AMD Raises Outlook As Intel Fight Heats Up -- WSJ
July 29 2020 - 3:02AM
Dow Jones News
By Asa Fitch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 29, 2020).
Chip maker Advanced Micro Devices Inc. reported higher
second-quarter earnings and lifted its full-year sales forecast,
driven by growing demand for a new generation of high-performing
processors that are helping the company take market share from
rival Intel Corp.
Santa Clara, Calif.-based AMD on Tuesday posted a $157 million
profit for the quarter, up from $35 million a year earlier. It
generated $1.93 billion in revenue, the company said, up 26% from a
year earlier and above what AMD had projected in April. Sales also
topped Wall Street's forecast.
Like many of its chip-industry peers, AMD's business has held up
relatively well during the coronavirus pandemic amid strong demand
for computers and internet services as millions of people work from
home.
Despite some lingering uncertainty, the company raised its
full-year revenue-growth outlook to 32%. Chief Executive Lisa Su
said the company was entering its "next phase of growth." The
company had previously forecast sales would rise 20% to 30% this
year.
"While there continues to be some macroeconomic uncertainty and
pockets of demand softness, our product portfolio is very strong,
and our markets are resilient," Ms. Su said during a call with
analysts. The company, she said, expects to gain further market
share in the second half of the year and see strong growth in that
division that supplies chips to new versions of Microsoft Corp.'s
Xbox and Sony Corp.'s PlayStation gaming consoles. Those are slated
to launch over the coming holiday season.
AMD's latest central processing units, or CPUs, have enjoyed
strong demand, with their performance equaling or beating that of
rival offerings from Intel -- by far the market leader -- in widely
tracked benchmarks.
AMD also has benefited from recent engineering struggles at
Intel, which on Monday announced a shake-up of its development
team. Days earlier, Intel said its development of cutting-edge
7-nanometer chip technology was delayed by a year from its initial
schedule, sending its shares plummeting and AMD's climbing.
AMD's shares rose more than 9% in after-hours trading, after
rising 14% since Intel's announcement.
Unlike Intel, AMD doesn't have its own factories. Instead, it
outsources manufacturing to companies such as Globalfoundries and
Taiwan Semiconductor Manufacturing Co., the world's largest and
most advanced contract chip maker.
Ms. Su said she felt confident in the company's road map of
future products and its partnership with TSMC. It is not only
mass-producing AMD's version of 7-nanometer chip but already moving
toward making the more advanced 5-nanometer design. "You have to
get the process technology and manufacturing right," she said.
AMD's market share in personal-computer central processing units
was 17.5% in the first quarter, according to Mercury Research, more
than doubling in about five years. The company has also made
inroads, albeit smaller ones, in the market for CPUs that go into
the servers used in big data centers powering most internet
services.
AMD said revenue for its computing and graphics segment rose 45%
to $1.37 billion in the second quarter, driven largely by sales of
its Ryzen processors that go into personal computers and other
devices. Sales for the segment that includes its server chips and
semi-custom chips for gaming consoles fell 4% to $565 million.
Lower sales in the semi-custom products were offset partially by a
rise in its Epyc server processors.
In the current quarter that ends Sept. 30, AMD expects to
generate around $2.55 billion in sales, above what Wall Street had
expected.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
July 29, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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