AMD - Earnings call transcript Q1 2018 | Advanced Micro Devices, Inc.

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Operator

Greetings, and welcome to the Advanced Micro Devices First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Graves. ahead. go please Laura,

Laura Graves

presentation. welcome you first opportunity should of and a and call. to XXXX By copy slide release earnings now, have our to you, quarter AMD's conference review Thank had the

will found If you have today's live Kumar, at Devinder Investors at the Executive Annual reviewed Technology for President and of I these Conference conference website Treasurer. May XXXX. May will and second Global call page quarter you. Senior AMD's Participants on Officer, Conference TMT Technology Vice XXth Lisa and on Financial on time Communications via at at Chief Annual Lisa Media Su, replayed dates Chief present and and can of a our Mark President and documents, our highlight and Relations June Dr. www.amd.com. Vice the would they XX, XXXX present Papermaster, not a be website. our XXth Chief President, on on are This Senior Friday, couple Officer XX; Dr. webcast Cowen President JPMorgan is of begin Officer; call to important will our the be will and XX; on Su, the quiet Executive like business Officer, Chief close

for business, today, investors will and our this call we as metrics growth meaningful analysts in focus our we trends believe way our the and During discussion on to year-over-year key trajectory. is evaluate most

CFO document. slide expanded the written have content commentary and the eliminated We

of to call QX @AMDNews recognition this we AMD of these XXXX, today's be this retrospective using sharing reflect you adopt call messages on be have at ASC this XXXX. new adjustments. adjusted on from been the of full standard prior reminded and Please standard, comments Twitter those revenue period XXX our results All social that as method effective our media, feed adopted call. will For on the conclusion key

on speak as statements, it. XX, statements please X-K currently contains environment the financial filing historical and information based refer are on our February see actual discussion our based we Today's on current cause differ involve statements XXXX. current more beliefs, of For to results Those materially forward-looking could the risks and and expectations. such, uncertainties to and assumptions that from date as current only as expectations,

refer will release call, operational website. during release non-GAAP segment gross directly Please for cautionary measure results, and a our reconciled to refer most their information. We today's financial which GAAP are on posted are primarily non-GAAP more on financial in The for this metrics comparable margin basis. measures GAAP press to the except the referenced to in press financial revenue, statements

ended about in and, detailed our You XX, year will Form particular, filings our XX-K find December on for also with factors the AMD's discussions XXXX. in the report annual risk SEC

the out Now, with happy I'm Lisa? way, Lisa. call to of that all turn to the of over

Lisa T. Su

Laura. afternoon revenue to listening you, straight double-digit third results, good as financial delivered We of growth. quarter our And started in XXXX Thank excellent today. year-over-year with we all those

points percentage billion First year-over-year. operating significantly on strong Gross share based quarter growth. grew income very $X. X net improved earnings and revenue XX% XX of per margin increased and

Our paying strategies long-term demonstrate strong financial that quarter first off. results our

on product executing our consistently roadmap. We are

strengthening are products the our customers we with investments. long-term new and the Our adopting are of increasingly right foundation AMD

our the was Ryzen ASPs increasing. the for Product overall Initial AMD accounted the better new for we high-performance revenue client Ryzen significantly were segment of XX% processor, most sales Zen and in sequentially. Client our on desktop processor and a the notebook double-digit single and Computing Ryzen Graphics desktop growth. the desktop processor our and up in Ryzen Ryzen as processors desktop APUs, revenue, seasonality, strong increase client of CPU in our quarter, QX, and power quarter, year-over-year as from execution low-XXs which graphics XXXXG. to with year-over-year grew shipments premium drove with product a significant GPU portfolio processor processor at sequential contributed the Vega portfolio sales chip, We the Ryzen Looking the excellent momentum on than expanded processor combining quarter. the powerful processor first products. our the were delivering in world's with component strong channel, in launched sales

outstanding we gaming leadership year-over-year our in the gamers, launches hardware OEM desktop Ryzen of CPUs enthusiasts. best-in-class a multiprocessing driving quarter the processor had architecture, in quarter, X-in-Xs Zen+ based our QX, increases second-generation of HP and and Acer, Ryzen Initial shipments for notebooks planned and mobile Ryzen and for performance in creators unit expanded new also Additionally, ahead began early and on XX-nanometer released system ramped and mobile strong April Dell shipments portfolio. our delivering further sales both double-digit sequentially. platforms unit that shipments, in Lenovo

graphics as of our number gaming demand. ASP top XX expected of all us, APU. the XX year-over-year HP Graphics, are priority a are shipments end such sequential QX. to on launch with outperformed increased and deliver consumer notebooks sales, basis, for Lenovo new growth Ryzen-based customers Vega for and performance products X, performance significantly. and to expect our growth alone, XXX launch, Ryzen experiences. Radeon released. based In we PC immersive to On Far Dell, expanding QX remained Demand to the continues with Overall, to strong strong by notebooks Additionally, increased new commercial more the revenue systems blockchain a first increasing offer planning of series our from revenue by as to a Ryzen-based driven features we the graphics by to new channel systems grow. on in and remain continues demand gamers titles, bring commercial this of Gaming be of commercial notebooks seasonality unit game and series and year. AMD-based number the Ryzen-based being to excellent total as Radeon PRO AAA for track and market were and driven In both we and delivered Cry of OEMs strong

and investments released We a and our on such our popular software uplift esports in esports experience, Overwatch. games X DOTA performance continued PUBG, providing as Fortnite, Radeon gaming

HP's We customers continue supply based market. to demand accelerate their significant to Vega of family, coming more Radeon graphics Professional increasing ramps HP high-performance Graphics, see with as availability on for our GPUs, both Dell In by WX workstations ZBook AMD light including XXXX. and the of expanded workstation powered new AMD and in Radeon quarter, Pro mobile their offerings portfolio Radeon the thin launch Pro

deep next-generation Instinct data to Compute gain our machine strategy applications, Our solution to center testing MIXX validating we are Open introduced learning ROCm and bottom open X.X, continues for Mega software to to happy workloads, later X-nanometer a Instinct momentum. ecosystem, stack this and for on provide Radeon for machine partners our learning report learning year. Radeon top customers that and Radeon to also running machine our product, optimized samples remain in track our is learning. I'm we labs

increased Xbox their double-digit delivering and EPYC consoles, and previous quarter. One processor Turning sequentially. in revenue QX announced revenue to to gaming technology shipments Microsoft the as X Server segment. channel OEM experiences. revenue, stutter-free doubled maturity FreeSync Enterprise, year-over-year, In center, semi-custom industry-leading Embedded our support cycle, of mega Xbox on from expected, decreased unit and the current customers. Radeon Semi-Custom data nearly percentage based One our sequentially, lower and increased across quarter, the for console due S game

increase university building center this mega Cray, HPC in announced To-date, networks, dense applications, they data a Cray quarter workload area and processors cloud customers grow production XXXX and powering big look instances virtualization are their pass to data, EPYC-powered Recently, expand simulations, big and deployments And there clusters momentum key of multiple as system in year. center platforms, on continued We HPC, of across to data milestones it storage, supercomputing that healthcare. HPC key three to market, added to EPYC achieving of automotive focused hybrid PowerEdge channel analytics its more virtualization CSXXX working with design unit with workloads, We are deployment newest of EPYC-based in OEMs, and customers. end Cray offerings. than Dell storage we EPYC XX EMC virtualized mid-single-digit momentum wins The very with data and dozens their launched end the series remain our by platforms line partners integrators and tops including off new share applications. active of to XXXX. leader, server actively on announcement processors. cloud

expansion enable Embedded business In new ASPs, two Our unit increased year of products. driven a shipments high-performance are closing, families: We and to believe other significant extremely our product XXXX to with year-over-year for and continued demand and be and solutions. revenue, margin Embedded we as Embedded growth execution. delivered embedded class thin IoT and first and results strong EPYC pleased new XXXX is Ryzen, up shaping processors financial and VXXXX introduced revenue Radeon excellent EPYC quarter the we for Ryzen AMD, with an the our client, by sequentially, product

Looking to grow artificial segments years, confident machine few and strategy over billion we forward, including sustained like market long-term will growth. data gaming, right we revenue $XX have and the to computing profitability are deliver in over the TAM next learning intelligence. high-performance that center, The high-growth

strong XXXX to deliver to compelling a roadmap even and execution built investments our an customers make in and beyond. we continue will in engine, software hardware have for and We more significant

quarter on provide turn I'd to first Devinder, to Now, to like financial the color over performance. call some additional our

Devinder Kumar

Thank Lisa. afternoon, you, everyone. Good

per guidance new a income was continue share from a compared million basis ago, as year compared $XXX operating year and to of and million was X% earnings on from $XX $X.XX in products up points Operating $XXX in as Total X strong quarter for multi-generation year AMD. $X to Ryzen basis XX%, investments, a of server diluted earnings year driven a down net our million and income adjusted make strong gross $XXX to $XXX we was X%, Net was year-on-year, and prior Radeon and ago were XX%, net was margin significantly of ago. than XX%, year-on-year, million and and driven achieved grew percentage expenses income a Ryzen compared The higher margin products. expended XX% net double-digit EPYC GAAP by growing profitability. improved expenses of and XXX were processors sharply proportion to a our of million $XXX Year-over-year, up ago. than EBITDA a million. XX-month first ago. revenue $XX income margin Adjusted million higher-than-expected XX% $X.XX was Operating our and products, a roadmaps. by percentage share points, a million, basis trailing invest a product launch lower quarter from billion ramping. up R&D million demand was year Operating was ago, revenue new revenue, or XXX more new Gross strategic for coming non-GAAP with from by of sales $XXX revenue EBITDA points we year per products

Now, was turning results. first Radeon quarter both of due segment to revenue Graphics year-over-year products. $X.XX to billion, sales and the Ryzen XX% segment business Computing and strong up

outperformed products and QX strength in operating both Ryzen XXXX. by Enterprise, growth driven income revenue demand. year revenue and accounting revenue year-over-year, of expense million, sequential to to offset was leverage. Our $XXX in our was gaming approximately loss revenue. client with revenue. blockchain lower Computing a growth client of Semi-Custom strong The embedded and to We compared and and processor segment XX% offerings Embedded in expectations XX% XX% for QX, double-digit revenue significant was $XX of improved approximately AMD turnaround $XXX blockchain server This percentage in was contributed by ago. Graphics believe a partially due and Radeon was higher revenue semi-custom down million million strong operating

as operating to non-cancelable in both from QX quarter-end million, due a XXXX EESC As in gain as expense investments operating and required to revenue income accounting standard. primarily a as inventory, ASC with under purchase QX year related a XXXX, include in the our XXXX associated increased revenue revenue data reminder, orders million $XX well was ago, semi-custom licensing business. $XX center down QX XXX

balance the to sheet. Turning

million including debt and Free QX, was totaled million Our repurchase first quarter. debt, we term the $X.X million, line continue $XXX the the cash equivalents $X.XX end debt from Inventory principal billion credit, of cash, cash $XXX the of to marketable from flow of $XXX year expense. as We ago was secured deployed was from quarter. up in down Total million $X.XX to billion at revolving and quarter, up securities slightly negative in in the quarter. and the first in interest $XX prior quarter, reduce billion. our cash

by increase an or growth Radeon, Now, in This product and billion, revenue For plus of a and our turning outlook: a of Ryzen minus to the XX% blockchain. to semi-custom we is basis, in modest EPYC offset seasonal approximately continued semi-custom strength $X.XXX decline expects be QX expect quarter and to our by XXXX, financial increase benefit to from due the graphics revenue, of second a million. EPYC $XX revenue. sequential On Ryzen, driven families AMD revenue partially year-over-year, in

As was the a revenue XXXX $X.XX reminder, for billion comparative revenue purposes, accounting ASC QX XXX standard. under

for to expenses be be $XXX of higher gross on be In operating approximately interest million revenue. to margin addition, a XXXX, QX slightly up approximately in of to expect non-GAAP XX%, be basis XX% $XX million non-GAAP other, we expense, taxes support and sequential to or revenue, and inventory non-GAAP approximately

our of Radeon EPYC products, is in and progress well Ryzen continued from the products. early as financial Our first quarter contributions to as ongoing the attributable strength

of Based revenue growth, by products. the over of summary, quarter to full expansion now increase mid-XXs the greater high-single-digit expect of the XXXX, excellent. percent gross strength we driven Non-GAAP to year revenue be revenue the revenue and be year-over-year. new our mid XXXX, Blockchain business first and business continued XX%. profitability we margin Our margin strong, percentage In increased XXXX. momentum, to to our ramp forward than for on look by was for to is

the We financial strong in with XXXX. the results, and a business believe our foundation which are lay we pleased execution for strong momentum

Laura? it execute model, high-performance We introduce the are I'll for delivering focused and long-term on multi-generational back as ramp to Q&A products. target session. roadmaps With our that, financial Laura we turn computing and our

Laura Graves

that, Thank Appreciate we're you Devinder. much. ready Operator, to go. very

Operator

Certainly. now be a conducting question-and-answer We'll session.

from Merrill Lynch. Vivek first from question coming today of Arya is Our Bank America

is now Your line live.

Vivek Arya

Thanks op for especially since that. Graphics saw and taking double-digit congratulations strong on margins your Computing my question it's the results, the been getting and on in segment. we to awhile

mentioned question, they my on sequentially. sales, Lisa, server you For first EPYC doubled

what adopt we is, right pushbacks some remaining or to in now. give sense so would terms deliver to in a to do magnitude a from on customers, they level? of meaningful you of us are least some at need time? more they But If sense a could it pricing of way, meaningful a matter performance what what have see EPYC EPYC ballpark the importantly, to are it you else or more where what before you just of a is the Is like gap, get

Lisa T. Su

Thanks Yeah, absolutely, the for Vivek. question.

quarter. a on nice EPYC, So look, very make we did the progress in

very strong I increasing think from double-digit There's across at is view revenue when it all a we actually you percentage. thing. certainly standpoint, the – it's look that positive traction units areas. is also a The

Enterprise traction the some get our as end is integrator to deployments. year. saw we as So well share this of end deployments. by in user deployments to sort goal And and channel system We hyperscale of saw mid-single-digit

working various progress is I think towards we're with just through we good that. their customers going making What of qualifications. are now stages

deployment initial from deployment. deployment they initial then volume that to to in phase. proof-of-concept we're And go So large

and process progress, no working pushbacks get that just time real to and is going qualification other their than them making through think – I environments we're sure in we qualified. make good fully the And it are with so, there

Vivek Arya

at a I Got if it. in sort to had. the as what competitor And $XXX they server your range, in follow-up, the well past, were your below ASPs $XXX of look

sell you're that of Are pricing As participating a segment past? we than you do should in the able were that look to a you're you these value seeing in trends how now, think market? that in lot you about engagements able at higher in to

Lisa T. Su

Yes.

right part Vivek, now the of portfolio. is across playing very our really strong I So the we're roadmap entire think

the the the let's all the high-end entry-level, XP from, through call the it, market, way of server So SKUs. low-end

is to the our we in providing From are they – market seeing also reasonable. very customer, overall we're that value of but pricing they're margins our the the standpoint, the very are to business. So accretive

environment is pricing the So good.

Vivek Arya

Okay. Thank you.

Laura Graves

Lisa. Thanks, Vivek. Thanks,

Next please. question,

Operator

you. Thank

next is Lipacis your Jefferies. Your from Please Mark question with from coming proceed question.

Mark Lipacis

taking for Thanks my Hi. question.

a And to like color, hoping what bigger a really I in you a opportunity ultimately little bit hit to could product? you. which it First your it's us it is it question sounds desktop effort, give notebook Ryzen to that extent, on think starting versus than the do stride. And Ryzen it with, does segments Thank the commercial its notebook consumer opportunity, you seem the more is was minds? resonate

Lisa T. Su

Yes, Mark.

So on making look, we're progress Ryzen. very good

the very in and QX see second launch of product. pleased thin the in designs see has been will think think from I first we the with our light we're a systems commercial is good What – impressive of notebooks launches. a quarter it QX quarter, of with one. cycle. that second the many It increase also But quarter launching the OEMs are is I that in that the And number channel basically in expectation the we're that I of until what overall, production of consumer is are premium to And see going systems is representative their year. kick seeing saw the what and is this strength OEMs the the half in will the and you're results, this in we we then, they're more into opportunity much consumer a quarter of the and QX and the OEM notebook We in of commercial a top progress think designs, actually is the of the second desktop the business. of portion second going for in half. had up true up notebooks building is nice that, the QX.

go-to-market overall than desktop the notebook wins. with doing opportunity ensure overall. to customers of and design important lot is a us. the We're and working with is closely strong have notebook retailers larger are We work The that

Mark Lipacis

scale On a for I then, market has go to you EPYC, helpful. pilot phase, been product and the and And initial that a in while. the have great. Okay, follow-up, the That's I you understand may. of desktop testing or through if deployments, programs do Is how the or updates think this a Thank How about hopefully, on see should then, larger similar you and notebook deployments. the cadence that would cadence you. on this we think product? side?

Lisa T. Su

Sure, Mark.

server the to the be on longer. of does cadence deployments So side, tend

well we're the cadence. into think I

move customers EPYC Dell their doing the and labs HPE that then, and systems over think OEMs, you taking the the their I their into now combination that saw Enterprise so, initial quarter, with And deployments. of with announcing then December, will in first in the into announcing who are work

over think quarters. will say I So the nice and we're for cadence is seeing really of interest, number a quite first-generation I the broad. customer EPYC, it's

And as well this view Enterprise we And so, customers. as it is play. the a multi-generational as across hyperscale

we're can and because make So what as But the would second-generation generation the very familiar about system. this next EPYC quarters. our the is go bring of it with the obviously, set EPYC, of the investment the right customer bit out with excited believe over is also EPYC a of couple to little customer third that do we we set, faster,

Mark Lipacis

you. Thank

Operator

you. Thank

next is coming Our from Credit Pitzer John Suisse. question from

Pitzer basis pretty clearly, Your that XXXX as William declined Credit of kind the the to a impressive John March Ryzen of and kind good impact. gross significantly curious, year-on-year down XXXX? XXX has Yeah, Securities about afternoon, in leverage Can we the then, Ryzen too? comes margin from of results, Devinder. perhaps help on Devinder, fact points. and between Lisa line do new growth basis semi-custom I'm year-over-year LLC a And positive products incremental how EPYC points think (USA) in just of as - the had the XXX of live. sort and growth mix break you Suisse quarter margin is now the strong Congratulations guys. percent

Devinder Kumar

there the embedded and Lisa, products have the and of you of go first helpful, fundamentally those are market increase that updated this work quantifying look the actually margin. we standpoint and just stake momentum for that blockchain which higher two, blockchain I'm look margin new a sort year see if commentary is it in this hard how it quarter all for for where you do just proof June I are corporate it's observed, it our time, from is a what's last And the were kind what's we in the as kind to and in updated say, And the or to good GPUs year given something of about track of Credit GPU the XX% secondary They're to driving negate new to, the Pitzer margin John. new both going versus are this Devinder. you then, helpful. the going the believe really in to That's mining back guidance. - in Yes, down the a get the long-term we that, rest was scenario EPYC, XXXX? you worried say, or the (USA) either market which from market why, products proof to appreciate move of to might new driving out, said margin these if and at as looks how is second the kind this as a do it half also to you you one? viable at And Suisse do sequentially you Actually, are follow-up, Compute, about cards time of develops, just the prior we coming into your maybe altogether? the into And the sense play pricing as margin. the my so of products. last being else, your you Ryzen, at application as have curious, going, with for products. of from like contribute just guidance, momentum greater least year products, how to hurting average, down, all get semi-custom question, that's of Securities increase than ahead John was LLC But all than beyond that revenue XX% year-over-year, to, if greater fundamentally, that year the William that's and for than

Lisa T. Su

John. Sure,

is our set stay to lot close there So look, blockchain space. we the on graphics very of discussion about this. the standpoint, very, in a From the customer

we spend graphics so, we cards our gamers. partners. to with look look And with at time the spending well we priority the And when is miners as commercial at as of this, time our way allocation first

system that's gamers through to that's OEMs, so key prioritizing do going through continue integrators, also to we're make with they that's And working e-tailers that segment and the are to sure that.

that's that so, And piece know we well. one

directly work and with go also we tell have work a that what we sense the that whether so, commercial forecasts visibility have good miners, There We and to believe of see is. but and that are piece or so retail good kind we mining, us a gaming on. that's of their hard they what that is through we is with

where is do stay. but approximation think blockchain it's infrastructure to to a longer-term an here then, approximation, we are. is your it of think So we And good question, I the

risk secondhand are There numerous blockchain that are there coming We don't a market. into of currencies. the using significant technology. numerous think GPUs applications see are I the

two, both GPUs commercial that you lot these buying I one, days use and, and is what think actually a cases, currencies, there of multiple that, of consumer. different them number for users are are these are find buying

more are cycle. demand, and And into That's than products that's business. putting made see up for really is that (USA) Securities a for LLC the other not think they're Pitzer do bit Thanks, lower second buying new why a in mining. by reason, - Lisa. we William products quarter way blockchain it. bit the half think Suisse do little John different Credit the case, appreciate a necessarily our I we I of for new the the being volatility the and forecast great. but So are ramping the and this just we that's That for second

Laura Graves

next John. question. Thanks, Operator,

Operator

Certainly.

Fargo. Our question. Wong is from from with coming Wells your question Please proceed David next

David M. Wong

your Thanks guidance some very you discrete give of sales much. assumes of Could graphics growth? microprocessor in terms growth June compared us to sequential what idea

Lisa T. Su

Sure, David.

modestly actually some are is seasonally, and guidance, be second EPYC the up our assuming blockchain graphics we of quarter up, expect Ryzen we're on semi-custom demand. down that and in So and to also based

David M. Wong

us rest what come you out? plan and these when And of the this new give Could you Excellent. products to are year launch update on through an next to scheduled year?

Lisa T. Su

couple David, Sure. say but let That's a things. a me lot,

mean, happy I we're that. our second have just year. the and think, really some the to positioning half, to we launching additional systems second launch. that in Ryzen-based XX-nanometer half Ryzen relative very gone updates other the launched that our products desktop the we'll customers launch mean second-generation are business, CPU of has I the I in well. Ryzen how with will we to and some lineup In and reacting are commercial We

have X-nanometer later sample a that this we'll GPU on Vega We based year.

obviously, server of We sample later then, a CPU as have have a this are And X-nanometer we'll well. year. we that number products that planned XXXX for

sort product the busy execution us. we're with the roadmap. of the But for very on pleased very, product a it's season So

David M. Wong

Thanks, Lisa.

Laura Graves

Thanks, David.

Operator

Thank you.

Stacy is from Rasgon Our coming question Research. next Bernstein from

now is line live. Your

Stacy Aaron Rasgon

Thanks taking guys. my for Hi, questions.

looking the on Firstly, this and – kind key the forward? investment higher through of on are revenue go on for a what base? as full a OpEx, that's that rest year of so, are areas we for year of revenue you XX% for still given the And going if

Devinder Kumar

Yeah.

and can Lisa Let me then, add. take that,

So yes, are we targeting XX%.

had long-term started are same came the you've We has As for model seen, XX%. in we Stacy, XX%, around XX% well. The in in terms obviously, in still of maybe details we the in where investing of in And investing OpEx. some investment roadmap. targeting mode, Lisa out But QX. can QX R&D and add of and at a are product we target of year terms the and

Lisa T. Su

Stacy. Yeah. Sure,

investing focus but in side, a software, on side, and software. R&D in investment think and key machine GPU learning I we're the certainly, particularly, us So the from the is CPU for

people I think space. the a use our in to compute GPUs high there's wanting demand of

learning. we're investments so, in machine around And our software increasing

Stacy Aaron Rasgon

you. Thank it. Got

tailwind I in a last seasonality, I historicals that normal have particularly follow-up, know you or versus on as the versus would in XXX have versus tailwind half change? a should semi-custom. the about guide? think we what that QX gave the some quarter ASC Is my we accounting we a the had XXX. the question would For well the through go ASC of second how how kind And been headwind without a what on – that headwind as for seen is was

Devinder Kumar

and ASC the profile Fundamentally, the from revenue a standpoint, happens changes. revenue Yeah. semi-custom is of XXX, seasonality the what

so revenue QX. moved the Some and second half see to more half, to the half, say, of we in the a revenue little balanced first between in would to the that to as the used second get used half bit opposed the it's first we I peak

is the effect of on our quarters. not significant had has primary necessarily revenue of annual So the more within It's impact revenue, profile profile the revenue. any annual the of revenue. on not the XXX that the ASC the

As XXXX, concerned, slightly far semi-custom XXXX, but an up, from QX year-over-year, example, down, is we overall more balanced it for in you're had in impact revenue from was QX very we comparing where and QX, of of because see if as is it in standpoint.

Stacy Aaron Rasgon

otherwise? in tailwind? is year it a what million similar forget less? been a in Or this would amount last So it QX a $XX headwind versus is much, I it have time like QX, Is like it how was headwind of or –

Devinder Kumar

were from headwind I year. we up it say that of compare slightly last year, is standpoint, I if would was QX where year-over-year, it This from an a overall in XXXX.

our XXXX XXXX benefit to comparing if in in revenue you're the a it's XXXX, QX QX of So guidance. to QX

Stacy Aaron Rasgon

Got you. it. Thank

Stacy Aaron Rasgon

ahead. Go Stacy. you, Thank

Operator

Thank you.

from UBS. is Our Timothy coming next from question Arcuri today

now is live. line Your

Timothy Arcuri

of rest some ASP SKU, I out you're for you. I product know that guess, you as would you comments potential about the I'm there blockchain, be also, handicap into the again how do how now in you on two. that right? ASPs over you would because channel, to the some think throughout too? you've be hear why is, of And back there had a I to selling on surprised little Can think captured the a Thanks. the you general year? then, that that the effect that rising and limited more risk curious that come go Thank your handicap so looking just market. I'm of

Lisa T. Su

period sort the think couple to are people which couple important you and this last Absolutely, so at, of ago are differences. Yeah. Tim. was years time one a of there Look, a of when think, I I look blockchain most comparing

I think both depending from for, one applications the those standpoint, well. again, users, that there for used. is gaming, We're are actually blockchain, on that buying for good is do for to for demand are currencies multiple as happening. and side, many see commercial that on seen cloud the but we've are that not that we seeing what's is first just currency the also people mining what cases. are multiple and that and from there consumer being another use one And And things go multiple who GPUs

So I we think it's a balanced assessment of are. where

I give of think applications base the that the breadth us and belief. the customer breadth blockchain also of the

been go go forward, as business Now, We very GPUs, the for forward at we not blockchain, question, had good go for growing, minus have environment. gaming of and good we Tim? side, GPU again, gaming Graphics some a see Compute you there's users so, that's good frankly, on are growing, those environment actually look to also when a as get a we those – you second see able see access all then, And forward. environment to we positives a – and a the

Timothy Arcuri

yeah. did, I

said capacity the That's going product you do launch is wondering you lab, I product later think that I TSMC, feel can from And this on vendor. correct? the that Thanks. and just that it's guess, that I'm to in the you comfortable front year. X-nanometer at get

Lisa T. Su

first on and GLOBALFOUNDRIES strategy So TSMC our product. foundry both is use X-nanometer to the

are TSMC very strong and have using a with we product them. We for relationship that

see do see, from on good we what capacity. I'm so, not we concerned it And and about a momentum

Timothy Arcuri

you so much. Thank

Laura Graves

Tim. Thanks,

Operator

Thank you.

Harlan question. Please your with from Our from JPMorgan. Sur next proceed coming today is question

Harlan Sur

afternoon. Good

on And quarterly the job execution. solid

follow-up you was business, it percentage on for guide, June semi-custom from sequential on the looks look ASC your down double-digits last at in reconciliations the year, semi-custom. Just semi-custom actually QX. if the a sequentially mentioned like quarter XXX growth I points to going QX business But

QX? year, this QX the why shipment to on like-for-like So different profile XXX, the

Devinder Kumar

explain Yeah, I that. can

of there wafers we So in QX did that in buy a XXXX. XXXX, QX strategic was of

impact And then, bigger in had the caught in it QX. QX So effect a XXXX. up

significant. QX, QX So to up. it's and more you when the QX to QX, year-over-year, impact QX down, This standpoint, from that year, but it's compare to it's QX balanced, was

it's wafers way the more a purchased are was little profile the just XXXX there where bit So as XXXX balanced. QX in on a based different in XXXX to opposed

Harlan Sur

for growth the for Thanks and Question contributed insights solutions to quarter-over-quarter year-over-year Great. EESC. Embedded there. Lisa. the in

in an understand of part us is that maybe embedded overlooked to rough revenue kind us embedded of team to the set this good because think often a demand traction is help just idea nice, of I exposure is of guys contribution overall diverse of the a business, where give the and gives because it on kind you seeing market you EESC? Can kind applications.

Lisa T. Su

Harlan. Yes,

a is yeah, So embedded nice segment.

You're right. absolutely

goodness where margin we think are embedded, for need so markets in ship very segment customers. they believe, there. I and embedded displays launch around we it's for strong are a Ryzen into to that we ship us, a The EPYC, from It's but there to and small we interest thin you displays, still business addition actually into those EPYC end graphics some that places when clients, we saw there's Ryzen the accretive products, us. actually

And strength products also business in so, in help will server think as that PC and overall. increase, the solutions they our our business embedded we

the a business business, say portion over will piece couple still be it but we next years. of accretive margin I So small the the of nice would of it's growing a believe

Harlan Sur

Great. Thank you.

Operator

you. Thank

Srini Our Pajjuri Macquarie. next coming question is from from

Lisa, question - Macquarie now Inc. Thank line live. ASPs. you. (USA), a is Your Capital the Pajjuri on Srini

you us expect with do the went mix? think X, Ryzen the more up give of some in And improving. accretive that said of to terms Ryzen you because Ryzen is color mix then, to ASPs you to the margins? and as ASPs I where be Could

Lisa T. Su

Yeah.

units up become and is the up the what saw underneath and overall. that, client seeing main the of both thing terms mobile. think were look business, in we desktop larger So a in they We Ryzen. saw when we're business of mix overall up ASPs And I you

of fourth the client in kind stated mix was that of in the business we quarter, the Ryzen had So the low-XXs.

And so, product shipping we had we and had legacy notebook, a that lot shipping. of legacy some we're product still that still desktop, in we're

over to has nicely mixed As we first and the nicely Ryzen, the now mixed quarter, desktop mix very as into Ryzen is notebook the move well. into

what to increase. the So ASP that's led overall,

second is Ryzen a very, generation the very product. think I good

Ryzen, – when it's performance, around but – on look the detractors it there some first-generation we were single-threaded actually were think I multi-threaded very and you good at gaming performance.

on I more think the Ryzen is competitive much second-generation gaming performance. actually

do Srini in this Inc. to that Pajjuri be that question your the one Capital which (USA), - of accretive business, is year, business, we on by to then, target opportunity So to And certainly, get Great. for an help gradual to us and mid-single-digit ramp. desktop the margin. Macquarie would increase fairly see server end guess, is I share share

and available the curious an continue or market inflection to you expect see happens, be to do share in to gains? part when do share the Just that you X-nanometer you as you. to gains expect when Thank gradual your

Lisa T. Su

Yeah.

be more the potentially the products. year So all mostly production than mid-single-digit of adoption of this second-generation because customers we'll us to rate around and our year product with XXXX, X that and Zen to generation do based the adoption the share. systems will first-generation, customers will in in believe higher our be sales current so, and could and be Ryzen, the later X-nanometer will the familiar this gets of be that we the sample that of rate

so, we'll see the in goals ambitious it server certainly space. are but how overall And we goes, – our

next the we'll X-nanometer Srini Ryzen; – Macquarie EPYC, (USA), first-generation we'll Pajjuri I'm you. and - of this mix Inc. so, in in Thank products. first-generation And the year, EPYC Capital second-generation year, sorry, second-generation year, the it's next mix

Laura Graves

Thanks, Srini.

Operator

Thank you.

from today question next from Goldman Our Sachs. Toshiya is Hari coming

on phone is live. phone your now Hari, you're Toshiya your live. is end. is mute is line mute. Your Perhaps on Perhaps line on your

Charles Long

Toshiya. for in calling Hello. Charles

Laura Graves

Charles. ahead, Go

Charles Long

– Thanks taking landscape I sorry time. a space. the that. is for about competitive had on first question AI my the the Yes, in Hello.

just NVIDIA, So to about And in I a custom could there wondering working entrants on relative your not thinking positioning, that only new biggest potentially you're also have competitor then, solutions. your how follow-up. but be

Lisa T. Su

Sure.

certainly relative market is we very, AI are the the very to a So competitive growing entrant. new landscape, fast

very good. I think hardware Compute our GPU is

putting have for I strong a roadmap that in we are that. think we place

opportunity we and to really, investments see I some learning work as significant and some think But more our on frameworks, to such software for as have we do, and making we frameworks TensorFlow it we solutions. ensure make the to this us. that the easier multi-year, are these key of side, in of adopt Caffe, machine a

think we area. this competitive focus invest very in to GPU to continue So be continue we're Compute going can will be us. and a We area for to

heterogeneously landscape As solutions. some says the it, it standpoint, have elements. call I the to and think be ability but – will in solutions, CPUs, And the other will solutions we then, view GPU that from complementary relates to, I there non-GPU we have there ASIC let's I think the to have marketplace, GPUs, as we these to connect that

standpoint and will in market invest again, our as fits our it. that from So we continue capability we a to very see this much

Charles Long

to you. dilutive wouldn't Got understanding meeting. that proposals the of one increase how shares. million wondering about be of my Obviously, the on But know is follow-up's then, Thank that uses that upcoming thinking just initially. about And is it. is. my shareholder XXX authorization you're share the I authorized by share potential

Lisa T. Su

Yes.

going the and proposal not is don't It at So begin be to this good any it's you're at housekeeping. There shareholder correct. with, is particular really point. to We have dilutive a plans meeting.

Charles Long

you. Thank

Laura Graves

Thanks, Charles.

question. Next

Operator

Certainly.

from Our next coming question from Srivastava is Capital BMO Ambrish Markets.

Your now line live. is

Ambrish Srivastava

a were Hi. year? AMD just we you on from that much. traction update and what where in revenues are the One give front so – questions. just any of on meaningful Thank very should in learning had you two an this we I side. machine expect talking see you to about When us Lisa was follow-up do

Lisa T. Su

Yes.

a area. others this to I think other optimizations software last partnerships we with So partnership with for in we Baidu learning. year, machine announced do have several And

lot a there's So of interest.

XXXX, we – see think revenue time the growth part half year margin will XXXX for some I in think area be of continue to meaningful expansion will us. second of an that's into revenue the growth I this the the the And story. in for and of

Ambrish Srivastava

first into discrete Okay. really quarter. reported, back And heading then, to graphics in the the channel for dry was getting the my the follow-up, quarter just

was So channel by you. there for March And buildup of driven Thank the you we on how help the much the way are in any where inventory? in is us channel understand growth quarter? to the the

Lisa T. Su

Yes.

GPUs. the frankly, was low hard going at it So levels get into and get the channel very quarter, GPU. was inventory to to the It hard very, was

inventory normal. I see we think look sites, would today, they're, if channel and e-tailer element is say, typical on the at from you what think inventory an of now the And but there channel I was I retailer replenishment, good. levels

Ambrish Srivastava

the level, weeks? is Lisa, of And what normal in terms

Lisa T. Su

Maybe somewhere five between weeks. four and

Ambrish Srivastava

you much. very Okay. Thank

Laura Graves

you. Thank

Operator

Thank you.

Our proceed question. Hans Mosesmann question your Please Rosenblatt coming from Securities. is with today next from

Hans Mosesmann

seeing of second questions. had impact competitive Lisa, it's us about that question, you're of Thanks. going And a terms the on on a Can in qualitatively an couple you the comment can forward? the as in you. microprocessors? business dynamic give Thank you update Spectre,

Lisa T. Su

Hans. Sure,

opportunities. the microprocessor it, And I seen landscape, on we we've and in Ryzen see design competitive competitive. side, the as very So EPYC head-to-head think that are

that. a I pleased standpoint, we're from CPU think very with

actually like overall and that we XX-nanometer us in Ryzen side. second-generation performance, PC think how the so, I improves on the positions

the planning. we ecosystem very that and a a in we I the side, we're think good that is is And good, foundry on puts us have design and this from capability important, manufacturing believe spot that X-nanometer the think I competitive forward, then, things standpoint. of look as obviously, we

to to I take so, and over and gets it we competitive the time. is question, very make better very good as that, the one the about yes, work seriously. that going Hans, that as And sure second Spectre. see sorry we're environment on Obviously, hard competition Oh,

to deploying. to make a our customers to in with they're our They're software We've our of and that partners. spent number have mitigations OEM good We their released actually protected set on Spectre. of of customer fully process already amount time sure a

it. don't make see lot any on focus. a time been work took and long-term it that's to our lot of we think to we our want of more customers a energy. and to done spend spent it It's time But Certainly, I quickly, sure we So the effects. that on get had

Laura Graves

time we have for two Thanks, please. Lisa. questions, Thanks, Hans. more Operator,

Operator

Certainly.

question Curtis from coming is Barclays. next from Blayne Our

is line now Your live.

Blayne Curtis

you're fill in you the was you, of follow-up. the CPU Thanks I wanted to I in for of I business? for ask think question. taking one mobile more I've curious And just kind Ryzen growth stage mentioned terms on then, my what business. channel double-digit sequential

Lisa T. Su

Yes.

shipped quarter. system we some see as the of in ramp. launches did, this as product have OEM of the second But So ahead Ryzen the I mobile beginning mentioned, we really

business So quarter, will in Ryzen will of my half. expectation in is our up that the the the second second portion up be or client it the and be

the beginning it's the ramp. so, And notebook of

Blayne Curtis

expect the offset, of OpEx some ask those of side, to been gains wanted that I just do in any OpEx then, licensing gains you And year? Devinder, terms have in of this

Devinder Kumar

because from to there could it's standpoint. upon That play. think see it that be, it's hard but a of milestones tell, but the kind I when was reversed, milestone got that OpEx come we'll dependent last into the happens offset year

Lisa T. Su

IP we're or point Blayne, point, think, a I this standpoint, quarter the the from an second forecasting clarification IP half. on not into either of second as in here just

forecast do Devinder depending I on we into of that sort and we're will some arrangements then those think, the have milestones business. when IP working said, complete, as it on, we

Blayne Curtis

Thank you.

Laura Graves

Thanks, Blayne.

Operator

you. Thank

final coming Gus Richard Our Northland. from is today question from

now Your live. line is

Auguste Richard

can you quickly, shrink real or Real, just performance a question. me tell the XX-nanometer dye the taking for if Thanks is just Yes. improvement?

Lisa T. Su

Yes, some improvement, performance Gus, is it is and primarily design it improvements.

and some see so improvements you not of latency It the is on. So dye shrink. a

Auguste Richard

Thanks. it. Got

Operator

floor like I'd session. the We've end Thank further closing you. any the for reached question-and-answer back our of to comments. or turn

Laura Graves

Conference. call Look your you Stanley thank for thank as Conference us. support the forward always, for very of and much Cowen at for today. joining we for And it seeing AMD. We to you our the at you That's Morgan

Operator

you, gentlemen. conclude today's teleconference. That does Thank and ladies

at time, participation We disconnect thank wonderful for lines your day. may you You your today. have this and a

Advanced Micro Devices (AMD) 25 Apr 182018 Q1 Earnings call transcript