AMD's sales rose 54% on strong demand for chips for servers and game consoles
AMD, whose central processing units and graphics processors power PCS, servers, and game consoles, has been one of the biggest beneficiaries of the surge in electronics sales over the past 18 months. Those sales came from AMD's computing and graphics division, which generated $2.4 billion in revenue, up 44 percent from a year earlier.
The PC market has slowed from the torrents of a year ago when people around the world still needed computers to work or study from home, but AMD said the average selling price of its chips had risen as customers opted for more powerful processors.
AMD reports sales of server chips and console chips in its embedded, enterprise, and semi-custom segments.AMD's sales in this important segment were $1.9 billion, up 69 percent from a year earlier, driven by Epyc server chips and higher "semi-custom" sales, or semiconductors sold to game console makers.
As giants like Microsoft and Google buy AMD chips to run their cloud services, AMD is grabbing market share in servers that follow its Epyc processor. Datacenter sales doubled year-over-year and now account for "the mid-20s" of AMD's overall revenue, CHIEF Executive Lisa Su said in a statement.
Meanwhile, consoles such as Sony's Playstation 5 and Microsoft's new Xbox remain in high demand and are hard to find because they sell out quickly. Similarly, AMD graphics and CPUs are hard to find in stock in stores.
"Semi-custom game revenue grew year over year as demand for the latest Microsoft and SONY consoles remained very strong," Su said on a conference call with analysts on Tuesday."We expect semi-custom revenue to continue to grow in the fourth quarter as we further increase supply to meet continued game console demand."
AMD is a fabless chip company. It designs technology inside its semiconductors and outsources manufacturing to contract manufacturing partners such as TSMC and GlobalFoundries.In September, AMD CEO Su Said she expected the severity of the chip shortage to ease by 2022.
AMD continues to control its costs and increase its profitability. The company said its gross margin was 48 percent, up from 44 percent a year earlier, as consumers bought more expensive processors. The company forecast a gross margin of 49.5 percent in the fourth quarter.AMD reported a net income of $893 million in the quarter.
In October, AMD announced plans to buy Xilinx for $35 billion, which would allow the company to compete with Intel in the market for data center chips.AMD said the deal remained on track to close by the end of 2021 and that it was making "good progress" in securing regulatory approvals.
AMD said it bought back $750 million of its shares during the quarter.AMD shares are up more than 30% this year.