Advanced Micro Devices Q4 2023 Earnings Report

Advanced Micro Devices EPS Results

• Actual EPS: $0.77
• Consensus EPS: $0.77
• Beat/Miss: Beat by +$0.00
• One Year Ago EPS: $0.54

Advanced Micro Devices Revenue Results

• Actual Revenue: $6.17 billion
• Expected Revenue: $6.13 billion
• Beat/Miss: Beat by +$42.49 million
• YoY Revenue Growth: +10.20%

Advanced Micro Devices Announcement Details

• Quarter: Q4 2023
• Date: 1/30/2024
• Time: After Market Closes
• Conference Call Date: Tuesday, January 30, 2024
• Conference Call Time: 5:00PM ET

Advanced Micro Devices (NASDAQ:AMD) (NASDAQ: AMD) is a semiconductor company that designs high-performance computing, graphics and adaptive computing products. Its offerings serve data centers, personal computers, gaming systems, embedded devices and other specialized markets.

AMD’s product portfolio includes Ryzen processors for desktop and notebook computers, EPYC server processors, Radeon graphics products, and Instinct accelerators designed for artificial intelligence and high-performance computing workloads. Through its adaptive and embedded computing business, the company also provides FPGAs, adaptive system-on-chips and embedded processors for applications such as communications, automotive, industrial, aerospace and defense systems.

Founded in 1969, AMD is headquartered in Santa Clara, California, and serves customers and markets worldwide. The company expanded its adaptive computing capabilities through the acquisition of Xilinx, completed in 2022, and strengthened its data center platform offerings through the acquisition of Pensando the same year. AMD is led by President and Chief Executive Officer Lisa Su, who has held the position since 2014.

Advanced Micro Devices Q4 2023 Earnings Call Transcript

Key Takeaways

• AMD delivered record data center segment revenue in FY 2023, with Q4 data center sales up 38% YoY driven by EPYC CPU share gains and the ramp of Instinct AI accelerators.
• The company raised its 2024 data center GPU revenue forecast from $2 billion to over $3.5 billion, expecting sequential growth in Q1 on strong Mi300X customer demand and secured supply chain capacity.
• AMD projects a roughly $400 billion data center AI accelerator TAM by 2027, underpinned by a multi-generational Instinct GPU roadmap and an open-source software strategy for training and inference.
• Q4 client segment revenue surged 62% YoY to $1.5 billion on the launch of Ryzen 8000 series processors and accelerating AI-PC momentum, with Ryzen CPUs powering over 90% of AI-enabled PCs in market.
• Gaming segment revenue fell 17% YoY and 9% sequentially, and AMD expects significant double-digit annual declines in gaming for 2024 as console cycles mature and channel inventory normalizes.

Presentation

[Operator]

Greetings, and welcome to the AMD Fourth Quarter and Full Year 2023 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce to you Mitch Haws, Vice President, Investor Relations. Thank you, Mitch. You may begin.

[Mitch Haws, VP of Investor Relations at AMD]

Thank you, John, and welcome to AMD's fourth quarter and full year 2023 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings press release and the accompanying slides. If you have not had the chance to review these materials, they can be found on the Investor Relations page of amd.com. We will refer primarily to non-GAAP financial measures during today's call. The full non-GAAP to GAAP reconciliations are available in today's press release and the slides posted on our website. Participants on today's call are Dr. Lisa Su, our Chair and Chief Executive Officer, and Jean Hu, our Executive Vice President, Chief Financial Officer, and Treasurer. This is a live call and will be replayed via webcast on our website.

[Mitch Haws, VP of Investor Relations at AMD]

Before we begin, I would like to note that Mark Papermaster, Executive Vice President and Chief Technology Officer, will attend the Bernstein Tech, Media, Telecom, and Consumer One-on-One Forum on Tuesday, February 28. Jean Hu, Executive Vice President, Chief Financial Officer, and Treasurer, will attend the Wolfe Research Semiconductor Conference on Tuesday, February 15, and the Morgan Stanley Technology, Media, and Telecom Conference on March 5. Today's discussion contains forward-looking statements based on current beliefs, assumptions, and expectations. We speak only as of today, and as such, involve risks and uncertainties that could cause actual results to differ materially from our current expectations. Please refer to the cautionary statement in our press release for more information on factors that could cause actual results to differ materially. With that, I'll hand the call over to Lisa.

[Lisa Su, Chair and CEO at AMD]

Thank you, Mitch, and good afternoon to all those listening in today. We finished 2023 strong, as data center sales accelerated significantly throughout the year, despite the mixed demand environment. As a result, we delivered record data center segment annual revenue and strong top-line and bottom-line growth in the fourth quarter, driven by the ramp of Instinct AI accelerators and robust demand for EPYC server CPUs across cloud, enterprise, and AI customers. Looking at our financial results, fourth quarter revenue increased 10% year-over-year to $6,200,000,000, driven by significant double-digit percentage growth in our data center and client segments. On a full year basis, annual revenue declined 4% to $22,700,000,000, as record data center and embedded segment annual revenue was offset by lower client and gaming segment revenue.

[Lisa Su, Chair and CEO at AMD]

Importantly, data center and embedded segment annual revenue grew by $1,200,000,000 and accounted for more than 50% of revenue in 2023 as we gained server share, launched our next generation Instinct AI accelerators, and maintained our position as the industry's largest provider of adaptive computing solutions. Turning to the fourth quarter business results, data center segment revenue grew 38% year over year and 43% sequentially to a record $2,300,000,000. Server CPU and data center GPU sales both set quarterly and annual revenue records as sales of our data center products accelerated throughout the year. We gained server CPU revenue share in the quarter, driven by significant double-digit percentage growth in fourth-gen EPYC processor revenue and demand for our third-gen EPYC processor portfolio.

[Lisa Su, Chair and CEO at AMD]

In cloud, while the overall demand environment remained soft, server CPU revenue increased year-over-year and sequentially as North American hyperscalers expanded fourth-gen EPYC processor deployments to power their internal workloads and public instances. Amazon, Alibaba, Google, Microsoft, and Oracle brought more than 55 AMD-powered AI, HPC, and general-purpose cloud instances into preview or general availability in the fourth quarter. Exiting 2023, there were more than 800 EPYC CPU-based public cloud instances available. We expect this number to grow in 2024 based on the leadership, performance, efficiency, and features of our EPYC CPU portfolio. In enterprise, sales accelerated by a significant double-digit percentage in the quarter as we built momentum with Fortune 2000 customers. We closed multiple wins with large financial, energy, automotive, retail, technology, and pharmaceutical companies, positioning us well for continued growth based on expanded production deployments planned for 2024.

[Lisa Su, Chair and CEO at AMD]

A growing number of customers are adopting EPYC CPUs for inferencing workloads, where our leadership throughput performance delivers significant advantages on smaller models like Llama 7B, as well as to power head nodes in large training and inference clusters. Looking ahead, customer excitement for our upcoming Turin family of EPYC processors is very strong. Turin is a drop-in replacement for existing fourth-gen EPYC platforms that extends our performance, efficiency, and TCO leadership with the addition of our next-gen Zen 5 core, new memory expansion capabilities, and higher core counts. Internal and end customer validation work is progressing to plan, with Turin on track to deliver overall performance leadership, as well as leadership on a per-core or per-watt basis across a wide range of workloads when it launches later this year.

[Lisa Su, Chair and CEO at AMD]

Turning to our broader data center portfolio, our data center GPU business accelerated significantly in the quarter, with revenue exceeding our $400,000,000 expectation, driven by a faster ramp for MI300X with AI customers.... We launched our MI300 accelerator family in December, with strong partner and ecosystem support from multiple large cloud providers, all the major OEMs, and many leading AI developers. MI300X GPUs deliver leadership generative AI performance by combining our high-performance CDNA 3 architecture with industry-leading memory bandwidth and capacity. Customer response to MI300 has been overwhelmingly positive, and we are aggressively ramping production to support the dozens of cloud, enterprise, and supercomputing customers deploying Instinct accelerators. In cloud, we are working closely with Microsoft, Oracle, Meta, and other large cloud customers on Instinct GPU deployments, powering both their internal AI workloads and external offerings.

[Lisa Su, Chair and CEO at AMD]

For enterprise customers, HPE, Dell, Lenovo, Supermicro, and other server vendors are on track to launch differentiated MI300 platforms later this quarter, with strong demand from multiple enterprise customers. In HPC supercomputing, we shipped the majority of AMD Instinct MI300A accelerators for the El Capitan supercomputer in the fourth quarter and expect to complete shipments this quarter for what is expected to be the world's fastest supercomputer when it comes online later this year. We also closed new Instinct GPU wins in the quarter, including the flagship system at the German High-Performance Computing Center, HLRS, as well as what is expected to be one of the world's most powerful enterprise supercomputers for energy company Eni. On AI software development, we made significant progress expanding the ecosystem of AI developers working on AMD platforms with the release of our ROCm 6 software suite.

[Lisa Su, Chair and CEO at AMD]

The ROCm 6 stack significantly increases performance in key generative AI workloads, adds expanded support and optimizations for additional frameworks and libraries, and simplifies the overall developer experience. The additional functionality and optimizations of ROCm 6 and the growing volume of contributions from the open source AI software community are enabling multiple large hyperscale and enterprise customers to rapidly bring up their most advanced large language models on AMD Instinct accelerators. For example, we are very pleased to see how quickly Microsoft was able to bring up GPT-4 on MI300X in their production environment and roll out Azure private previews of new MI300 instances aligned with the MI300X launch.

[Lisa Su, Chair and CEO at AMD]

At the same time, our partnership with Hugging Face, the leading open platform for the AI community, now enables hundreds of thousands of AI models to run out of the box on AMD GPUs, and we are extending that collaboration to our other platforms. Looking ahead, our prior guidance was for data center GPU revenue to be flattish from Q4 to Q1 and exceed $2,000,000,000 in 2024. Based on the strong customer pull and expanded engagements, we now expect data center GPU revenue to grow sequentially in the first quarter and exceed $3,500,000,000 in 2024. We have also made significant progress with our supply chain partners and have secured additional capacity to support upside demand. Turning to our client segment, revenue was $1,500,000,000, an increase of 62% year-over-year and flat sequentially.

[Lisa Su, Chair and CEO at AMD]

We launched our latest generation Ryzen 8000 Series notebooks and desktop processors in January, including our Ryzen 8040 Mobile Series that combine leadership, compute performance, and energy efficiency with an updated NPU that delivers up to 60% more AI performance compared to our prior generation that was already industry-leading. Acer, ASUS, HP, Lenovo, MSI, and other large PC OEMs will all offer notebooks powered by our Ryzen 8000 Series processors, with the first systems expected to go on sale in February. To further our leadership in AI PCs, we launched our Ryzen 8000G Series processors earlier this month, which are the industry's first desktop CPUs with an integrated AI engine. Millions of AI PCs powered by Ryzen processors have shipped to date, and Ryzen CPUs power more than 90% of AI-enabled PCs currently in market.

[Lisa Su, Chair and CEO at AMD]

Our work with Microsoft and our PC ecosystem partners to enable the next generation of AI PCs expanded significantly in the quarter. We are aggressively driving our Ryzen AI CPU roadmap to extend our AI leadership, including our next gen Strix processors, that are expected to deliver more than 3x the AI performance of our Ryzen 7040 Series processors. Strix combines our next gen Zen 5 core with enhanced RDNA graphics and an updated Ryzen AI engine to significantly increase the performance, energy efficiency, and AI capabilities of PCs. Customer momentum for Strix is strong, with the first notebooks on track to launch later this year. Looking at 2024, we are planning for the PC TAM to grow modestly year-on-year, weighted towards the second half as AI PCs ramp.

[Lisa Su, Chair and CEO at AMD]

We continue to see strong growth opportunities for our client business as we ramp our current products, extend our AI PC leadership, and launch our next wave of Zen 5 CPUs. Now, turning to our gaming segment. Revenue declined 17% year-over-year and 9% sequentially to $1,400,000,000, as lower semi-custom revenue was partially offset by increased sales of Radeon GPUs. Semi-custom SoC sales declined in line with our projections in the quarter. Going forward, we now expect annual revenue to decline by a significant double-digit percentage year-over-year as supply caught up with demand in 2023, and we enter the 5th year of what has been a very strong console cycle. In gaming graphics, revenue grew both year-over-year and sequentially, driven by strong demand in the channel for both our Radeon 6000 Series and Radeon 7000 Series GPUs.

[Lisa Su, Chair and CEO at AMD]

We expanded our Radeon 7000 GPU series with the launch of new RX 7600 XT series enthusiast desktop GPUs earlier this month, that offer leadership price performance for 1080p gaming. We also launched new open source FidelityFX Super Resolution 3 software, that can deliver significantly higher gaming frame rates on both GPUs and APUs. Turning to our Embedded segment, revenue decreased 24% year-over-year and 15% sequentially to $1,100,000,000 as customers focused on reducing their inventory levels. We expanded our embedded portfolio in the quarter with new leadership solutions for key markets. We launched new Versal Prime adaptive SoCs for the aerospace, test and measurement, healthcare, and communications markets, that deliver industry-first support for DDR5 memory and increased DSP capability compared to our prior generation.

[Lisa Su, Chair and CEO at AMD]

In automotive, we launched new Versal SoC solutions that bring industry-leading AI compute capabilities and advanced safety and security features to next-generation vehicles. We also launched Ryzen Embedded processors with unmatched performance and features for industrial automation, machine vision, robotics, and edge server applications. Looking at 2024, we expect overall embedded demand will remain soft through the first half of the year, as customers continue to focus on normalizing their inventory levels. Longer term, we're very confident in the growth trajectory of our embedded business, as our expanded product portfolio drove more than $10,000,000,000of design wins in 2023, an increase of more than 25% compared to 2022. In summary, I'm very pleased with our fourth quarter and full year results.

[Lisa Su, Chair and CEO at AMD]

For 2024, we expect the demand environment to remain mixed, with strong growth in our data center and client segments, offset by declines in our embedded and gaming segments. Against this backdrop, we believe we will deliver strong annual revenue growth and expand gross margin, driven by the strength of our Instinct, EPYC, and Ryzen product portfolios. Taking a step back, we believe AI is a once-in-a-generation transition that will reshape virtually every portion of the computing market, starting in the data center and then expanding into PCs and across multiple embedded markets. We have built excellent customer traction based on the strength of our multi-year AI hardware and software roadmaps, and we see clear opportunities to drive our next wave of growth as we deliver leadership AI solutions across our portfolio.

[Lisa Su, Chair and CEO at AMD]

In the data center, we see 2024 as a start of a multi-year AI adoption cycle, with the market for data center AI accelerators growing to approximately $400,000,000,000 in 2027. Customer deployments of our Instinct GPUs continues accelerating, with MI300 now tracking to be the fastest revenue ramp of any product in our history, and positioning us well to capture significant share over the coming years based on the strength of our multi-generation Instinct GPU roadmap and open source ROCm software strategy. In PCs, we're focused on delivering our long-term roadmaps with leadership Ryzen AI NPU capabilities to enable differentiated experiences as Microsoft and our other software partners bring new AI capabilities to PCs starting later this year. At the same time, we are rapidly driving leadership AI compute capabilities across the full breadth of our embedded product portfolio.

[Lisa Su, Chair and CEO at AMD]

This is an incredibly exciting time for the industry, and an even more exciting time for AMD, as our leadership IP, broad product portfolio, and deep customer relationships position us well to deliver significant revenue growth and earnings expansion over the next several years. Now I'd like to turn the call over to Jean to provide some additional color on our fourth quarter and full year financial results. Jean?

[Jean Hu, EVP, CFO and Treasurer at AMD]

Thank you, Lisa, and good afternoon, everyone. I'll start with a review of our financial results, and then provide our current outlook for the first quarter of fiscal 2024. AMD executed well in 2023, despite of a mixed market demand environment, delivering revenue of $22.,700,000,000 and earnings per share of $2.65. We drove year-over-year revenue growth in our Embedded and Data Center segments. In addition, we successfully launched our AMD Instinct MI300 GPUs, positioning us for a strong ramp in 2024 in the AI market. For the fourth quarter of 2023, revenue was $6,200,000,000, growing 10% year-over-year, as the revenue growth in the data center and the client segments was partially offset by the lower revenue in our embedded and the gaming segments.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Revenue was up 6% sequentially, primarily driven by the ramp of AMD Instinct GPUs across several leading customers, and higher revenue from EPYC server processors, partially offset by the decline in embedded and the gaming segment revenues. Gross margin was 51%, flat year-over-year, with higher revenue contribution from the data center and the client segments, offset by lower embedded segment revenue. Operating expenses were $1,700,000,000, an increase of 8% year-over-year, as we invest in R&D and marketing activities to support our significant AI growth opportunities. Operating income was $1,400,000,000, representing a 23% operating margin. Taxes, interest expense, and other was $163,000,000 . For the fourth quarter of 2023, diluted earnings per share was $0.77, an increase of 12% year-over-year. Now turning to our reportable segments.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Starting with the data center segment, revenue was $2,300,000,000, up 38% year-over-year, and 43% sequentially, driven by strong growth of both AMD Instinct GPU and the fourth generation AMD EPYC CPU sales. Data center segment operating income was $666,000,000, or 29% of revenue, compared to $444,000,000, or 27% a year ago. Higher operating income was primarily due to operating leverage, driven by higher revenue. Client segment revenue was $1,500,000,000, up 62% year-over-year, driven by Ryzen 7000 series CPU sales. Client segment operating income was $55,000,000, or 4% of revenue, compared to an operating loss of $152,000,000a year ago, driven by higher revenue.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Gaming segment revenue was $1,400,000,000, down 17% year-over-year, and 9% sequentially due to a decrease in semi-custom revenue, partially offset by increase in Radeon GPU sales. Gaming segment operating income was $224,000,000, or 16% of revenue, compared to $266,000,000, or 16% a year ago. Embedded segment revenue was $1,100,000,000, down 24% year-over-year, and 15% sequentially, as customers continue to work down their inventory levels. Embedded segment operating income was $461,000,000, or 44% of revenue, compared to $699,000,000, or 50% a year ago. Turning to the balance sheet and the cash flow. During the quarter, we generated $381,000,000 in cash from operations, and the free cash flow was $242,000,000.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Inventory decreased sequentially by $94,000,000to $4,400,000,000. At the end of the quarter, cash, cash equivalents, and short-term investment was strong at $5.,800,000,000. In the fourth quarter, we repurchased 2,000,000 shares and returned $233,000,000 to shareholders. For the year, we repurchased 10,000,000 shares and returned $985,000,000 to shareholders. We have $5,600,000,000 in remaining share repurchase authorization. Now turning to our first quarter of 2024 outlook. We expect revenue to be approximately $5,400,000,000, ±$300,000,000. Sequentially, we expect data center segment revenue to be flat, with a seasonal decline in server sales, offset by strong data center GPU ramp. Embedded revenue to decline as customers continue to work down their inventory levels. Client segment revenue to decline seasonally and in the gaming segment.

[Jean Hu, EVP, CFO and Treasurer at AMD]

As we enter the 5th year of what has been a very strong gaming cycle, and given current customer inventory levels, we expect revenue to decline by significant double-digit percentage. Year-over-year, we expect data center and client segment revenues to increase by strong double-digit percentage, given the strength of our product portfolio and the share gain opportunities. Embedded segment to decline, and the gaming segment revenue to decline by significant double-digit percentage. In addition, we expect first quarter non-GAAP gross margin to be approximately 52%. Non-GAAP operating expenses to be approximately $1,730,000,000. Non-GAAP effective tax rate to be 13%, and the diluted share count is expected to be approximately 1,630,000,000 shares. While we're not providing specific full-year guidance for 2024, let me provide some color.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Directionally, for the year, we expect 2024 data center and the client segment revenue to increase, driven by the strength of our product portfolio and the share gain opportunities. Embedded segment revenue to decline, and the gaming segment revenue to decline by significant double-digit %. We expect to expand gross margin in 2024 and continue to invest to address the large AI opportunities, while driving operating model leverage to deliver earnings per share growth faster than top-line revenue growth. In closing, we delivered solid financial results in 2023, further strengthening our product portfolio and establishing ourselves as a leading provider of data center GPUs for AI. We are very well positioned to build on this momentum and deliver strong financial performance in 2024 and beyond. With that, I'll turn it back to Mitch for the Q&A session.

[Mitch Haws, VP of Investor Relations at AMD]

Thank you, Jean. John, we're happy to poll the audience for questions.

[Operator]

Thank you, Mitch. We will now be co-conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you'd like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.... We ask that you please limit yourself to one question and one follow-up. Thank you. One moment, please, while we pull for questions. The first question comes from the line of Aaron Rakers from Wells Fargo. Please proceed with your question.

[Aaron Rakers, Managing Director and Senior Equity Research Analyst at Wells Fargo]

Yeah, thanks for taking the question. Just kind of framing the outlook and the guidance for this calendar first quarter. I guess the first question is, you know, can you help us on a relative basis, the $400,000,000of data center GPU revenue that you expected in Q4, what did that ultimately kind of fell out to be? And then on the guidance into Q1, can you help us appreciate what seasonal, you know, is defined as, as we think about the server business into the Q1 guide?

[Lisa Su, Chair and CEO at AMD]

Sure, Aaron. Let me start and then see if Jean has something to add. So, you know, relative to the data center GPU business, look, we were very pleased with the performance that we saw in the fourth quarter. You know, it was always gonna be a very sort of back-end quarter, weighted as we were, you know, ramping the product. And we saw MI300A, our HPC product, actually ramp very well. And then we saw MI300X, the AI product, actually exceed our expectations based on the strong customer demand, the way the qualifications went, and then the ramp, manufacture ramp. So we were over $400,000,000 for that business in the fourth quarter.

[Lisa Su, Chair and CEO at AMD]

Then going into the first quarter, you know, as we look at the business, you know, server seasonality, you know, call it something around, let's call it high single digit, low double digit. There are also some pieces of the data center business. I think the key piece of it is, we had originally expected, the ramp to be a little bit more shallow of our MI300X, and, what we're seeing now is, you know, the supply chain is operating really well, and the customer, demand is strong, and so we will see, MI300 X, increase as we go into the first quarter, and, you know, things are going, relatively well, so.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Yeah, Aaron-

[Aaron Rakers, Managing Director and Senior Equity Research Analyst at Wells Fargo]

Yeah.

[Jean Hu, EVP, CFO and Treasurer at AMD]

I'll give you some color. Aaron, I'll give you some color about client seasonality and others. So client is very similar to server. Typically, Q1 is high single-digit to low double-digit. That's consistent with the past. On the embedded side, it's very consistent with what we said in the past, and consistent with what you see in the industry. Embedded business is going through a bottoming process, and we think Q1 it will have a low double-digit sequential decline. That's embedded. On the gaming side, you know, Lisa mentioned during her prepared remarks. We have the late stage of product cycle in the year 5 of gaming console, but at the same time, we also have inventory at the customers.

[Jean Hu, EVP, CFO and Treasurer at AMD]

So the combination of those impact, we expect the Q1 gaming sequential declines probably more than 30%. So hopefully that help you a little bit.

[Aaron Rakers, Managing Director and Senior Equity Research Analyst at Wells Fargo]

Yeah, very helpful, Jean. And as a quick follow-up, I'm just curious, the traditional server demand that you see, I know when we look at server CPU, you know, shipments are down, you know, north of 20% year over year. Are you seeing any signals, or how are you thinking about a recovery in that traditional, call it, non-AI, general purpose server market as we move through 2024?

[Lisa Su, Chair and CEO at AMD]

Sure, Aaron. So look, I think, you know, I agree with your characterization of the 2023 demand, although we did see, you know, some strong progress in the second half of the year, especially as, customers in cloud and enterprise adopted our Genoa and our Zen 4 family. So going into 2024, I would say the traditional server market is, probably still mixed, especially into the first half of the year. There's still some cloud optimization going on, as well as, you know, sort of enterprise, you know, being a little bit cautious. That being the case, though, you know, we also see opportunities for us to continue to grow share, in, the traditional server business. I think our portfolio is extremely strong.

[Lisa Su, Chair and CEO at AMD]

The adoption of, you know, Genoa and Bergamo, as well as our new Siena product lines, are getting a lot of traction. And then we also see, you know, Turin, our Zen 5 product, coming in the second half of the year. So even in a mixed demand environment, I think we're bullish on what traditional server CPUs can do in 2024.

[Operator]

The next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

[Timothy Arcuri, Managing Director and Senior Equity Research Analyst at UBS]

Thanks a lot. Lisa, I'm wondering if you can give us a little bit of sense in terms of the milepost that you're kind of, you know, marching toward on this $400,000,000,000 TAM that you have for, you know, 2027. For example, do you think you can gain share at a rate that's kind of similar to the rate that you gain share for server CPU? Or I guess maybe asked a different way, is it reasonable to kind of look at your consumer GPU share of 20+%? Is that a reasonable bogey, or do you have aspirations higher than that, perhaps?

[Lisa Su, Chair and CEO at AMD]

Yeah, thanks, Tim, for the question. You know, I would say a couple things. First of all, we're really pleased with the progress that we've made in our data center GPU business. I think the ramp that we've seen, the customer traction that we've seen, even in the last few months, I think has been great, and that gives us a lot of confidence in the ramp of this business. I think the beauty of the you know AI market here is it's growing so quickly that I think we have both the market dynamic as well as our ability to gain share in that framework. The point I will make is, you know, our customer engagements right now are all quite strategic, you know, dozens of customers with multi-generational conversations.

[Lisa Su, Chair and CEO at AMD]

So as excited as we are about the ramp of MI300, and frankly, there's a lot to do in 2024, we're also very excited about the opportunities to extend that into the next couple of years, you know, out into that, you know, 2025, 2026, 2027 time frame. So I think we see a lot of growth. I think it's a little early to make market share projections, but I would say it's a significant growth driver, given the market demand, as well as, you know, our own, you know, product capabilities.

[Timothy Arcuri, Managing Director and Senior Equity Research Analyst at UBS]

Thanks a lot. Jean, I guess as a follow-up, I know that you don't want to guide the, you know, full year, but I'm wondering if I can pin you down just to touch on maybe a, you know, milepost that you're kind of, you know, marching to for 2024 growth is up 20% for the whole company. Is that a reasonable target? And then I guess within, you know, data center, if you just add the incremental, you know, data center GPU revenue, and you assume that the server business grows a little bit, it seems like that should maybe double year-over-year. But I'm kind of wondering if you can give us any ranges on those numbers. Thanks.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Hi, Tim. Thank you for the question. Yeah, we're not guiding a year. It's very early of the year, literally, you know, January. I think the way to think about it is, you know, Lisa mentioned it during her prepared remarks. We feel pretty good about both our data center and client business to grow in 2024. Of course, the largest incremental revenue opportunities are going to come from data center, between both the server side, gaining more share, and the data center GPU side, with a significant ramp of our MI300. I think that's how we think about it. We do have a headwind from gaming segment.

[Jean Hu, EVP, CFO and Treasurer at AMD]

We do think year-over-year, we'll see very significant double-digit decline on the gaming segment, and at the same time, embedded is going through the bottoming process. We do think the second half we'll see the recovery. So those are the puts and the takes, I can talk about it.

[Operator]

The next question comes from the line of Matt Ramsay with TD Cowen. Please proceed with your question.

[Matt Ramsay, Managing Director and Senior Equity Research Analyst at Cowen]

Thank you very much. Good afternoon. Lisa, I wanted to ask—I mean, there's been so much focus and scrutiny, as there should be, on this really exciting progression with MI300. And I mean, we've progressed over the last six months from, I think, some doubts in the investing community on—as to software and your ability to ramp the product. Now you've proven that you're ramping it with, I think you said, dozens of customers, right, across different end markets. So that—It's—What I'm interested in hearing a little bit more about, and you guys have been open about, what some of the forward programs in your traditional server business look like from a roadmap perspective.

[Matt Ramsay, Managing Director and Senior Equity Research Analyst at Cowen]

I'd be interested to hear how you're thinking about the roadmap in your MI accelerator family. Is it gonna continue to be parts that are CPU and GPU together, or is it primarily a GPU-only roadmap? What kind of cadence are you thinking about? Just any kind of color you can give us on some of the forward roadmap trajectory for that program would be really helpful. Thanks.

[Lisa Su, Chair and CEO at AMD]

Yeah, sure, Matt. So, you know, appreciate the comments. I think the, you know, the traction that we're getting with the MI300 family is really strong. I think what's benefited us here is our use of chiplet technologies, which has given us the ability to have, you know, sort of, both the APU version, as well as, the GPU version. And, you know, we continue to use that, to differentiate ourselves, and that's how we get our memory bandwidth and memory capacity advantages. As we go forward, you can imagine, like we did in the EPYC timeframe, we plan multiple generations, in sequence. That's the way we're planning the roadmap.

[Lisa Su, Chair and CEO at AMD]

You know, one of the things I will note about the AI accelerator market is the demand for compute is so high that we are seeing you know, sort of an acceleration of the roadmap you know, generations here, and we are similarly planning acceleration of our roadmap. I would say that you know, we'll talk more about the overall roadmap beyond MI300 as we get into later this year. But you know, you can be assured that we're working very closely with our customers to have a very competitive roadmap for both training and inference that will come out over the next couple of years.

[Matt Ramsay, Managing Director and Senior Equity Research Analyst at Cowen]

Thank you for that, Lisa. Just as a follow-up, I guess one of the questions that I've been getting a lot in different forms is with respect to the $400,000,000,000 TAM that you guys have laid out for 2027. Maybe you could give us a little look under the hood as to, I guess, the... I've gotten 100 versions of the same question, which is, how the heck did you come up with that number? So if you could give us a little bit more in terms of, are we talking about systems and accelerator cards? Are we talking about just the silicon, or are we talking about full servers?

[Matt Ramsay, Managing Director and Senior Equity Research Analyst at Cowen]

And what kind of sort of unit assumptions, any kind of thing that you can give us on market sizing, or what gives you the visibility so early into this generative AI trend to give a precise number three years out, that would be really, really helpful. Thank you.

[Lisa Su, Chair and CEO at AMD]

... Sure. Well, Matt, I don't know how precise it is, but I think we said approximately $400,000,000,000. But I, I think what we need to look at is growth rate and how do we get to those growth rates. I think we expect, you know, units to grow, you know, sort of substantial double-digit percentage, but you should also expect that content is gonna grow. So if you think about, you know, how important, memory and memory capacity is, as we, as we go forward, you can imagine that, you know, we'll, we'll see, you know, acceleration there in just the overall, content, as we go to, you know, more advanced, technology nodes. So there's some, ASP uplift in there.

[Lisa Su, Chair and CEO at AMD]

What we also do is, you know, we're planning longer-term roadmaps with our customers in terms of how they're thinking about, you know, sort of the, the size of training clusters, the number of training clusters, and then, the fact that, you know, we believe inference is actually going to exceed training, as we go into the next couple of years, just given, you know, as more enterprises adopt. I think as we look at all of those pieces, I think we feel good that the growth rate's gonna be, you know, significant and sustained over the next few years. In terms of what's in that TAM, it really is accelerator TAM.

[Lisa Su, Chair and CEO at AMD]

So within accelerators, there are, you know, certainly GPUs, and there will also be some ASICs or other accelerators that are, you know, in that TAM. As we think about sort of the different types of models, from, you know, smaller models to fine-tuning of models to, you know, the largest large language models, I think you're gonna need different silicon for those, you know, different use cases. But from our standpoint, you know, GPUs are still gonna be the, you know, sort of the compute element of choice when you're talking about training and inferencing on the largest language models.

[Operator]

The next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

[Joe Moore, Managing Director and Senior Equity Research Analyst at Morgan Stanley]

Great, thank you. I think you talked about the MI300 cloud workloads being kind of split between the more customer-facing workloads and versus internal. Can you talk about how you see the breakdown of that and how, you know, how is your ecosystem progressing? This is a brand-new chip. It seems impressive that you're able to support kind of a broad range of customer-facing workloads in cloud.

[Lisa Su, Chair and CEO at AMD]

Yeah, sure, Joe. So, yes, look, we are really happy with how the MI300 has come up, and, you know, we've now deployed, and, you know, working with a number of customers. What we have seen is certainly ROCm 6 has been very important, as well as the direct optimization with our top cloud customers. We always said that, you know, the best way of optimizing the software is working directly on the most important workloads. And, you know, we've seen performance, you know, come up nicely, which is what we expect, frankly, with, you know, the GPU capabilities, that we would have to do some level of optimization, but that optimization has gone well.

[Lisa Su, Chair and CEO at AMD]

I think to your broader question, you know, the way I look at this is, there are lots of opportunities for us to work directly with large customers, both on the cloud side as well as on the enterprise side, who have specific training and inferencing workloads. You know, our job is to make it as easy as possible for them, and so, our entire tool chain, you know, all of our sort of the overall ROCm suite has really gone through significant progress over the last 6-9 months. And then we're also getting some nice support from the open source community.

[Lisa Su, Chair and CEO at AMD]

So the work that Hugging Face is doing is tremendous in terms of, you know, just real-time optimization on our hardware. You know, our partnership with OpenAI on Triton and our work, you know, across, you know, a number of these you know open source models has helped us actually make very rapid progress.

[Joe Moore, Managing Director and Senior Equity Research Analyst at Morgan Stanley]

Great. And for my follow-up, I guess, you know, a lot of the forecasting of your business that I'm hearing is coming from supply chain, and we're sort of hearing AMD's building X in Asia. I guess, how would you ask us to think about that? You know, are you looking at being kind of sold out for the year, and so the supply chain would be close to revenue? Are you building for the best case scenario? Just, you know, I worry about sometimes expectations when people hear these supply chain numbers, and I'm just curious how you would bridge the gap.

[Lisa Su, Chair and CEO at AMD]

Yeah. So I mean, Joe, I think we updated our revenue expectations, you know, this quarter from, you know, our original number of $2,000,000,000-$3,500,000,000 to try to give, you know, some, some bounding on some of the discussion out there. The way to think about, you know, the $3,500,000,000 is, you know, these are customers that we're working with, who have, you know, given us firm commitments on what they need. As you know, the lead times on these products are quite long, so it's important, you know, to have, you know, those forecasts in early. And we have a strong order book, so that gives us, you know, good confidence to, you know, exceed the $3,500,000,000.

[Lisa Su, Chair and CEO at AMD]

From a supply chain standpoint, our goal is always to build more supply. We... And so from that standpoint, you know, we have also worked with our supply chain partners and secured significant capacity. You know, think about it as first half capacity is tight, and more comes on in the second half of the year, but, you know, we've certainly made more progress there. So, you know, we do have more supply, and we're gonna continue to work with our customers on their deployments, and we'll update that number as we go through the year.

[Operator]

The next question comes from the line of Toshiya Hari with Goldman Sachs. Please proceed with your question.

[Toshiya Hari, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

Hi, thank you for taking the question. I had one on the MI300 as well, Lisa. I guess, first of all, how should we think about the quarterly trajectory beyond Q1? You talked about Q1 being up sequentially. You know, is it fair to assume kind of a straight line as we progress through, you know, the balance of the year, or is it more second half skewed? How should we think about that? And I guess more importantly, you know, some of the cloud potential customers that have yet to officially sign off on the MI300, I guess, what's the sticking point?

[Toshiya Hari, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

Is it just a function of time, and, you know, you just need a little bit more time to go back and forth and tweak things, or, you know, is there a software kind of concern? I guess, what's holding them back at this point?

[Lisa Su, Chair and CEO at AMD]

Yeah. Yeah, Toshiya, thanks for the question. So, first on the MI300 trajectory, I think you would expect that, you know, revenue should increase every quarter from now through, you know, sort of the end of the year. But it will be a bit more second half-weighted, and, you know, part of that is just, you know, customers as they're, you know, finishing up their qualifications in their lines, as well as, you know, sort of how our supply, you know, chain is ramping. So, yes, it should increase each quarter, but be a bit more second half-weighted. And then, you know, to your comment about customers, look, we're engaged with all of, you know, sort of the large customers.

[Lisa Su, Chair and CEO at AMD]

You know, these are all folks that know us really well, given our deep relationships in EPYC. I think people just have different adoption cycles as they consider what they're trying to do in their roadmap. But I view this as, you know, still very, very early innings, you know, for us, you know, in this space. And I think, you know, a question was asked earlier. I think the key is, this is not just about an MI300 conversation, but it really is about, you know, sort of our long-term, multi-generational roadmap.

[Lisa Su, Chair and CEO at AMD]

That's the context on which, you know, we're working with our largest customers, as well as, as you know, there's a lot of demand coming from, you know, folks that are more AI-centric and, you know, not necessarily typical cloud customers, but, yeah, more enterprise or, you know, let's call it AI-specific, you know, companies that we're also very well engaged with.

[Toshiya Hari, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

Got it. That's super helpful. And then as my follow-up, maybe one for Jean on the gross margin side. You're guiding Q1 to 52%. I'm curious. Again, I'm sure you're not gonna give, you know, quantitative guidance beyond Q1, but how to think about the trajectory for Q2 and beyond. I'm pretty sure you're working through some kinks as it pertains to the Instinct ramp. Hopefully, that improves over time, so that should be a tailwind. FPGAs, perhaps the second half, you know, turns for the better, and you've got server CPU volume growth throughout the year.

[Toshiya Hari, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

So it feels like you've got multiple tailwinds as we think about gross margin progression on a sequential basis, but what are the potential headwinds as we move throughout 2024? Thank you.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Yeah, Toshiya, thank you for the question. Yeah, you're, you're absolutely right. We have some puts and takes that impact our gross margin. We guided the Q1 120 basis points higher than Q4 sequentially, primarily because the higher data center contribution actually more than offset the decline of embedded business in Q1. Going forward, the way to think about it is, as you said, the major driver is going to be data center business is going to grow much faster than other segment. That mix change will help us to expand the gross margin nicely. I think you also are spot on, on the embedded coming back in second half, which will be a tailwind. With data center GPU, we are at a very early stage of ramp.

[Jean Hu, EVP, CFO and Treasurer at AMD]

We are improving testing time, yield, and continue to expand gross margin, and we expect to be accretive to corporate average. So those are all the tailwinds coming in the second half. I would say, the headwinds side continue to be, you know, in the first half, we see embedded business, not only, you know, Q1, we see sequential decline. Q2 probably are going to be sequentially flattish versus Q1. That is a headwind for us, because it does have a very nice gross margin. But overall, we feel pretty good about, you know, the trajectory of the gross margin improvement, especially second half.

[Operator]

The next question comes from the line of Ross Seymour with Deutsche Bank. Please proceed with your question.

[Ross Seymore, Managing Director and Senior Equity Research Analyst at Deutsche Bank]

Hi, thanks for letting me ask a question. I wanted to get into the competitive environment. First, on the, the Instinct side of things, how that's going. It doesn't seem to be slowing down your ramp whatsoever, but then also on the straight server CPU side of things. Lisa, you said you're gaining share in, in that area, but as we think about future roadmaps, pricing incentives, those sorts of things, any meaningful change in the competitive environment that you're seeing throughout, 2024?

[Lisa Su, Chair and CEO at AMD]

Sure, Ross. So look, I think the environment for us is always competitive, so I think that has not changed. If I look at the Instinct side, I think we have, I think we've shown that, you know, MI300 and our roadmap are actually very competitive. You know, there are some places where, you know, let's call it, you know, it's more even like in the training environment. But as we look at the inferencing environment, you know, we think we have significant advantages, and, you know, that's shown through in some of our customer work. So we think, you know, for both training and inference, you know, we will continue to be very competitive.

[Lisa Su, Chair and CEO at AMD]

And then as you go into the CPU side, you know, again, you know, from our view, you know, with each generation of EPYC, we've continued to gain share. I think we exited the fourth quarter at record share, you know, for AMD, and we're still quite underrepresented in enterprise. So I think there's an opportunity for us to continue to gain share as we go through 2024. From a competitive standpoint, you know, what we see is, you know, Zen 4 is extremely competitive right now, with Genoa, Bergamo, Siena. And as we go into Turin, we're deep in the design-in cycle for, you know, Zen 5 in Turin, and we feel very good about how we're positioned.

[Ross Seymore, Managing Director and Senior Equity Research Analyst at Deutsche Bank]

Thanks for that. I guess as my follow-up on the data center side, another theme that's been pervasive throughout 2023, at least, was the GPU side crowding out the CPU side. You mentioned that there was still a little bit of cloud digestion going on within your EPYC business, but where do you see that standing? I know you're gonna gain share, et cetera, but how— you guys clearly benefit from the Instinct side of the data center GPU side, but what about on the CPU side of things? Is that headwind now behind us, or is it still an issue?

[Lisa Su, Chair and CEO at AMD]

I think we expect the CPU business, from a market standpoint, to grow, Ross, as we go into 2024. I think the rate and pace of growth will depend a little bit on the macro and just, you know, overall CapEx, you know, trends. But, you know, from our standpoint, you know, we are starting to see some of our larger customers, you know, plan their refresh cycles. There's a lot of, let's call it, older equipment that has yet to be, you know, refreshed. And, you know, the value proposition for refresh is so strong because, you know, the energy efficiency and sort of the footprint of the newer generations are so much better than sort of the four- or five-year-old infrastructure, that we do see that refresh cycle happening, as we get into 2024.

[Lisa Su, Chair and CEO at AMD]

I think the exact timing, we'll have to, you know, understand more, as the market evolves, as we go through the year.

[Operator]

The next question comes from the line of Vivek Arya with Bank of America Securities. Please proceed with your question.

[Vivek Arya, Managing Director and Senior Equity Research Analyst at Bank of America Securities]

Thanks for taking my questions. So first one, Lisa, from—you know, you gave us a $2,000,000,000+ number for MI before, now you have raised it to over $3,500,000,000. And I'm curious, what drove the change? Was it incremental demand signals? Was it supply? And, you know, can, can you supply more if, let's say, demand is $4,000,000,000, $5,000,000,000, or $6,000,000,000, right? What, what is the, limitation? And sort of related to that, on the competition side, your, your competitor will launch their B100, later in the year. Do you think that will change the competitive landscape in any way?

[Lisa Su, Chair and CEO at AMD]

Yes, sure, Vivek. So, I think what we said is, as we went from $2,000,000,000 to $3,500,000,000, it really is mostly customer demand signals. So, as you know, orders have come on books and as we've seen programs move from, let's call it, pilot programs into full manufacturing programs, we have, you know, updated the revenue forecast. As I said earlier, from a supply standpoint, we are planning for success, and so we've worked closely with our supply chain partners, to ensure that, you know, we can ship more than $3,500,000,000, substantially more, depending on what customer demand is as we go into the second half of the year.

[Lisa Su, Chair and CEO at AMD]

And then, you know, in terms of, again, you know, roadmaps, as I said, we're very focused on a competitive roadmap, this, you know, that, you know, sort of what the next generations are beyond MI300. So I do believe that, you know, we have a strong roadmap in place and continue to work with our customers to, you know, sort of, adopt our roadmap as quickly as possible.

[Vivek Arya, Managing Director and Senior Equity Research Analyst at Bank of America Securities]

All right. And a longer-term question, Lisa. If I look at the success that AMD has enjoyed, it's, it's many factors, but a few of them included your early adoption of chiplets and then the strong partnerships you have had with TSMC. But now, you know, we are seeing your x86 competitor, Intel, also adopt chiplet or tile technology, as they call it. And then I think recently, the manufacturing update they gave, they said they are 2 years ahead, you know, in terms of incorporating gate-all-around and backside delivery. So let's assume they are right, and, and they have either caught up to TSMC or, you know, maybe they are ahead. What impact does that have on AMD in kind of the medium to longer term?

[Lisa Su, Chair and CEO at AMD]

Yeah, sure, Vivek. Look, you know, we're always looking at what's next, right? So on the chiplet technology, I mean, we're, we're sort of on the fourth generation of the chiplet technologies. I think we've learned a lot about how to optimize performance there. We are, you know, very aggressive with our adoption of leading-edge technology as it's needed. But I think those are only, you know, a few of the pieces. We're also focused on continuing to innovate on architecture and design. So I think the longer-term question that you ask is... You know, I think we're expecting that the, you know, competition is gonna be on a similar process technology.

[Lisa Su, Chair and CEO at AMD]

And even in that case, you know, I think we feel like we have a very strong roadmap going forward, and we'll continue to drive both the CPU and the GPU roadmap, you know, very aggressively.

[Operator]

The next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed with your question.

[Harsh Kumar, Managing Director and Senior Equity Research Analyst at Piper Sandler]

Yeah, hey, thanks for letting me ask a question, guys. I had two questions. Let me start off with the accelerator side. The question we get a lot from our customers is they want to understand the value proposition of the MI300. So Lisa, I was hoping you could give us some understanding of price versus power comparison or compute power. And then, today, are you seeing your customers primarily that are buying the MI300, are they primarily buying it for inferencing today, or are they using it primarily for training? And maybe for Jean, and Jean, do you think is it possible for MI300 to finish the year at a run rate of about $1,500,000,000?

[Lisa Su, Chair and CEO at AMD]

Okay, Harsh, so, let me start. So your question about the value proposition for MI300. You know, again, customers are using it for different reasons, but, presume that there is a performance per dollar benefit to using AMD. So that's one piece of it. The other piece of it, though, is, you know, we intrinsically have more memory capacity on MI300X, compared to the competition. And what that means is, for large language models that are many tens of billions of parameters, you could potentially do the workload in fewer GPUs. So it's a substantial, you know, system savings and allows you to do much more work, you know, within the same system.

[Lisa Su, Chair and CEO at AMD]

In terms of what customers are using MI300 for today, I would say, there are a number of customers using it for large language model inferencing. And there are also, you know, customers that are using it for training. So I think the whole point is being a strong partner. When you put these AI systems in place, you know, they are, you know, sometimes mixed-use systems, so they would be used for both training and inference.

[Mitch Haws, VP of Investor Relations at AMD]

John, we have time for two more questions.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Yeah, Harsh, let me answer your question about the MI300. Exiting Q4 2024, is it possible to get to $1.5? It is possible, right? Because Lisa mentioned earlier, we'll see sequential increase each quarter and the more back-ended loaded in second half. And we do have the supplies more than $3,500,000,000. And of course, we'll continue to make progress with our customers. So the math, yeah, it's possible, but right now we are really looking at focusing on the execution of the current $3,500,000,000 plus.

[Operator]

The next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

[Stacy Rasgon, Managing Director and Senior Equity Research Analyst at Bernstein Research]

Hi, guys. Thanks for taking my questions. So the first one, you had talked about that you had expected a more shallow ramp of the MI300, and it's clearly doing better than that. So if some of the upside, I guess, in the near term, is that being pulled forward from the second half, or is this like a step up, or is it more of a step up in demand, both in the first half and the second half, relative to what you were seeing before? Like, how do I-

[Lisa Su, Chair and CEO at AMD]

So-

[Stacy Rasgon, Managing Director and Senior Equity Research Analyst at Bernstein Research]

How do I interpret that, like, shallow comment that you made?

[Lisa Su, Chair and CEO at AMD]

Sure, Stacy. I don't think it's a pull forward of demand. I think what it is, is, you know, we wanted, you know, we wanted to see how long it would take for customers to fully qualify and get their workloads performance. So, you know, that depends a lot on, you know, the actual engineering work that's done. And now that we're, you know, let's call it a quarter later, we've seen that it's gone really well. So it's actually gone, you know, a bit better than our original forecast. And as a result, we've seen stronger demand signals and, you know, customers are gaining confidence in their ability to deploy a significant number of MI300s this year.

[Stacy Rasgon, Managing Director and Senior Equity Research Analyst at Bernstein Research]

Got it. Thank you. For my follow-up, I wanna ask Matt's question a little more directly. You didn't quite answer it. The $400,000,000,000 number that you've got out there, is that just silicon and chips, or is there hardware and servers and stuff like that in that number as well? Like, what's in that number?

[Lisa Su, Chair and CEO at AMD]

Yeah, I thought I had answered it, but yes, I'll answer it again. It is accelerator chips. It is not systems. So, you know, think of it as, you know, GPUs, you know, ASICs that will, you know, be there, sort of those types of things. But it includes, obviously it includes, you know, memory and other things that are packaged together with the GPUs.

[Jean Hu, EVP, CFO and Treasurer at AMD]

Yeah, memory will be quite significant, right? So memory is a big portion of the two.

[Operator]

The final question comes from the line of Chris Danley with Citi. Please proceed with your question.

[Chris Danley, Managing Director and Senior Equity Research Analyst at Citi]

Hey, thanks for squeezing me in, team. I guess question for Lisa. As MI300 revenue ramps, how do you see the customer concentration, let's say, a year or two from now? Do you think you'll have one or two customers that are in double digits, or one or two that are half the revenue, or do you think it'll be totally fragmented?

[Lisa Su, Chair and CEO at AMD]

I don't think it'll be one or two that are half the revenue, Chris. I think we're building this as a... You know, really, we're happy to see, you know, sort of the broad adoption. As always, with you know sort of the large cloud, you know, partners, we might see, you know, sort of one or two that are higher than others, but I don't think you see the type of concentration that you mentioned.

[Chris Danley, Managing Director and Senior Equity Research Analyst at Citi]

Great. And then just to follow up on somebody else's question on, you know, sort of Intel's roadmap versus TSMC. So I'm sure you're intimately familiar with TSMC's manufacturing roadmap, and we've all seen, Intel open up the kimono on what they expect to happen over the next couple of years. I mean, do you think Intel is going to close the gap somewhat with, with your foundry over the next couple of years, or do you think they'll be able to maintain the lead?

[Lisa Su, Chair and CEO at AMD]

You know, I look, I feel very good about our partnership with TSMC. They continue to execute extremely well. You know, we'll see what happens over the next, you know, few years. But, you know, I, I'd like to kind of reemphasize what I said earlier. You know, even in the case of, you know, process parity, we feel very good about our architectural roadmap and, you know, all of the other things that we add as we look at our entire portfolio of CPUs, GPUs, DPUs, adaptive SoCs, and kind of put them together to solve problems. I think we feel really good about what we can do with our customers.

[Lisa Su, Chair and CEO at AMD]

So, you know, we're always gonna be paying attention to, you know, sort of the process race, but I think we feel very good about, you know, sort of our strategy and how do we continue to sort of push the envelope on the computing roadmaps.

[Operator]

Okay, and that is the end of the question and answer session. I would like to turn the floor back over to the AMD team for any closing comments.

[Mitch Haws, VP of Investor Relations at AMD]

Great, John. That concludes today's call. Thank you to everyone for joining us today.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Lisa Su, Chair and CEO

Analysts

• Aaron Rakers, Managing Director and Senior Equity Research Analyst at Wells Fargo
• Chris Danley, Managing Director and Senior Equity Research Analyst at Citi
• Harsh Kumar, Managing Director and Senior Equity Research Analyst at Piper Sandler
• Jean Hu, EVP, CFO and Treasurer at AMD
• Joe Moore, Managing Director and Senior Equity Research Analyst at Morgan Stanley
• Matt Ramsay, Managing Director and Senior Equity Research Analyst at Cowen
• Mitch Haws, VP of Investor Relations at AMD
• Ross Seymore, Managing Director and Senior Equity Research Analyst at Deutsche Bank
• Stacy Rasgon, Managing Director and Senior Equity Research Analyst at Bernstein Research
• Timothy Arcuri, Managing Director and Senior Equity Research Analyst at UBS
• Toshiya Hari, Managing Director and Senior Equity Research Analyst at Goldman Sachs
• Vivek Arya, Managing Director and Senior Equity Research Analyst at Bank of America Securities