For the past year, AMD has faced relentless pressure to ship hardware out the door and the overall availability of RDNA2 has been low. The company CFO, Devinder Kumar, spoke at the Deutsche Bank Technology Conference recently and denied that AMD was prioritizing GPU cryptocurrency miners.
AMD’s ability to meet GPU demand has been poor the past year, dating back at least to the launch of RDNA2. When asked if this was due to crypto demand for its cards, Kumar said no:
We do not prioritize our product or make them for the crypto folks is not for the gamers and that’s a high priority from that standpoint. What’s driven the growth, as you know, we had the Radeon 6000 Series high end GPUs introduced very competitive and that is driving the growth in the GPU space.
It is not clear exactly how much AMD’s graphics business has grown. The company doesn’t break out its CPU and GPU businesses but combines client-side Radeon and Ryzen sales into the Compute and Graphics business segment while Enterprise, Embedded, and Semi-Custom (EESC) contains Epyc, Radeon Instinct, the PlayStation 5, and Xbox Series X. There’s no evidence that AMD has prioritized the crypto market, but the company’s GPUs have been very difficult to find at retail.
AMD’s growth in graphics is being driven by the same thing Nvidia’s is: the pandemic and a huge spike in demand for electronics and entertainment devices. As in CPUs, AMD’s overall market share has headed in the wrong direction. According to data released by Jon Peddie Research, AMD’s share in the discrete graphics space has slipped three points, down to 17 percent. Nvidia holds the rest of the market with 83 percent overall market share.
AMD has not specified how much its GPU business has grown, only that revenue is up. It attributes these gains to shipping more high-end hardware. Like a lot of companies, AMD is currently maximizing profits by emphasizing high-end hardware sales.
Conventional wisdom suggests that the reason AMD hasn’t shipped enough graphics cards to meet the needs of the channel is that it’s focused on producing the PS5 and Xbox Series X. TSMC only has so much capacity, and AMD is contractually bound to deliver inventory to both of its partners.
Devinder’s remarks on AMD’s expectations for the console business emphasize that AMD is the sole supplier for these parts and that it is “very important” for the company to meet its production targets. Demand is high right now, it has been high since launch, and AMD expects it to remain high into 2022. AMD expects seasonality patterns to eventually return, but not until 2023 at the earliest.
Continuing high demand does not necessarily mean AMD will be unable to improve supply. Much depends on which TSMC customers are migrating to its 5nm nodes and how much (if any) additional 7nm production AMD can contract for. With that said, Nvidia’s CEO, Jen-Hsun Huang, has also stated he doesn’t believe the GPU market will fully meet demand until late next year.
AMD may be hitting record revenue between its CDNA2 GPUs and its RDNA2 cards, but for that to be true the company must be mostly targeting the OEM channel. Retail GPU availability for AMD has not been very good at all at any point. AMD remains a gaming and graphics company, but its interest in the high-end PC gaming market has been modest these past six years. It may well be that RDNA2 was meant to be AMD’s triumphant return to PC gaming before COVID-19 waylaid availability and beat it half to death, but the end result is that Nvidia continues to overwhelmingly dominate the discrete GPU market.
AMD Is Willing to Design ARM Chips
There was a brief time when AMD looked to be all-in on ARM CPUs (at least for certain markets), but the chip design firm shelved those plans to get Ryzen out the door. According to Devinder, AMD has no objection to partnering with companies that want to build ARM chips.
“We stand ready to go ahead and do that even though it’s not x86, although we believe x86 are dominant strength in that area, but there’s other areas we’re willing to partner with customers of ours to go ahead and deliver those compute solutions because that’s what we believe from my standpoint at the CFO level,” Kumar said.
This is less a declaration of immediate focus and more a reminder that AMD has a sizable semi-custom business and is not chained to the x86 market. This is not unique to AMD; Intel also holds an ARM architectural license.
By signaling its ongoing openness to ARM and ARM technology, AMD keeps the door cracked ever so slightly on the idea that it might launch a future ARM processor. It’s also a way to invite potential customers who aren’t looking to use x86 to think about AMD for future semi-custom needs.
When AMD launched its semi-custom business, it meant the Xbox One and PlayStation 4. Things have changed on that front in the past few years. In addition to designing the Xbox Series X and PlayStation 5 SoCs, AMD has publicly designed a GPU for Samsung and a console processor for Tesla. One could make a certain argument that the company is laser-focused on gaming — just not necessarily PC gaming.
But regardless of how one feels about AMD’s overall gaming position, advertising its willingness to manufacture ARM silicon is a way for AMD to signal its flexibility and emphasize the capabilities of its semicustom unit. Like Intel, the company is looking for ways to emphasize that it’s more than just an x86 CPU designer and manufacturer.
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