Breaking down segment financials, Su said that AMD expects demand to drop off in the second half of the year in both its client and gaming businesses due to "higher memory and component costs." That's the sentiment we've heard echoed from executives at Micron and SK Hynix , among at least half a dozen others. AMD says it's bracing for quite the significant impact to its consumer business in the second half of the year, however.
"We expect second half demand in gaming to be impacted by higher component and memory cost," said AMD's Jean Hu, executive vice president and Chief Financial Officer at AMD. "We now expect second half gaming revenue to decline by more than 20% compared to the first half."
You may like MSI plans 30% gaming product price hike as memory and GPU shortages bite Memory will consume 30% of hyperscaler data center spending this year, a 4X increase over 2023 Nvidia warns of constrained supply of gaming GPUs, potentially signaling higher prices and shortages to come There are a couple of caveats to that quote. First, AMD broadly splits up its business into enterprise , client and gaming, and embedded segments. Here, Hu is talking specifically about gaming revenue — GPUs and consoles — and AMD later noted that consumer demand is partly offset by commercial demand for Ryzen laptops across the entire client segment.
Still, gaming demand is important, especially given the state of console prices. Last year, Microsoft increased the price of its Xbox Series consoles twice. In March, Sony announced price hikes across all new PS5 models. And just days ago, Sony increased the price of refurbished PlayStation 5 Slim consoles by $100. The drop in gaming revenue could be a response to these price increases, or they could be a sign that further price hikes are on the way; there's no way to tell without knowing how many consoles Microsoft and Sony are shipping.
Although consumers will feel even more of the memory squeeze in the second half of the year, AMD won't. The company says it expects data center CPU revenue to increase 70% year-over-year in the second quarter on the back of increased AI demand. That's certainly possible, as just last month, Intel hit a record-high stock price due to increased CPU demand.
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