Earnings reports for technology companies this quarter were mixed at best. Apple, Microsoft, alphabetand others managed to get a little growth while those like Meta and Nintendo contracted slightly, and most companies’ forecasts for the next quarter are anything but optimistic.
One company that has been hit particularly hard is intelwhose revenue declined to $15.3 billion in 2022 from $19.6 billion in the second quarter of 2021. The company’s earnings presentation (pdf) showed weakness across the board for a variety of reasons: weaker demand for consumer PCs, money invested in bringing dedicated Arc graphics products to market, and “competitive pressures” in the server CPU market.
That competitor is AMD, whose EPYC line of server processors was just a bright spot a record quarter for the company. Revenue increased to $6.6 billion this year from $3.9 billion in the second quarter of 2021, with $673 million of that additional revenue coming from sales of EPYC processors and the company’s data center division. This is a big deal for AMD, the had some success with its Opteron server CPUs in the mid-2000s however, had largely ceded that ground to Intel by the 2010s.
AMD’s consumer CPUs also generated more revenue this quarter, from $1.7 billion in Q2 2021 to $2.2 billion in 2022, leading the company to Ryzen laptop processor sales attributes. Gaming revenue also grew to $1.7 billion this year from $1.3 billion last year, thanks to the semi-custom chips found in consoles like the PlayStation 5, Xbox Series S and X, and the Steam Deck embedded (and despite lower GPU sales as the cryptocurrency mining boom slows and GPU prices finally normalize).
The dynamic between Intel and AMD in server CPUs mirrors the situation in consumer PCs a few years ago. Intel’s next generation Xeon processors have “Sapphire Rapids”. suffered repeated delayswhich opens up the possibility for AMD to move forward with its EPYC server CPUs by initially offering more CPU cores than Intel and later surpasses Intel’s single-threaded performance. Intel has managed to shift that momentum somewhat in consumer PCs with its 12th Gen Core chips and Alder Lake architecture, but we’re still waiting for new server chips that can do the same.
One thing Intel’s and AMD’s earnings reports have in common is that both say the consumer PC market will continue to plummet after a few years of pandemic-related strength. AMD CEO Lisa Su predicted that the consumer PC business will decline in the next quarter around the “mid-10s” and Intel CEO Pat Gelsinger said that Intel’s OEM customers “were reducing inventories at a rate not seen in the past decade.” Still, both companies have scheduled new processor launches later this year, with both Ryzen 7000-series CPUs and 13th Gen Intel Core processors expected in the fall.
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