AMD Should Shine Through Chip Cloud

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AMD’s latest results show the chip maker gaining data center market share versus its rival Intel. AMD Chief Executive Lisa Su.


Steve Marcus/REUTERS

Updated Aug. 3, 2022 10:31 am ET

Advanced Micro Devices

AMD -2.92%

wears its new look well. 

Long the David to


Goliath, the chip maker known as AMD eclipsed its rival by market value last week. That is due in part to


self-inflicted wounds; the chip giant’s shares have slid more than 9% since its second-quarter report last Thursday that included news of a bug in its latest data center processor that will delay high-volume shipments of that product until next year. 

AMD’s own second-quarter results late Tuesday added a new dimension: The company reorganized its segments, finally breaking out results for the data center business as well as its units that make chips for PCs and gaming. Those numbers showed AMD gaining rapidly on its still much larger rival by market share. AMD’s data center revenue hit $3.7 billion in 2021—more than double the previous year in a period in which Intel’s data center business shrank by 1%. The trend has continued; AMD’s data center revenue surged 83% year over year in the second quarter to $1.5 billion. Intel’s fell 16% to $4.6 billion over the same period. 

The new revelations weren’t quite enough to assuage investors’ fears that the entire semiconductor industry is on the cusp of a major correction following two years of booming growth. AMD’s shares slipped about 2% early Wednesday as its overall revenue for the quarter barely exceeded the midpoint of its own forecast. That came after it had been averaging a beat of 8.4% over the previous eight quarters. Slumping PC sales were the main factor; AMD draws more than one-third of its revenue just from the central processors used in desktop and laptop computers. The company’s forecast for the third quarter was slightly below analysts’ projections, though it left its full-year outlook unchanged given new products coming later in the year. 

The last one is an important point. Among AMD’s new products will be a server processor called Genoa, which will be rolling off

Taiwan Semiconductor Manufacturing’s

5-nanometer production process. The Sapphire Rapids chip that Intel delayed uses a recently renamed “enhanced” version of the company’s 10-nanometer process. Circuit size alone doesn’t determine a chip’s overall performance—or its reception in the market—but a smaller number is generally better.

Stacy Rasgon

of Bernstein noted that the delay from Intel gives AMD a “wide-open window” to keep picking up valuable market share in data centers. He estimates AMD’s market share in data centers hit about 24% in the second quarter—nearly double from the same period last year. 

Share gains will help AMD even if the cloud computing giants such as,


and Google slow their data center investments next year, as seems likely if a recession hits. It also should help offset the weakening of the PC market. AMD Chief Executive

Lisa Su

said on the company’s call Tuesday that PC unit sales are now expected to come in the range of 290 million to 300 million units globally this year. That would be a drop of as much as 17% from what IDC tabulated for the global PC market last year, though still about 10% above the industry’s pre-pandemic levels. 

AMD can’t fully escape that gravity, but its runaway success in data centers and its recent acquisition of Xilinx has made it far less dependent on PCs. AMD’s client segment that comprises the bulk of its PC business now accounts for about 33% of total revenue compared with 50% for Intel. Most notably, AMD’s overall revenue will be about 39% of Intel’s this year based on current forecasts compared with just 9% in 2019. The underdog is growing up fast. 

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