Data Center, had flat or negative sequential growth.
The challenging PC market at the moment also resulted in higher inventory and other expenses, such as those for reserves, which are reflected in AMD costs, which rose by $160 million.
Its chief executive officer Dr. Lisa Su blamed a supply chain adjustment and unfavourable macroeconomic factors for the revenue deficit. Since the beginning of the year, this adjustment has been on analysts’ minds, and as part of the early findings, Dr. Su stated that:
The PC market weakened significantly in the quarter. While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5nm data center and graphics products later this quarter.
The company was able to retain its revenues at a time when consumers were having trouble making new computing purchases as inflation was eating away at their purchasing power thanks to AMD’s acquisition of field programmable gate array (FPGA) company Xilinx. The company’s balance sheet now includes more than $2 billion in debt.
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