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Make money again and set a record



As part of AMD’s announcement this morning that it will acquire FPGA manufacturer Xilinx for $35 billion in stocks, the company also released a third-quarter earnings report and acquisition news. To say the least, this is an atypical earnings release, which allows AMD investors and other investors to understand AMD’s latest financial situation, and at the same time digests the decision to use the company’s considerable market value to buy another company-ultimately helping AMD Prove why they are now in such a favorable position to trade. After the company hit a record high in the second quarter, AMD ended its sales record in the third quarter of this year and set a revenue record again, while profits tripled.

For the third quarter of 2020, AMD reported revenue of $2.8B, an increase of 56% over the same period last year. Therefore, AMD once again set a new revenue record for the company, releasing the best third quarter and the best single quarter ever. Further growth in AMD̵

7;s two main market segments has driven this growth, with everything from consumer CPU sales to EPYC and semi-custom sales rising.

AMD 2020 third quarter financial results (GAAP)
The third quarter of 2020 Q3 2019 The second quarter of 2020
income $2.8B $ 1.8B $ 1.93 B
Gross margin 44% 43% 44%
Operating income $449 million $186 million $173 million
Net income $390 million 120 million USD $157 million
Earnings per share $ 0.32 $ 0.11 $ 0.13

Perhaps the most striking thing is AMD’s net income, which more than tripled in the same period last year. In the third quarter of 20 years, AMD’s GAAP net income was 390 million US dollars, an increase of 225%, compared with the 120 million US dollars in the same period last year. Even on a quarterly basis, AMD’s revenue and profits have also increased substantially. Compared with the second quarter, AMD’s net income has more than doubled again. In fact, the only aspect of AMD’s financial situation that has not seen significant growth at present is AMD’s gross profit margin, which is 44%, which is only 1% higher than last year. According to the company, GM’s growth has been limited by semi-custom sales with relatively low profit margins, and the accelerated growth of PS5/XSX offset the increase in CPU sales.

Breaking down the figures by sector, AMD’s computing and graphics divisions performed strongly, mainly due to the growth in Ryzen processor sales. Overall, this segment booked revenue of $1.67B, a 31% increase from the same period last year. AMD desktop and notebook computer CPU shipments have both increased significantly. AMD reported that both achieved double-digit growth and set a new record for notebook computer processor shipments. However, AMD’s graphics department is a strange person. The launch of the RX 6000 series means that graphics revenue has declined compared to the third quarter of 2019.

AMD Q3 2020 computing and graphics
The third quarter of 2020 Q3 2019 The second quarter of 2020
income $1.667 billion $ 1,276M $1.367 billion
Operating income $384 million $179 million USD 200 million

As for the product’s average selling price (ASP), AMD reports that client processors and graphics ASPs are hit every year. As AMD’s current RX 5000 product life cycle is coming to an end, graphics ASP has declined, while CPU ASP has declined. This is due to the increase in sales of mobile chips, and the sales prices of mobile chips are often lower. With the launch of the Zen 3 and Radeon RX 6000 series, both of these situations will change for AMD in the next quarter, because this will bring a new round of products to the market, which can increase prices.

At the same time, AMD’s enterprise, embedded and semi-custom divisions had another larger quarter in the third quarter, with shipments of all products from EPYC processors to console SoCs increasing. Driven by the former, AMD continued to expand its market share in the server field, and during the company’s earnings call, CEO Dr. Lisa Su confirmed that due to the increase in cloud technology and enterprise adoption rates, server sales were the third largest in 19 The quarter has more than doubled. At the same time, the launch of Playstation 5 and Xbox Series X also promoted the growth of semi-custom sales, which is expected to increase even more in the fourth quarter.

AMD Q3 2020 Enterprise Edition, embedded and semi-custom
The third quarter of 2020 Q3 2019 The second quarter of 2020
income $1.134 billion $525 million $565M
Operating income $ 141M $61M $33 million

Moreover, just like the consumer side of AMD’s business, the enterprise side will also benefit from the release of next-generation products. AMD has confirmed that its EPYC “Milan” processors based on the Zen 3 architecture will begin shipping this quarter as previously promised, and the initial chips will be for cloud computing and “certain HPC” customers. At the same time, overall OEM availability will be released in the first quarter of 2021.

Overall, AMD has a lot of things to be happy about in the third quarter, and there are more things to look forward to in the fourth quarter. With AMD’s record revenue and the traditionally strongest quarter still coming, the company expects the fourth quarter to be better. The combination of Zen 3 CPUs for desktops and servers and new Radeon hardware will mean AMD has strong power and new products. All of this is at a critical juncture in the industry, because AMD is trying to use its technological advantages to seize the larger x86 processor market from the lackluster Intel.


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