AMD's Lisa Su: MI300 has strong demand, limited supply, will launch new AI chip later this year

During the first quarter earnings call for 2023 on Tuesday local time, CEO Lisa Su revealed some important information.

She mentioned that AMD will share more details about the next generation Instinct AI chips in the coming months, with the earliest launch expected later this year. Additionally, AMD will also introduce a new generation of mobile processors codenamed "Strix" within the year.

Lisa Su emphasized that the demand for AMD's Instinct MI300 AI chips is very strong, making it the fastest-growing product in the company's history, achieving over $1 billion in sales in less than two quarters.

Furthermore, AMD's priorities for this year will include expanding AI chip production capacity, with expectations for growth in PC and data center businesses, which will drive strong revenue and gross margin growth for AMD this year.

MI300 in High Demand, Becoming AMD's Fastest-Growing Product Ever

According to Lisa Su, there are currently over 100 companies and AI customers actively deploying the MI300X, which is the GPU-specific version of the MI300 chip.

Moreover, several OEM manufacturers will begin mass production of systems using MI300X this quarter, including Dell, HPE, Lenovo, Supermicro, and cloud service providers such as Microsoft and Oracle are increasing adoption and deployment of AMD's MI300X AI chips.

She stated:

"What we're seeing now is higher visibility of existing and new customers committing to MI300."

This growing attention has made MI300 the fastest-growing product in AMD's history, achieving over $1 billion in total sales in less than two quarters.

However, supply constraints on the MI300 series have hindered sales growth. Lisa Su acknowledged that the company could have sold more MI300 products if supply was sufficient. Nevertheless, she expects the supply situation to improve each quarter this year.

Lisa Su said:

"We are indeed in a tight supply situation, so undoubtedly, if we had more supply and there was demand for this product, we would continue to work on these issues throughout the year. I am very pleased with the progress."

New AI Chips on the Horizon, AMD Accelerating to Catch up with NVIDIA

Despite Lisa Su's satisfaction with the progress of MI300, AMD faces the fact that NVIDIA's H200 has recently started shipping, and a more powerful chip based on the next-generation Blackwell architecture will be launched later this year.

When asked about competing with NVIDIA, Lisa Su stated that AMD's strategy is not just about one product, but a "multi-year, multi-generation" roadmap, and revealed that the company will share more details about the next generation Instinct AI chips in the "coming months," with these chips expected to debut later this year She said:

We are very confident in maintaining a highly competitive ability. To be honest, I believe our competitiveness will only get stronger.

PC and Data Center Business Expected to Return to Growth

Su Zifeng also mentioned that the PC business is expected to return to growth this year, thanks to the beginning of the enterprise renewal cycle and the popularity of AIPC. The company plans to meet this demand by continuously expanding the Ryzen series of laptops and desktop processors.

According to the financial report, the revenue from the Client Computing Division, including personal computer (PC) sales, in the first quarter was $1.4 billion, an 85% year-on-year increase and a 6.4% increase from the previous quarter, with a sharp drop in PC chip sales in the same period last year.

Su Zifeng said:

Based on the performance and efficiency advantages of our Ryzen Pro product portfolio, as well as more adoption of AMD's commercial PC series from OEM partners, we have a clear opportunity to gain more market share in the commercial PC market.

AMD expects that the Ryzen product line will receive a significant boost after launching a new generation of mobile processors codenamed "Strix" later this year.

CEO Confident, Investors Skeptical

Compared to a year ago, AMD's profitability has significantly improved. In the first quarter, AMD's total revenue was $5.5 billion, a 11.3% decrease from the previous quarter but a 2.2% increase from the same period last year, when AMD's revenue suffered a severe setback due to weak sales of PC chips and data center chips.

During the earnings conference call, Su Zifeng stated that the company's strong performance in the PC and data center fields has laid a foundation for its future development, and revenue and gross margin are expected to achieve strong growth this year. The last time AMD achieved revenue growth was in 2021.

Our priorities for 2024 are very clear: to accelerate the growth of the data center business by increasing Instinct GPU capacity and expanding market share with our Epyc processors, to launch the next generation Zen 5 PC and server processors to maintain our leading position in performance, and to introduce a differentiated portfolio of adaptive computing solutions.

In terms of performance guidance, AMD expects second-quarter revenue to be approximately $5.7 billion, with a fluctuation of $300 million, a year-on-year increase of about 6% and a quarter-on-quarter increase of about 4%, in line with market expectations of $5.72 billion. The non-GAAP gross margin is expected to further increase to 53%.

However, AMD's upward revision of annual sales expectations for AI accelerator chips is only $4 billion, far below its competitor NVIDIA, causing the stock price to drop by as much as 9% after hours.