The company's revenue totalled $5.6 billion because of weak sales of AMD's CPUs and GPUs for the client segment. On the plus side, sales of AMD's data centre products saw demand for EPYC CPUs, Pensando DPUs, as well as Xilinx field programmable gate array products growing.
AMD boss Lisa Su said that the third quarter results came in below expectations due to the softening PC market and substantial inventory reduction actions across the PC supply chain.
"Despite the challenging macro environment, we grew revenue 29 per cent year-over-year, driven by increased sales of our data centre, embedded and game console products. We are confident that our leading product portfolio, strong balance sheet, and ongoing growth opportunities in our data centre and embedded businesses position us well to navigate the current market dynamics."
AMD's Q3 2022 revenue reached $5.565 billion, up 29 per cent year-over-year but down $985 million compared to the previous quarter. The company's gross margin dropped to 42 per cent, down from 48 per cnet in the same quarter a year ago.
Net income fell to $66 million from $923 million in the third quarter of last year and earnings per share declined to $0.04, down from $0.75 a year ago.
Some of that was apparently due to the Xilinx acquisition-related intangible assets and increased R&D investments, partially offset by a $135 million tax benefit in the quarter.
Demand for client processors and chipsets got significantly lower in the third quarte and AMD’s Client Computing revenue fell to $1.022 billion or a whopping 40 per cent year-over-year.
In addition, the company's client business unit lost $26 million during the quarter as the company's clients were trying to clear out inventory.
AMD's Gaming business — which includes client GPUs and console system-on-chips — had mixed results during the quarter. The business unit earned $1,631 billion during the third quarter, up 14 per cent year-over-year.
Its Gaming unit thrived because Microsoft and Sony prepared for the holiday season and bought system-on-chips for their Xbox and PlayStation game consoles in third quarter 2022. AMD’s own gaming chips did not do so well.
AMD's Datacenter business unit has been the company's main success story in recent years. The Unit’s sales totaled $1,609 billion, up 45 per cent year-over-year, whereas its operating income topped $505 billion, a 64 per cent year on year increase.
While AMD began shipments of its next-generation EPYC 'Genoa' processors to select customers in the third quarter, those volumes were barely significant. The company said that its Datacenter business unit was supply constrained during the quarter and that in Q4 2022, those constraints will be less severe, allowing the company to grab some additional market share from Intel.
AMD's Embedded business, which sells products developed by AMD and various solutions designed by Xilinx, earned $1.3 billion, up 1,549 per cent year-over-year since 2021, AMD's Embedded unit only sold the company's CPUs and GPUs, which are not particularly popular.
For the fourth quarter of 2022, AMD expects revenue to be approximately $5.5 billion ± $300 million, an increase of around 14 per cent year on year and flat sequentially. For the full year 2022, AMD projects revenue to be approximately $23.5 billion ± $300 million, an increase of about 43 per cent over the previous year, primarily driven by the success of AMD's data centre and embedded products.
