Following strong demand for processors used in servers as well as the contribution from its acquisition of field programmable gate array (FPGA) maker Xilinx, AMD predicts its target annual revenue will grow by 60% in 2022.

“Based on higher AMD organic growth, as well as the addition of Xilinx with strong demand across multiple end markets, we now expect annual revenue to grow by approximately 60% year–over–year, up from approximately 31% growth we guided at the beginning of the year,” AMD CEO Lisa Su said this week in a conference call with analysts.

The bullish outlook makes AMD a standout in the semiconductor industry, where growth has been constrained by supply chain issues, the Covid pandemic, and the war in Ukraine. Intel, AMD’s larger rival, has forecast annual sales of $76 billion, an increase of 2% from 2021.

AMD has made strong market–share gains against Intel in CPUs for the PC and server business while also expanding into new markets such as GPUs, where Intel is just starting to field its own products.

AMD has more than doubled server processor revenue annually in 8 of the last 10 quarters, highlighting growing demand for the company’s Epyc processors with cloud, enterprise, and high–performance computing (HPC) customers. Cloud revenue more than doubled annually as hyperscalers such as Alibaba, Amazon, Baidu Cloud, Microsoft Azure, and Google expanded their infrastructure deployments.

AMD completed its acquisition of Xilinx in the first quarter of 2022 and announced plans to acquire Pensando. As the industry’s top provider of FPGAs and adaptive computing solutions, Xilinx “significantly expands our technology and product portfolio”, Su said.

With Pensando, AMD expects to expand its data–center product mix. Pensando will add a data–processing unit (DPU) and software stack deployed with key customers including IBM, HPE, Microsoft, Oracle, and Goldman Sachs.

In the CPU business, AMD recognized that demand has showed signs of weakness.

“Although the PC market is experiencing some softness coming off multiple quarters of near–record unit shipments, our focus remains on the premium, gaming, and commercial portions of the market where we see strong growth opportunities, and we expect to continue gaining overall client revenue share,” Su said.

AMD’s success relies on its main chip supplier, Taiwan Semiconductor Manufacturing Company (TSMC). With TSMC, AMD rolled out its first Epyc processors with 3D–stacked chiplets during the first quarter this year. The technology extends AMD’s performance leadership in technical computing workloads by up to 66% compared with the previous generation, according to the company.

AMD customers including Cisco, Dell, HPE, Lenovo, and Supermicro launched servers featuring the new CPUs. Interest in next–generation Genoa server processors has been strong as AMD expanded sampling of the chip. AMD said it plans to launch Genoa in the second half of 2022 and expects to continue share gains based on expanded cloud, enterprise, and HPC customer adoption.

The company is integrating Xilinx’s differentiated artificial intelligence engine across its CPU product lineup to enable inference capabilities, with the first products expected in 2023.

Capacity concerns

Some analysts questioned whether the company can maintain strong growth, given supply chain constraints. TSMC has been unable to meet demand from all of its foundry customers.

“We continue to get very good support from our suppliers,” Su said. “That’s one of the reasons we can increase our guidance. 16–nm and above wafer supply is still somewhat constrained. We’re working with the larger scale of AMD to try to bring more supply on board, as well as continuing to ramp our overall capacity to support a very strong next few quarters.”

With Su at the helm, AMD has become a turnaround story. The strategy is to have the best compute engines and put them together in products for specific end markets, according to Su.

“Our CPUs, GPUs, the FPGAs, the adaptive SoCs, and then the DPU that we’re adding from Pensando give us just a tremendous range of capability,” she said.

Still, analysts questioned whether business will lose steam.

“There have been some comments from some of the big cloud customers about moderating or slowing investment,” said Timothy Arcuri, an analyst for UBS. “There’s some debate about whether that means there’s going to be some slowdown in procurement of servers.”

“Our planning extends beyond 2022, into 2023,” Su replied. “From what we can see, it’s robust demand.”

By: DocMemory
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