AMD forecast disappoints on console demand

Bengaluru, Jan. 29: Advanced Micro Devices Inc’s (AMD) first-quarter revenue estimate came in largely below analysts' estimates due to waning demand from gaming console makers, even as its data center and PC chips business tracked a recovery in the chip industry.

Shares of the company fell 4 per cent in extended trading on Tuesday. The stock has surged over 150 per cent in the last 12 months, making it the top gainer on both the S&P 500 Index and the Philadelphia Semiconductor Index during the period.

The console business has been under pressure as inventory is drawn down ahead of Microsoft and Sony launching their new gaming consoles in the second half of this year.

Fourth-quarter sales in its enterprise, embedded and semi-custom segment, which also houses chips used in consoles, rose 7 per cent to $465 million, but missed FactSet estimates of $603.8 million.

“The secular decline in the game console semi-custom chip (SoC) should have been expected. I think investors wanted to see a steeper growth profile from its datacentre, CPU business to offset the nearterm gaming SoC decline,” said KinNgai Chan at Summit Insights Group.

Sales at AMD’s computing and graphics segment, which includes graphic chip sales to data centers, surged 69 per cent to $1.66 billion in the fourth quarter, beating analysts' estimate of $1.5 billion, according to market research firm FactSet.

Data center demand also powered strong results and forecast from bigger rival Intel last week, which reinforced chip industry turnaround expectations triggered by Micron and Texas Instruments

AMD projected firstquarter revenue to be about $1.8 billion plus or minus $50 million, compared to analysts’ average estimate of $1.86 billion, according to IBES data from Refinitiv.