Yesterday, AMD released a preliminary Q3 2022 financial report to inform shareholders that it earned less than it had initially expected. as Toms Hardover He writes that the red team had predicted to achieve revenue of $6.7 billion in the third season, but now it has lowered its forecast by $1.1 billion to $5.6 billion.
AMD has warned that the company’s gross profit margin (excluding Generally accepted accounting principles or GAAP) will be equal to 50%. Initially, the gross profit margin of the red team was predicted to be 54%.
AMD says that the decline in processor sales in the personal computer market is one of the factors that have affected the company’s revenue decline. AMD says the company’s datacenter, gaming and embedded processor businesses performed in line with initial expectations.
AMD’s new statement lowers the company’s revenue forecast from 55% annual growth rate to 29%, however the red team said it will continue to expand its activities despite all the restrictions. AMD specifically pointed to the decrease in product sales and the decrease in the average selling price of its consumer processors, and said that these two factors had a big impact on the bottom line.
The mentioned problems have also plagued other chip industry players such as Intel and Nvidia. Many chip companies are faced with excess inventory because they are working at full capacity; But the demand from customers has decreased. Excess inventory forces companies to reduce product prices and eventually the average selling price decreases.
The decrease in average selling price has also affected AMD’s gross profit margin. The red team attributed the $160 million drop in Q3 revenue to excessive inventory, pricing and other issues in the consumer processors and graphics unit.
AMD’s weaker-than-expected performance in the third quarter of 2022 comes as the company performed brilliantly last quarter, increasing its revenue by 70% from a year earlier. Despite the fact that desktop class processor sales have reached the lowest level in the last 30 years, AMD continues to take more of Intel’s market share.
AMD’s revised Q3 revenue forecast is directly related to the performance of the company’s business unit, which includes CPUs. The red team has predicted that the income of this business unit will face an annual drop of 40% and a seasonal drop of 53%. Gaming business unit revenue, which includes AMD graphics, is unchanged.
AMD’s CPU business has been affected more than other business units. Competitors of the red team in the market of central processors and graphics processors have also faced a drop in revenue. Nvidia said some time ago that it will reduce its forecasted revenue by $1.4 billion due to the drop in graphics processor sales. In the last season, Intel faced a drop in quarterly revenue for the first time in decades and lost 500 million dollars.
Following the publication of this news, AMD’s stock value fell by 13%.