AMD Reports Q4 2021 and FY 2021 Earnings: Turning Silicon Into Gold

As the total 12 months 2021 earnings season rolls alongside, the subsequent main chip maker out of the gate is AMD, who has been having fun with a really optimistic trajectory in income and income over the previous few years. The corporate has continued to construct upon the success of its Zen architecture-based CPUs and APUs in each the consumer and server areas, in addition to a full 12 months’s income for the APUs powering the hard-to-find Ps 5 and Xbox Sequence X|S. Because of this, these merchandise have propelled AMD to a different document quarter and one other document 12 months, as the corporate continues to hit income data whereas recording some sizable income within the course of.

For the fourth quarter of 2021, AMD reported $4.8B in income, a 49% soar over the identical quarter a 12 months in the past. Because of this, This autumn’2021 was (but once more) AMD’s greatest quarter ever, constructed on the again of robust gross sales throughout all the firm. In the meantime, resulting from final 12 months’s uncommon, one-off acquire associated to an revenue tax valuation allowance, AMD’s GAAP web revenue did dip on a year-over-year foundation, to $974M. In lieu of that, AMD’s quarterly non-GAAP web revenue (which excludes the tax allowance) was up 77% year-over-year, which is an excellent larger soar than what we noticed in This autumn’20.

AMD’s continued development and general success has additionally boosted the corporate’s gross margin to 50%, marking the primary time since at the very least the flip of the century that AMD has crossed the 50% mark. In addition to underscoring the general profitability of AMD’s operations, gross margins are additionally an excellent indicator of the well being of an organization; and for a fab-less semiconductor agency, 50% is an excellent quantity to beat certainly. AMD is now inside 5 proportion factors of Intel’s gross margins, a feat that at one time appeared unimaginable, and highlighting AMD’s ascent to a top-tier chip agency.

As for AMD’s full-year earnings, the corporate has been having nice quarters all 12 months now, so unsurprisingly that is mirrored of their full-year outcomes. General, for 2021 AMD booked $16.4B in income, which was a rise of 68% over 2020, and, after all, units a brand new document for the corporate. AMD’s gross margin for the 12 months was 48%, up 3.7 proportion factors from FY2020, and reflecting how AMD’s gross margins have been on the rise all through all the 12 months.

All of this has performed out properly for AMD’s profitability, as nicely. For the 12 months AMD booked $3.2 billion in web revenue, and in contrast to 2020, there are not any one-off tax valuations inflating these numbers. Amusingly, even with that $1.3B valuation for 2020, AMD nonetheless beat their 2020 web revenue by a large margin this 12 months, bringing dwelling $672M extra. Or to take a look at issues on a non-GAAP foundation, web revenue was up 118% in a 12 months, greater than doubling 2020’s figures. Suffice it to say, the chip crunch has been very variety to AMD’s backside line previously 12 months.

Shifting on to particular person reporting segments, 2021 was a 12 months the place all of AMD’s enterprise items have been seemingly firing on all cylinders. Consumer CPUs, GPUs, server CPUs, recreation consoles; 2021 will go down because the 12 months the place no person may get sufficient of AMD’s silicon.

For This autumn’21, AMD’s Computing and Graphics section booked $2.6B in income, a 32% enchancment over the year-ago quarter. Based on the corporate, each Ryzen and Radeon gross sales have performed very nicely right here, with each product strains seeing additional gross sales development. On the CPU/APU entrance, common sale costs have been up on each a yearly and quarterly foundation, reflecting the truth that increased priced merchandise are making up a bigger share of AMD’s processor gross sales. And whereas AMD doesn’t provide a selected proportion breakdown, the corporate is reporting that pocket book gross sales have been as soon as once more the main consider AMD’s Ryzen income development, approaching the again of robust demand for increased margin premium notebooks. And, primarily based on general development within the variety of processors offered, AMD believes that they’ve elevated their market share (by income) for what could be the seventh straight quarter.

In the meantime on the GPU entrance, AMD is reporting that graphics income has doubled on a year-over-year foundation. Based on the corporate, GPU ASPs are up on a year-over-year foundation as nicely, although curiously, they’re really down on a quarterly foundation resulting from what the corporate is attributing to the product combine – which in flip is presumably the ramp-up and launch of their first Navi 24-based merchandise such because the RX 6500 XT. AMD’s ready remarks don’t embrace any mentions of cryptocurrency, nevertheless it goes with out saying that for the final 12 months AMD has encountered little hassle in promoting nearly each GPU it could possibly get fabbed.

Lastly, AMD additionally folds its knowledge heart/enterprise GPU gross sales beneath the C&G section. There, AMD is reporting that income has greater than doubled on a YoY foundation, because of final 12 months’s launch of the Intuition MI200 accelerator household. Sadly, AMD doesn’t provide any unit or income breakouts right here to get a greater thought of what knowledge heart shipments are like, or how a lot of these gross sales have been MI250X accelerators for the Frontier supercomputer.

In the meantime, AMD’s Enterprise, Embedded and Semi-Customized section booked $2.2B in income for the quarter. The 75% year-over-year improve in income was pushed by each improved EPYC gross sales in addition to increased semi-custom gross sales.

As is normally the case, AMD doesn’t break aside EPYC and semi-custom gross sales figures, however the firm is noting that knowledge heart, server, and cloud income – basically every little thing EPYC besides HPC – all greater than doubled versus the year-ago quarter. All of which propelled AMD to doubling EPYC gross sales versus This autumn’20, setting new data within the course of. AMD has additionally famous that they’ve shipped their first V-cache enabled EPYC CPUs (Milan-X) to Microsoft, who’s utilizing them in an upcoming Azure occasion kind.

As for semi-custom gross sales, AMD is driving a wave of unprecedented demand for recreation consoles that has Sony and Microsoft taking each console APU they will get. Moreover, regardless of this occurring now for the final 12 months and a half, AMD nonetheless expects semi-custom gross sales income to additional develop in 2022 on the again of continued orders from console makers.

With all of that stated, nevertheless, as AMD’s revenues have elevated, so have their prices. For each the Consumer and Enterprise segments, the corporate is reporting that working revenue development has been partially offset by increased working bills. This encompasses each increased wafer costs from TSMC, in addition to increased prices for issues akin to delivery. AMD can greater than take up the hit, after all, nevertheless it’s a mirrored image on how AMD has wanted to spend extra with a purpose to safe wafers and provides on an ongoing foundation.

Wanting ahead, AMD is (understandably) as soon as once more anticipating a really promising first quarter of 2022 and past. AMD has loved important income and market share development over the previous few years, and the corporate’s official forecasts are for that to proceed into 2022. And, particularly within the midst of the present and ongoing chip crunch, as long as demand holds, silicon could as nicely be gold for as priceless as it’s to a few of AMD’s prospects.

To that finish, AMD is formally projecting income development of 31% for 2022, which might deliver AMD to round $21.5B in gross sales. Given AMD’s 2021 estimate, that is possible as soon as once more conservative, although it’s noteworthy in that it’s a bit much less development than AMD was projecting at this level a 12 months in the past for 2021. Extra curiously, maybe, is that AMD expects the non-GAAP gross margin for the 12 months to land at round 51%, which even when it’s additionally a conservative estimate, would nonetheless be an enormous accomplishment for AMD.

Driving this development can be a brand new slate of merchandise for a lot of of AMD’s vital product strains. Together with ramping deliveries of Milan-X EPYC processors, AMD can be slated to ship their Genoa EPYC processors, primarily based on AMD’s Zen 4 CPU structure, later this 12 months. Zen 4 may even be making its look in Ryzen processors in H2’22, and within the meantime AMD has simply launched their Zen3+ primarily based Ryzen 6000 APUs for laptops. Lastly, GPUs primarily based on AMD’s forthcoming RDNA 3 structure stay on the roadmap to be launched later this 12 months as nicely.