AMD - Earnings call transcript Q4 2018 | Advanced Micro Devices, Inc.

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Operator

Greetings, and welcome to the Advanced Micro Device's Fourth Quarter and Full Year 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Laura Graves. ahead. go Please

Laura Graves

release welcome XXXX And had fourth and our quarter opportunity Thank call. to By year earnings of copy conference review have slides. now, fiscal to you. a AMD's and you the should

actual the current HR, present to as date expectations. March Those see we as are Annual and begin Vice based Marketing results Investor XX, of President differ such, Senior at and is and the President, involve Executive our replayed speak will contains live would they our and XX; Conference of Dr. current If via February Sachs important statements as and Technology on Lisa materially Financial call, be webcast quiet President highlight our Goldman Lisa Chief that on XXXX AMD's statements and site, Su, the discussion I Friday the Dr. these today's currently dates first forward-looking Senior Technology on Chief to of close cause Relations found of time Tuesday, uncertainties Cotter, www.amd.com. Treasurer. XX; page our can on site. beliefs, based could Su expectations, XXXX. environment Internet and March a current Participants also, This at you on Officer from assumptions Relations conference will will on for reviewed it. quarter only the Kumar, have Web you; not Vice and Ruth documents, and Susquehanna Devinder on Investor will be Worldwide on risks the call Officer, our business like at and Today's present some Web Conference are Tuesday

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

detailed on AMD's discussions for our SEC XX-Q in factors ended the the Report particular, Quarterly and XX, quarter find about our also Form in filings XXXX. will You risk with September

with call to will I Now, that, over Lisa? hand Lisa. the

Lisa Su

Thank datacenter you, Laura, growing of to year those annual by driven billion with XXXX strong by graphics revenue another more grew We all year. XX% and our near-term financial GPUs performance, good performance product high the in listening revenue afternoon expanded portfolio by EPYC than and marked $X.X despite weakness. Ryzen, product today. for

profitable and Our new our since margin, leading most to products gained share year gross expanded significantly XXXX.

products. a at our from sales quarter, in high datacenter reached new $X.XX overall CPUs margin revenue and XX% in of business Looking fourth We year from billion the milestone our accounted X% mid-teens ago of with percentage revenue. of coming for quarter a important an the approximately increased our GPUs as

results. we data to revenues meaningfully to the business center expect data to lumpy, financial our is be beginning our our ramp While contribute center of

than unit our through revenue GPU lower graphics GPUs year our computing data CES, quarter. year-over-year with new mobile as Ryzen more and highest launched HP, by we revenue of graphics client of our generation four processor in the we fifth notebooks from graphics. Huawei, growth. channel believe sales quarter Lenovo Acer, straight unit second Samsung, than and powered straight computing had grew delivered segment the at At shipments datacenter levels XX% offset We and we client Looking desktop Radeon segments, and processor Dell, Asus, share for period. all CPU ago gain continued years, by eighth and the processors Client Ryzen inventory. of working notebook Sales more our elevated

available quarter mobile The from we processor this is HP. notebooks. enhanced Chromebooks launched Acer have fastest delivers and second built, AMD ever performance, earlier processor industry's based gen and and ultrathin processor battery the than longer Ryzen mobile any for features more The life first

additional we to further momentum based is more cloud. in the There confident right Radeon inventories. set professional systems as to significant AI in our their introduced that we and Radeon software planned significant deploy in work to learning for improvement a center a we and year the decreased driven We throughout for Radeon of quarter, more the major generating XX%. Vega Chromebooks of X-nanometer partners reduce AMD than workloads. market. in our sales. portion volume than XXXX notebook graphics, we data by GPU as increase PCs we're across launch number center still in to processors, quarter record partially the GPU later data the of in on growing channel more make of a launched We XXXX quarter inventory. gain Ryzen based for continued GPU GPU the this easier by with multiple XX% that in centers Based expect offset Ryzen started the this memory our data by largely drain participation highlighted and our At it and competitive GPUs. channel of We sales, positioning PC We to for new number the wins In expand systems expect year-over-year, GPU increasing consoles, GPU machine GPUs to set increase lower and to in revenue an accelerators enhancements our CES, sell Ryzen actions by do, Instinct to driven customers for we're by launch taking channel revenue saw the our will the but out remain high shipping

market competitively our second our compute and very GPUs Radeon content Stream. new graphics gamers game Pro gaming Radeon our Definition with return memory, to Google bandwidth positioned the Google at and GPUs For GPU workloads creation VII GPU. we Xk and gigabytes GPU The the Vega running performance Pro and initiative, virtually enable their to creators, is new leadership virtualization XX second by of performance high X-nanometer High to in generation demanding high Project VII featuring cloud AAA the we end generation Powered announced gaming, features differentiated and core announced selected uncompromised any an resolution. on experience deliver power when Radeon Radeon most games In our of that streaming delivers PC.

a embedded enterprise processor was year was segment, our offset sales. flat percentage as by in to Turning in ago semicustom EPYC from decrease semicustom double-digit a strong growth in revenue revenue

unit are a the Sony based This in most were one generation now console of sales semicustom cloud, quarter ago virtualized from Fourth current on customers. well XXX million in processors HPC sequentially year growing ever remains excess enterprise as our highest for have EPYC based combined expected, cycle. shipments powered doubled Microsoft than As AMD down successful and core more of with console end the demand consoles. server where on we shipped and XX

and nodes. current X-nanometer and key products compared of products chiplet the development believe the and technology am HPC ECX strong University summary, that versions is Rome Supply and socket revenue in at goal Agreement. Increased full at midyear. As the most performance with instance that continues XX% a more Gamble, start a exiting quarter, Microsoft used EPYC High-Performance quarter to GlobalFoundries quarter, our AMD. share of year next of our probably XXXX times new HPC margins adoption processors. generation machine the these affirms made another we instance critical multiple outperforming and dedication big XX,XXX featuring a Computing processors EPYC great can well supplier our thank powered we XX competitive at save a to U.S. next I unit Labs AMD AMD expected expanded XXXX. the Department of strategy. availability xXX amendment also Ryzen data flexibility for our We announced advantages one and possible. deliver analytics be announcing to have single generation strong Stuttgart's leader and AWS Customer supercomputers core performance with and their than to highlighted multiple of processors. double supercomputer, had annual discussions like wins mid-single-digit demonstrated well both point provide will offerings. faster to play including and by strategic The interest popular new shipments very is nanometers Center. our built announced generation processor Businesses the general below server to their GF results our current very learning EPYC or another AMD result, of by computing competitors' generation in for Europe's growth, EPYC on based of high. two also would Wafer highest Amazon is are drove platform. In as as on role concluded sourcing whose partnership instances new We for Livermore will we and workloads. performance that processors GF seventh of by workloads. AMD's than Instinct adoption, Azure double-digit achieved to products profitability. we also above, in and Procter easily We with Radeon industry the XX% with a products powered high of AMD second Lawrence of a gross the year our in track their four of in server instances compute EPYC migrate of proceeding end Energy the and building more processor products XX was EPYC our and to based Rome processors secured floating our improved a straight next the with storage I server cloud Rome for remains on pleased employees amendment generation the be largest report accelerators

to the and the graphics half we next first some X are as are year throughout the in XXXX, While and headwinds share accelerate remain products. growth believe positioned macro causing we we of nanometer caution well uncertainties channel generation our gain ramp in

entered generation Ryzen XXXX, launch gaming, the we’re product As middle in expect we about the XXXX how step year. proud deliver I and followed Rome and our what end GPUs to we In launch high of significant Navi processors the in launch GPU Ryzen preparing in the our February, In of generation our track we on in desktop year And server strongest to in our in off generation the generation pay our middle our a to will our very second Radeon with long-term computing, by with later in market, excited processors portfolio the third mobile we next the we started set client to ever. accomplished year. we investments am more are next function increase of performance processors of XXXX. even the year. launch are X

color Now, would over like provide additional quarter financial to year I to full call turn on and fourth our performance. Devinder Devinder? the some

Devinder Kumar

Thank year you, everyone. XXXX a for was Lisa strong and good AMD. afternoon

gross New up in sales. driven XXXX, increased per with product XXXX introductions and a in share revenue and margin processor year segment $X.XX in annual strong $X.XX revenue improvement highest in year-over-year. billion, significant Ryzen per Full the in Earnings growth the computing XXXX. $X.XX significant graphics by to per performance XX% since year-on-year, drove share XXXX from was share

improvements basis Although, there margin half Radeon the of CPUs driven Ryzen, year. XXX Gross percentage XX% of graphics prior year, margin products. the EPYC Gross strength prior points and points the GPUs. from we primarily the the channel our an saw X year. expenses and improvement were XX%, revenue, center Operating from were in second was new by data in up was in weakness of

of in operating was million Net million, the million net full For the year. income from year. to income year, was million, million the million compared up prior income $XXX prior $XXX $XXX up $XXX in $XXX $XXX

On leverage end debt we reduced million sheet, improved a X.X ago the the times of $XXX significantly X.X balance times XXXX. year at gross from by principal and to

percentage revenue revenue sales share XXX during X% all up year of EPYC revenue, and and up semicustom data margin, details consecutive from Fourth margin ago. and for Blockchain-related and year results, Year-on-year a products. quarter of seven of the Gross year-over-year. and a fourth quarter. Quarterly XX%, XX% $X.XX revenue earnings GPU center was driven licenses quarters, more Fourth Ryzen improvement was used. primarily write-down Gross processors than year-over-year did excludes the increased margin gross me percentage a from the technology Strong EPYC $XXX are billion was and period. negligible. margin of improved margin from has expenses quarter to year processor sales gross XXXX IP-related the million points to per quarter lower by longer ramp was revenue higher driven sales. and flat operating million by quarter X% Let ago. turn XXXX of margin revenue GPUs a fourth approximately Ryzen ago offset include no basis year-over-year from the of as older remained a grew any Operating being that not revenue channel GPU $XX of gross new

earnings $XX invest million refund tax than IP to our continued Net of a roadmap $X.XXX diluted activities from Diluted go X% market up important in per million product Operating We plus year and of to a X%, income market we share last markets. $XXX QX compared million million was using ago. $XX litigation count year to of to Operating in settlement was billion gain $X.XX an was interest to $XX share less million withholding per from income net as $XX margin compared ago. income XXXX. million, $X up share ago. a year per was share a from share related XXXX $X.XX excludes year.

segment $X EESC in grew million the $XXX compared EPYC sales the the was $XX largely Ryzen The a by channel were embedded continued due year-over-year elevated million offset strength ago. from a revenue Radeon of client XXXX, revenue units cross-sell product of strong GPU than of growth greater up ago. in the negligible by inventory Graphics ramp adoption of by compared GPU million Graphics, ASPs driven sales down Computing was in partially Ryzen momentum. cost lower by engineering datacenter primarily in driven flat by the driving $XX year-over-year. desktop in to Graphics and mobile significantly processors, and increase operating due business year. and loss year. segment Now to Graphics' continued strong the more operating million channel. revenue, was both In loss generation significant and to doubled compared $XXX as was and improvement EPYC was lower the second and results. Revenue revenue Server levels year was than to desktop in segment the sequentially, income semi-custom revenue channel total primarily related offset by a year investments $XXX of segment and quarter. sales sequentially, turning to fourth million, quarter The Blockchain prior year growth datacenter million, semi-custom server Ryzen revenue Ryzen X% and well lower revenue and higher compared offset driven was in of and sales. semi-custom memory revenue. prior was product products revenue to business. continued was OEM Enterprise higher as driven ago. Graphics mobile Computing sales to to XX% Total a by revenue and go-to-market growth

further products. new products $X.X ramp up Inventory term during $XX reduction securities due quarter. flow million million and the in $X.XX primarily end $XX cash billion reduce of flow the debt as balance generated the full to our year, due was million, collections. equivalents resulting $XXX of cash the was cash, new billion $XXX Turning million by cash Total to $XXX of totaled We Free related quarter. sequentially, primarily for million to was debt $XXX marketable of total the and inventory during at the to the in a of growth in XXXX. quarter, timing million debt free principle we the negative sheet,

term million XXXX, pay March that a have XXXX are less beyond Gross of on to And pleased and in debt debt was times EBITDA doubling no we EBITDA expect remaining $XX years month as are year-over-year. more there and to long-term adjusted $XX trailing XXXX. Adjusted leverage off of million was $XXX than to until times. compared long-term than XX XXXX gross basis, leverage our maturities was X target million million, ended we achieved X.X We ago. the $XXX

the let establishes of January and Today, The Before financial spans me through Supply with the AMD WSA from XXXX royalties at for XXXX our March X-nanometer Wafer XXXX. our commitments and purchase above also on flexibility beyond turning to full without GlobalFoundaries. amendment XX-nanometer XXXX. It and one-time pricing provides purchase years at seven discuss Agreement payments through or amendment products, sourcing other foundries. any outlook, for

in the XX% to first and The decrease a XX% lower the channel outlook XXXX, primarily expected of to expect expected Blockchain channel and minus inventory, plus softness year-over-year approximately graphics to we absence due million, approximately later the $XX the memory revenue excess revenue by be primarily to decrease driven billion Sequentially, year-over-year. sequentially, GPU lower business. continued for of the Turning sales the seasonality by decrease of across and driven to quarter graphic or be be sales. $X.XX is is

addition, custom year-over-year, GPU In increase. while expected to and are lower is product EPYC to Ryzen, Radeon revenue be datacenter semi expected sales

addition benefit In million licensing static to interest QX, P&L. gain JV we the be non-GAAP income be the approximately associated quarter expect approximately non-GAAP we operating non-GAAP line to to expenses recorded gain which of on operating expense million XXXX, and first XX%, approximately record the the and be also gross to be in XXXX, $XX with $XXX other and of IP licensing a will million, expect margin $XX taxes for to

we as in year Ryzen, we sales expect Radeon throughout For revenue by and and cautious percentage products high-single-digit the product our datacenter a X-nanometer despite environment, business the GPU ramp growth, macro and year. driven EPYC XXXX the near-term and full graphics channel

and of expanded the X% approximately billion, be XX%, expenses gross non-GAAP grew of non-GAAP tax to rate than to progress XX% of by $X.X greater pre-tax margin and non-GAAP gross operating excellent approximately expect In significantly top-line more We revenue than margin made in income. closing, profitability. we a We XXXX. be improved

financial execute momentum We long-term solid driven last continue model, gained year. by computing to our that high our products performance new

sheet strengthened Laura back We are question session. pleased With continued next turn the a a to driving of balance and that, financial Laura. growth. and capable portfolio to answer enter with I'll it XXXX strong products of for generation

Laura Graves

Operator, we're Thank question, please. for you, our Devinder. first ready

Operator

a be question-and-answer conducting now [Operator We'll Instructions]. session

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

live. now is line You're

Toshiya Hari

XXXX question year a had outlook. full your I Lisa, on

You margin guys you or XX% mix then what the in your primarily well? assuming businesses the a or there are is WSA And and in range. high-single-digit rates greater. gross server Is are year-over-year graphics, guiding of CPUs? improvement for Thank in revenue core the growth Embedded side, growth growth outlook, that revenue role the computing, amendment playing a on semicustom function in you. as the

Lisa Su

the growth of year and So full are relative that EPYC Also, up with high-single-digits, down. largest to to be up. would drivers datacenter the or growth primary expect be guidance will Ryzen semicustom two then that And we're expecting GPU. the drivers we

of seventh look at be cycle. of cycle will semicustom the life console you year the If in

the XX% we year. of approximately semicustom double-digits then we be to we would let's channel we And expect in some and as so also consumer be off down call burn that the would inventory of it half expect the see really first graphics down

second throughout So we was… X-nanometer Ryzen your are then the launch And the growth, and the drivers question, Tosh, and products EPYC our that’s of largest year. as

Toshiya Hari

that improvement WSA margins as well? Ryzen greater Is X a the year-over-year. a of or given revenue percentage EPYC, gross in or is primarily mix function providing improvement that's and greater tailwind XX% amendment Yes, point growth and or a

Lisa Su

it's Yes, the to mix. due primarily

new EPYC the the GPUs. datacenter higher products the of mix Ryzen, So margin and

Operator

is Ramsay question Company. from next from Cowen coming Matt Our &

live. now is line Your

MattRamsay

year pragmatism little bit assumptions just Lisa, conservatism X question full some I on a guys Tosh's I And little nanometer you attack maybe your a for wanted on bit talk roadmap gain what share embedding market. the the differently. about guess maybe to are versus or

down year. in talked on revenue us to quarter server guess for you And of units and maybe business. guided Just growth the flat for about starting off going terms the what's PC a TAM I business Intel XX% are guys year-over-year their only in for mid obviously given graphics the is first macro? mean single-digit the given I expansive in

markets bit thinking gains of through us maybe could just about for two versus So you you're you. share little you're the your main growth a what TAM the embedding? growth walk year Thank

Lisa Su

would relates we market, as others think I think stated. a of different market very to the the may as don’t I view it have have

look story. Our that story design share is progress really we've And in the in wins made a a take at that XXXX. gain have the we when in XXXX you

we product Ryzen, PC five how more customer product line. as nice we've the quarters we made the go look OEMs XXXX both see is. opportunity with we notebook that four then started as the portfolio and of notebook. also line our particularly we a We a workloads we about as the through platforms broader desktop over year, competitive couple share we we And at the strong at product quarters, progress as last the very as see good Rome see go of We into We set on Similarly given Ryzen. made last on or the look by that progress on competitive XXXX and well we've As have, side, good well the desktop. when engagements over breath to how as gain OEM go progressing. feel the we on

that’s well as our custom But year. see move the and opportunity in products well reduced we go that’s of So When a guidance the significant ramp there that’s into think as basis, a business. we lot a year. how graphics due and To with revenue QX, your year-over-year but starting a the as point we forward, to as semi channel. the true. moving particularly pieces it's QX we in on basis, thinking the beyond, absence both demand, we’re of QX, with look as we as new I primarily about the Blockchain the how And year-over-year about that’s lower little at bit are on see

MattRamsay

few that gross a licensing and a and include the in gains licensing outlook got margin of And gains. not of first here associates then IP little clarify just maybe for I IP revenue, my asked couple in gains timing IP outlook? including you. licensing should when year, the might Thank to Thatic there, any you pieces recognized? lot of how on apply revenue I the are but the know a for terms just full or think the the does want revenue we those things of about quarter get And the lots to any times Devinder, question there. for moving rest it’s

Devinder Kumar

essentially that's P&L. does gross together not separate gain and license line of License impact line the margin, on on all a gain the

So impacted the not that. by gross is margin

is Thatic As to IP an record that outside in of far on point. gross be no contemplated the this as nothing so concerned IP gain at products are there expecting substantial might have. QX margin JV contemplated QX, licensing is IP point while revenue, guide is in at this that but for IP we the we standpoint, at opportunities from year And revenues XX% the the there based

Operator

you. Thank

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

live. is line Your

Vivek Arya

on you Lisa, XXXX, I'm EPYC? back market of and with then as slowdown think in And XXXX assumptions concerns the look share cloud you versus cloud it year with curious so mix do success if your of us that, EPYC, trends what because what around are the as with was we share part had all forth. how exit as could CapEx initial in you enterprise? And success you the and the of at the EPYC,

Lisa Su

strong we the through coming when were look of progress that our we the pleased we doubled cloud as us it server mix, weighted. of off quarter pretty And and units fairly that actually XXXX, with look And on fact quarter, fourth more in for at a business. fourth number you it was So is our EPYC. for

the enterprise some That went the as the had here we’re we going positive fourth So in too. well quarter nice large into online that said being us. as and XXXX. HPC wins of deployments was making a business for of progress had number that the side We've and that quarter, in in

be breadth of OEM It having So earlier we as the good a set but will will the platforms. confidence to expect us I the were we going early Rome it’s ones, a set XXXX, coverage I into also we as of strong based. have first look the that of would deployments market. that in workloads the And be and broader that mentioned cloud platforms broader enterprise gives

see quarters terms four quarter to we I out. have still the would would of markets to share that digit year the think think In XXXX, expect But reach we've market and share that another before it mid-single in I how take will fourth assumptions after the we're we what XX% share. said of to play reaching in is six market And range.

Vivek Arya

positive negative I’m competitors up, which And has things that your public there shortages. for few any my came this if that on follow two And out had last wondering were discussions, is one concept CPU of year strategy I’m when mentioned being positioning? little outlook. tactical or Intel more on comes full it how to a your then has into wondering that figures And And effect your or also pricing.

of impact would CPU shortages So any you. Thank both helpful. very be and color the pricing,

Lisa Su

there shortages, pockets some particularly CPU shortage, are the low at end. comment that is my of On

on Devinder And However, percentage at Ryzen look of really focus Ryzen. the been mentioned our overall ramping has of you business, our business. if our was client Ryzen XX%

So business. our we improving mix in are the actually really client

gain gain but look as each And we as in consistent believe XXXX, that, we shortages again seen consistent we quarter and are gain. fourth in gone the share through as really think the from at share it well. we've view, we've quarter I temporary share getting my

we then into to So well in I long-term think we when XXXX. factored drive are will competition And model, positioned think pricing about certainly and and relative with have pricing, we together the pricing be our when aggressive. and that will that portfolio we we put

largest is the the to very be with ownership market factor in I of believe Rome that the performance we case. go that What the total seen from in a buying XXXX. also believe know particularly and But And cost we single decision think standpoint well very, as that product. will the into is you we of consistent positioned the we've the be that. datacenter,

we environment cognizant are assumptions. right the good so that the we feel of competitive of but have And set

Operator

you. Thank

from next Our coming Lipacis is question from Mark Jefferies.

is Your live. now line

Mark Lipacis

to is my for mid-single shipping start just as take on biggest volume? it what's great to customers convincing delivering you to for you and I taking you start expect or -- sales EPYC confirm, execution in hit do, mid-year. digit the Thanks Rome the to the the year. wanted question Is to milestone Lisa, process And Rome? risk the exiting as product, it

Lisa Su

rate. biggest adoption opportunity/risk I Rome, is So with our think

a very I standpoint, engagements. as our well good, solid, through development product customer everything the labs as competitive going think very from is looks our

this is customers as so for are infrastructure. rate We production a just Naples. reason about that the do for the in possible. we adoption will Rome faster though is rate expect that than And for fast be as socket getting the And adoption to compatible

need don't motherboard Rome. currently who features customers so can system the that use in And and newest drop the and the of same necessarily actually platform with they Naples have

But think accelerate the environment. adoption. it's right about helping of that some so And customers now, help their I us in will

about of the done are we and work be good sampling but to trajectory. there's feel Rome widely We a lot

Mark Lipacis

may And Devinder. a for if follow up I

be read of cheaply? some into cash a that some were you. in can we more going million Thank of that a source trying front to seasonal And they launches? just you And was to So flow about inventories, healthy cash inventory are when the statement? on like that's we product wafers expect looks get to Or should quarter declining. stockpile up How pretty Devinder? there $XXX opportunity

Devinder Kumar

for this expect be how year. launching will and by We the that the mentioned products the few script. inventory generation growth overall our then of mentioned. year but at also to ramping you environment launches a as in support of product just So support and there. in in it we'll products throughout that the manage Lisa the and we from next is our and see manage primarily prepared the nanometer also inventory later progresses an new the revenue, to And from preparation launches new standpoint year driven X CES

Operator

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

now is live. line Your

Stacy Rasgon

the the weakness Is basically assumption GPU also And Ryzen versus tell true? can sequentially mentioned is but can an you least versus means most correct of us GPUs, you down is mentioned CPUs, give like my what that us Around GPU is across you versus that the that And QX idea EPYC? guide, seasonality so Servers? magnitude sequentially, if everything down the obviously, businesses.

Lisa Su

So said around driver basis, I let's as PCs so. a is the and call datacenter and a seasonality the for largest On situation sequential year-over-year it on basis. probably XX% GPU is channel GPUs or typical

little GPUs we or that. than that's bit forecasting of the that believe ranking, will way a other are a bit two the currently little we And that bit down are the more it. see would down -- I say more terms segments be in We a than

Stacy Rasgon

follow-up, my For general EESC. a in I had question just

and maybe everything. revenues The has business server up And profitable, continue XXXX? Rome investments EPYC flat custom XX% that sustainably or are of are profitability to the guess how big and does get in segment? to revenues before in to decline I about it get we going I some semi its So it especially server think still a year-over-year. How But the money. bunch losing do incremental there's

Devinder Kumar

to I business server going think Stacy, key, the XXXX. is ramping be in the

we to XXXX. it will from ramp server in and and expect XXXX in do lost down the custom, of of at in make that products, that bit EESC the benefit it, definitely money. fundamentally, ahead fact it's to go that product engineering to the given it's seventh You we bring in expect our the semi But ongoing the go-to-market year-over-year sure the the But cycle, right business needed programs and of be customers that time. profitability And work XXXX. that's look we year are up on is new the investing to little launching investing

Stacy Rasgon

Do you think it's profitable for the full year?

Devinder Kumar

to early I it tell, evolves at Too how over But see year. the the profitability don't we'll segment predict level.

Operator

Bank. Our next Ross from from is today Seymore coming question Deutsche

line now live. Your is

Ross Seymore

overall like going part to XX% sequentially quarter know the something you ask admittedly a that's of talked the low a as different going weighted. server the it's helping point? Ryzen side? grow some I year off of on of somewhat you at better perfectly business there businesses not year my the it on the the question get get server side GPU in pretty have question there that. What through If Is like of last your middle is to portion side? trying linear But about weighted. I the each Just starting way there. on Lisa, being snapback of a is half year, this guess are sorts the be different of to events, of full the guide. first back year of year? if remainder potentially Late second the seems shape the half business to same few go base plus the XXXX Is to I quarter on

Lisa Su

do a is our fair quarterly that progression launches. have our think I to to it with So lot say product will

datacenter, in In as growth second expect as about we So about the sequential expect weighted improving server business see second the consumer we GPU We're go we half than growth we you into half. would more the right more that But the the as in business. have will though second in our business although general, second in launches we first think be certainly would with portions quarter also now, point half. low half sequential the weighted see business first quarter. of getting channel we if additional And is well. as stronger there product the the expect as think it you our PCs, would

well. expect third on also quarter would the as way second as lower although And to it the we basis, a custom, So see quarter that's we semi would year-over-year go portfolio. it's we into increase from

Ross Seymore

side, the new China your existing penetrate And it's as issues a bit in competitive market having on the products that anything being some selling new or obviously competitor your market that either do you on at whether to the mentioned market, more with GPU they through. would that all current having cited product at or demand be the a concerned aggressive ability to them the that GPU because the wasn’t to little high-end Are pricing question as big and is weaker in year then landscape progresses?

Lisa Su

center. So data and we at let's GPU and the look gaming separate market when

the seeing, sell versus QX what out QX. in from increase we on see are think we gaming I side did

are price about more still gamers buying discerning So They be GPUs. may points.

might so happening end a be versus And more of we the softness good I be the imagine there will bit mid believe high at in But can that in the the side what's it driven. range. and of that business, we gaming have a understanding

year our see we as X by through well Our would with Radeon the driven products. new Navi launch, as gaming go this that be our growth on will side. and We launches as gaming

GPUs some actually data virtualization center base. have a progress that obviously, cloud wins. low dependent. we're we And things center in data workload very like are good center, do the in and side, are But On well very and making workloads from the gaming the early GPU data some HPC we and there

this see we so deployments. need And customer acquisition as

And the sources so GPU us. the for are of growth those on side

Operator

you. Thank

today Our Rakers next question Aaron from is coming Fargo. from Wells

line is Your live. now

Aaron Rakers

which noted your And can center percentage where a of granularity how Just mix we contemplated you GPUs time do actually, total is full if a big one. you go? a guidance. giving building that year your you as mid-teens of revenue. is business GPU think center there that data In on the as as curious remarks business milestone on you've CPUs Where in foresee point us can, last you reached trending? I data prepared that reach well of I'm two questions your

Lisa Su

think I margin for our mean I our it revenue a revenue. milestone. was And gross percentage percentage XXXX. us exited good the a of mid-teens meaningful that's contributor think to I QX in we So, as a was

we my we data data in that where the we we see key to terms center is for are to they will XXXX. side as will CPU continue us grow growth the faster business growth To But into overall give develop year you story I again, will than visibility of both is. and of think give center think GPU deployments. expectation go just a as continue I meaningful be side the in how what given businesses the develops. into on And for color XXXX, part of us of will the the be fair

Aaron Rakers

as 'XX? something on that quickly think real through here just level? about that your the the progression marks then off grow that the semicustom QX from the courses a of side, you for year. bottom Is seasonally the Or differently the in we should as in and full And decline guidance assumption contemplated can XX% through well quarters we

Lisa Su

think the to about correct it. way Aaron, that's

the and QX higher, will semicustom. low, seasonality be will QX So, a be will then be QX again. come That higher, be down of should will QX

Operator

Thank you.

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

Your line is now live.

John Pitzer

is growth back growing see would question. half be uncertain pointed going out do up Because it half around How the XX% difficult. I’m in you’re notwithstanding on you XX%. growth QX throughout of he as to just So sequentially equally if predictions curious by QX, that the the extremely macro Ross' QX, making somewhere year? quarter, you any of cadence divide north

of XX%. more change to, half growth on in seasonal difficult assume a because half bit and you get you get to to If is accounting, seasonal little I can think

something or growth, half on you year more is on full half? that’s as half the half So XX% like this about XX% think

Lisa Su

at would the look what early was is It go for to us we Blockchain following. the might significant us, from we XXXX XXXX, to because XXXX. for bit in there, still a still When XXXX be compares QX a say little very strong I of but a sales had amount year-on-year quarter

X sequentially portfolio. that to compare. expect half we get then we think I fully into the that be call nanometer ramped expect So will be, still the we a second QX, year, when I tougher But will the of let's on but it, grow entire into year-on-year

half. heavier a in would so And see we the second weighting

we into sequential growth half. second heavily more quarter, So but into see weighted second the

John Pitzer

of that, margin that’s a hit But north QX to isn’t number, And How run run that need could from what should I on and I’m then, margin $X rate a if front curious at gross year rate. billion QX over guidance full the better. bit up QX to guided full than to QX run existing little you margin than greater higher despite you we XX. year the the at the billion about operating look XX to year? QX. be think the little well know QX bit gross the you I’m with surprised to guidance revenue Devinder, you profitability QX the at if numbers you exiting a see

Devinder Kumar

If you XX%. quarters newer on we strength improved year quite greater ended gross and XX%. have of than I look think back the with last year-over-year, quarter start the year, it's And was the nice, achieved XXXX in We margin only start many quarters that fourth in we're seven year products. the as margin and guiding we gross the we the now well the

and ended we should XXXX. you in Lisa as that X from that should end greater the improve to products see continue expect our in and at of where think than the ramp product margins I end will we year-on-year where the goes XX% do we up But nanometer particular we with expect margin XX% for referenced, the that XXXX by up year.

Operator

question Our from is coming next from RBC Steves Markets. Capital Mitch

live. now is line Your

Mitch Steves

if think grow so, X. why And Is at a there. I that long-term? of to terms I the be C&G be? talked it about singles a when lot business sequential long-term realized underperform Intel why to where going you difficulties I growth. Is in can And that XX that there still next side, the on in think guys double-digit First have reason you But would would high EPYC environment? there's that to rate, secondly know any of then growth essential testing the nanometer

Lisa Su

Devinder Let can the then question. question first second maybe me take and you take the

it ROM as against product, would had originally So planned, planned our be ROM competing relates product. when XX the nanometer it was we to that

we when our that So expectation was started.

and that customer Rome, other is a double also I four now so of to spent performance more point we've And six some the to that coming I of over quarters terms X times play. thing shown improvements time architecture into quite socket the last set software our our is second advantages performance think bit on and some the architectural floating digit are the performance used on of on say would basis. generation generational basis, a the with in a we've of

other development So the think very Rome. we are thing in about is deep next to feel the of And generation we of our competitive Rome. good keep Beyond I positioning in mind

portfolio product in as X Zen deep well. is the development So

goal And that is of to products. very so our a ensure competitive consistent have we cadence that

Devinder Kumar

then XXXX. But with of as Rome question on that in the some projecting about level. growth It In EESC datacenter over half basis standpoint the it. from in X you feel on XXXX of Graphics, concerned as XXXX, it an high both we're segment launching digit and And is GPU. play. XXXX, level early we look company do product of datacenter on good But is growth for up impact And side of factors a come we single growth the back obviously in of the your some digits the single to at a to company compare obviously from that's Blockchain compare in segment. in the the on don't look the XXXX at the have for you for XXXX where year overall at relative the nanometer in and high semi-custom you XXXX are happen segments, year-on-year back from In where good piece in And particular you the when the then the standpoint. of memory far the down and mean into still the there that growth XXXX Computing way when ended ramping sales half, a factor is. market I is

Operator

you. Thank

question Blayne coming from Barclays. Curtis next from is Our

Your now is line live.

Blayne Curtis

But half? little ramp Can terms thin the still test months baking you I shift. with the of silicon. I us second steep and guess you everything customer about sampled in that XX And socket have because obviously laid to ask, over through in people in of you to particular walk talk timeline, Lisa, in just early it finish getting to line the but a the of to it EPYC production you're terms six then a of production Thanks. it for the silicon. those has wafer bit. the does and pretty getting in sure make out want

Lisa Su

top to with had well the vendors, as partners. half So a amount OEM ODM year as second year our we sampling as last We've some of the of so started last actually EPYC significant cloud development of well. our partners

our So of good cycle the between there and cycle. customer development is I amount overlap think development a

of the think said, the feel this about key you engagements, are platforms, I to the year. of locked here silicon of as half current is still production have very and in certifications ensuring final the that about But good We first developments. it. work we customer we that the progress feel good Now is in do

is so execution from much And plan standpoint. very an that our

Blayne Curtis

data the up as I like your the the then center side. It on looks just of we mix of want ASP just And data about to curious with ask kind think GPU substantially was do initial I sharp the you think December? of business? forced lumpy go mean that forward level about that in the shipments is or after How pretty this is in center. as trajectory well that

Lisa Su

than that's channel us. relates I because true important a given the but business driver as inventory bit So on little lumpy, so think a to basis, be the will ASPs, expected gaming datacenter the in straight for on that situation. year-over-year us side driver the expect datacenter a I was we I say will for it do are affecting wouldn't a a growth CPU would lower ASPs overall overall growth GPU line XXXX. It gaming say And be datacenter or business ASPs the it's it's

it's So think also units. in I the terms just weighted of

Operator

Thank you.

from is question Morgan from next Stanley. Moore coming Our Joe

live. Your now line is

Joe Moore

It is you for give exposure point? mid-teens and the seems give GPU? us are of Can businesses, what you seeing this pretty mostly if applications And CPU us are GPU look applications, much datacenter how there? color some other well. overall main some that two is qualitative sense at at Can business between the doing you it What like is datacenter virtualization? you GPU the

Lisa Su

we very mid-teens QX early So gaming. our and virtualization in workloads and HPC. terms traction actually in side. the between it's the very roughly solutions with in do well have of CPU similar. GPU, enter And percentage data in revenue GPU some cloud for We of on then We do well the

Joe Moore

earlier. guess to to and talk as different I I like hard custom segmentation, think of this in Have overtime moving the it's the And your that? three in semi the conversation realize in way to typically it to But business about is more thought I with just what's opportunities. and the with you microprocessor of then alluded about you seems in you And around talk thought terms graphics business? implement. line about terms that more line But segmentation easier guys migrating the

Lisa Su

So different in we look at the business all cuts.

very you our EESG. are, custom. can some a look and be of underneath As feedback, granular a And by semi we fall little with CG is much imagine, businesses segment more in of that. CG and how based it various the driven the we EESG enterprise to terms trying segment and also on PC at bit

that how how look you going. So in guys I of think our give we continue color and becomes transparency is a piece larger as the datacenter more business business, we'll to for do more

Operator

from coming from Mizuho. is Rakesh question next Our Vijay

Your is line live. now

Vijay Rakesh

currently? in was side, normal some and Just where GPU gaming wondering where Thanks. are higher GPU are levels. you can you terms of running I the they on if mentioned us levels give inventory number inventory

Lisa Su

levels they levels some partners GPU expectation will channel there growth my channel still into in have will do be QX But return of So spill to really see see inventory think the and QX. improved are when out. channel inventory believe elevated and the some QX, in is will we We our we QX business. side look gaming plays will over We'll how sell-through inventories really, we inventory, and elevated sequential we at reduce the that reduce and have levels. our in inventory will in QX the to

Vijay Rakesh

they CPU the X-nanometer back as side, Thanks. in is the ramp those X-nanometer GPU on to gross levels? the half. margin Are And accretive and XX% this

Lisa Su

in the data side QX. GPUs So center X-nanometer on ramping the started

part the center we've revenue ramp the The CPU and middle CPU that X-nanometer about. GPU talked And both of margins. corporate was are X-nanometer average that the above of GPU will So year. data

as that they're would expect would to above XX and be points So mix accretive that margin improves. the you

Operator

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

Laura Graves

you operator. proud in Thank much everyone XXXX. Have great seeing the today. afternoon. very forward look all appreciate us the and accomplishments joining XXXX, growth We're on quite We you in to of a here

Operator

teleconference. today's conclude does That you. Thank

today. you disconnect And this We have time. thank wonderful may line You a your your for participation at day.

Advanced Micro Devices (AMD) 29 Jan 192018 Q4 Earnings call transcript