AI Chips, China Comeback, and Confidence: AMD CEO

Key Concepts:

• CPU Strength
• Accelerators (AI)
• Data Center (Cloud, Enterprise)
• Gaming (PC, Consoles)
• Embedded Systems
• AI TAM (Total Addressable Market)
• MI300, MI355, MI400 (AMD Accelerator Product Lines)
• Inference and Training Workloads
• Total Cost of Ownership (TCO)
• Annual Cadence (Product Roadmap)
• China Business (Regulations, Licenses)
• US Government (Department of Commerce)
• National Security
• Supply Chain
• Market Share
• Pull Forward (Demand)
• Refresh Cycles (Data Centers)
• Roadmap Execution

1. Overall Business Performance and Growth Drivers

• AMD had a strong first half of the year, with Q2 revenue up 32% year-over-year.
• Q3 guidance projects 28% year-over-year growth.
• Key growth drivers include:
  • Data center business (server CPUs gaining share in cloud and enterprise).
  • AI investments from hyperscalers driving both CPU and GPU revenue.
  • Strength in PCs and gaming (consumer and commercial).
  • Improvement in the embedded business, expected to return to growth in the second half of the year.

2. Accelerator Outlook and AI TAM

• The second half of the year's growth will be primarily driven by data center accelerators.
• AMD launched the MI355 accelerator in June, which is competitive in total cost of ownership for inference and training workloads.
• Sequential growth into Q3 is primarily driven by accelerator capabilities.
• The AI TAM for accelerators in the data center is expected to be over $500 billion over the next couple of years.
• AMD expects to capture a large portion of this new accelerator TAM, leading to "tens of billions of dollars" in revenue.
• AMD has accelerated its roadmap to an annual cadence.
• Next year, the MI400 series will bring full rack-level solutions, representing a significant step forward in AI capabilities.

3. China Business and US Government Regulations

• There are questions about the China business due to US government regulations.
• 90 days prior to the interview, AMD did not expect to be able to ship to China due to regulations.
• The US government (Department of Commerce) is trying to find a balance between national security and ensuring the proliferation of US AI technologies.
• AMD has a number of licenses under review and has received "good indications" that they are moving through the review process.
• Due to the uncertainty in timing, AMD has not included potential China revenue in its Q3 guidance.
• AMD had an $800 million inventory impact due to the uncertainty around China access.
• AMD expects to restart its supply chain and ship products once licenses are approved.

4. Competitive Landscape and Roadmap Execution

• The AI computing market is very competitive, with Chinese domestic chip makers making progress on their own accelerators (e.g., Huawei).
• AMD is constantly assessing the competitive environment.
• AMD believes its roadmap for the rest of the world is strong and getting stronger.
• AMD is having close conversations with the US administration and making good progress regarding China.
• AMD's AI roadmap has "never been stronger."
• AMD is focused on delivering total cost of ownership and being a dependable partner to its customers.

5. Market Share and Demand Patterns

• AMD is capturing market share in both server and client CPUs.
• Demand patterns are improving.
• AMD has leadership CPUs in both server and client segments.
• Enterprise customers are seeking the best solutions, which AMD aims to provide.
• AMD is seeing strong refresh cycles in data centers.
• There is strong pull-through of AMD solutions in enterprise and PC.
• AMD has a strong product cycle in gaming.
• The impact of tariffs is smaller compared to the impact of strong products and customer traction.

6. Gaming Consoles and AI Margins

• A viewer asked about AMD's success in gaming consoles and the plan to become indispensable in AI, not just a cost-effective alternative to Nvidia.
• Lisa Su emphasized AMD's strong execution, roadmaps, and progress.
• The MI300 was an excellent product, and the MI350 is a significant improvement.
• AMD's history is delivering on its promises, providing total cost of ownership, and being a great partner.
• AMD's largest customers want a dependable and good partner.

7. Notable Quotes

• "When we have a business where all of our businesses are actually performing extremely well, it's a good it's a good place to be." - Lisa Su
• "We expect to get a large portion of that new accelerator, Tam, and that's how we get to tens of billions of dollars." - Lisa Su
• "Our roadmap for the rest of the world is very strong and we think is just getting stronger as we go forward." - Lisa Su
• "Our largest customers want to have a dependable and, you know, good partner." - Lisa Su

8. Technical Terms and Concepts

• AI TAM (Total Addressable Market): The total market demand for AI-related products and services.
• Inference and Training Workloads: Two primary types of AI workloads. Inference is using a trained model to make predictions, while training is the process of creating the model.
• Total Cost of Ownership (TCO): A comprehensive assessment of all costs associated with a product or service over its lifetime.
• Annual Cadence: A product development and release cycle where new versions or updates are released every year.
• Hyperscalers: Companies that operate massive data centers and cloud computing infrastructure (e.g., Amazon, Google, Microsoft).

9. Logical Connections

• The discussion starts with an overview of AMD's strong quarterly performance, then dives into the specific drivers of that performance, particularly the data center and accelerator businesses.
• The conversation then shifts to the challenges and opportunities in the China market, highlighting the impact of US government regulations and AMD's efforts to navigate them.
• Finally, the discussion returns to AMD's competitive position and roadmap, emphasizing the company's commitment to execution and customer partnerships.

10. Synthesis/Conclusion

AMD is experiencing strong growth, driven by its data center business, particularly AI accelerators. The company is navigating challenges in the China market due to US government regulations but remains optimistic about its long-term prospects. AMD is focused on executing its roadmap, delivering competitive products, and being a reliable partner to its customers, positioning itself for continued success in the evolving computing landscape.