A market share gain story
Advanced Micro Devices (AMD) is a small player in the CPU (central processing unit) and GPU (graphics processing unit) markets. In the previous part of the series, we saw that AMD’s 2019 growth will likely be driven by market share gains rather than market expansion.
AMD’s first half of 2019
For the first quarter of 2019, AMD expects revenue to fall 24% YoY and 12% sequentially to $1.25 billion. AMD expects a significant YoY decline due to the absence of crypto-related GPU sales this year, excess GPU inventory in the channel, and declines in its semi-custom business.
At the fourth-quarter 2018 earnings call, AMD CEO Lisa Su stated that she expects PC, server, and GPU sales to fall more than the normal seasonal decline of 10% in the first quarter with the biggest sequential decline coming from consumer GPU sales. Even Intel (INTC) expects its first-quarter 2019 revenue to fall 14% sequentially driven by soft demand in the PC and data center markets.
In the second quarter of 2019, Lisa Su expects excess channel GPU inventory to be sold off and revenue to grow sequentially driven by the launch of new products. However, she expects revenue to be down YoY, as the second quarter of 2018 included crypto-related sales.
AMD’s second half of 2019
Moving into the second half of 2019, Lisa Su expects significant YoY growth as it ramps up production of next-generation Ryzen, EPYC, and Radeon products on TSMC’s (TSM) 7-nm (nanometer) node. The 7-nm portfolio will likely give AMD a technological advantage over Intel, which is still stuck on the 14-nm node. AMD also expects consumer GPU sales to return to normal growth in the second half of 2019 as the excess inventory is absorbed.
If AMD expects its 2019 revenue to grow 8% YoY, its third and fourth quarter revenue should sequentially grow more than 30%. AMD’s third quarter is usually stronger, as it includes semi-custom sales. Thus, we expect its third-quarter revenue to grow 40% sequentially and fourth-quarter revenue to grow above 25% sequentially in 2019.
Lisa Su expects its 7-nm products to help it gain share in the PC and data center markets. Next, we will see how competitive products can help AMD boost growth even in a slowdown.
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