Advanced Micro Devices (AMD) 31 Jan 232022 Q4 Earnings call transcript

Hello, and welcome to the AMD Fiscal Fourth Quarter and Full Year 2022 Financial Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Ruth Cotter. Please go ahead, Ruth.

Thank you, and welcome to AMD's fourth quarter and fiscal year-end 2022 financial results conference call. have earnings opportunity slideware. press should copy review you our of release now, had to the a By and accompanying

you've of documents, the these not be If on found they Investor amd.com. can page Relations reviewed

We today's call. GAAP full this measures The and release primarily slides will available our non-GAAP in website. to refer are financial during non-GAAP reconciliations press to posted on

Chief and Financial are a Chief conference be and President. Participants call Dr. Executive our Lisa on Vice our Vice our in via replayed Devinder President, Officer; Executive live and Chair Officer Jean Treasurer; will Executive Kumar, Hu, today's Su, webcast website. call our and is This

to Media And our we on business will and is on Papermaster, Friday, that X. Engineering, Mark Officer and Monday, XX. begin the March XXXX President, of quarter Before expected like the Chief Stanley Morgan Telecom to Technology I at attend begin, Conference Technology, note time quiet and would first Technology Executive March Vice close

Today's involve expectations. discussion materially. as cautionary as from to current current materially and beliefs, to of results refer press that today forward-looking on speak differ such, on and to differ expectations that statement information assumptions could and actually cause in factors only uncertainties our could results for statements the our release Please risks contains based more cause actual

call the hand Lisa. Lisa? to I'll over that, with Now

today. Thank you, in Ruth, and listening to good those afternoon all

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also our $XX.X acquisitions business We Pensando, our Embedded of strengthening Data strategic grew significantly billion in billion Center, sales We XXXX. model in XXXX our as to and transformed and Center the company. our closed Data product Xilinx $X.X our diversifying accelerated business from and financial

billion, year-over-year $X.X driven than of Looking increased Fourth significant at Data Embedded revenue which in overall quarter results. XX% the to our in our by for and more XX% quarter. revenue segments growth Center financial accounted

Data our our XX% profitability in for On year segment following We by annual margin strong a and grew records our and Embedded billion. basis, performance annual set revenue the largely XX% Center a revenue to revenue, segment Xilinx of driven full $XX.X acquisition. we gross increase

led providers. Center quarter $X.X cloud Data by adoption starting to Turning our processors results, by increased EPYC XX% the segment. Revenue our year-over-year business to with of billion, fourth increased

quarter. instances year-over-year instances globally the moving external as of their power more to hyperscale in internal publicly more following available than launches sales and to customers processors hyperscalers and of workloads continued AMD-based more instances others North now AWS, EPYC new XXX EPYC processors. from cloud, In Microsoft American doubled than the

services, fourth quarter Against automotive, based new number technology, year-over-year and in continue this and XXX wins closed on macro the of declined slowed we revenue a companies. financial Enterprise, pipeline backdrop, In energy the expanding environment. as demand with aerospace our Fortune

EPYC by and supercomputers increasing fastest now AMD-powered in year-over-year. XXX on In the top energy-efficient the list powers latest AMD adoption highlighted XX HPC, of world. most Top of world's growing of was the supercomputers XX% supercomputers XX number the more the by processor than XXX

our energy our in EPYC Data leadership, enterprise build processors Xx to applications, offerings. deliver recently HPC the up November and To Center than competition's to are that we past faster fourth XX% launched gen up performance announced most this cloud, and more efficient

offerings and very going very pull Initial strong throughout for cloud instances customer capabilities. deployments both complement and with are internal EPYC third-gen workloads well, we seeing performance which fourth-gen CPUs, public to and We XXXX. ramp our are additional expect

than there generation. Lenovo, are prior compared Super an in Micro increase others, and Dell, EPYC development XX% platforms fourth-gen to the XXX more Enterprise, For from HPE, of

at significantly Alveo companies the for looking of from our boards, had led launched We and broader improvements low record chain Now in portfolio. supply the driven services series DPUs newly Center demand products Center our demand. quarter, strong Pensando networking Data XX Xilinx our Data from trading. and by quarter, our sales prior optimized Sales for latency continued ramped by also of financial

reception technology pleased standard DPUs We with in next the and component the long-term enterprise growth Pensando a with customer of become of generation data are the as good centers. very cloud opportunities

Instinct in when MIXXX multiple had our accelerator build-out data January, Laboratories. supercomputer In model National AI Data that exascale the at sales Lawrence and Capitan accelerator a power center were exaflop cloud of for next-generation wins. X-plus selected significantly ago shipments used El applications GPU will large Livermore down from MIXXX supercomputer previewed has we we to be year supporting the centers been

into GPU performance that efficiency for MIXXX delivering lead our Xx Xx quarter is accelerator second better be combines more powering currently will to the to CPU, sampling supercomputer. and this on data HPC design, in and XXXX. AI center MIXXX and the the workloads, fastest industry's world's integrated MIXXX launch and chip memory a single first compared half later to of track begin a customers

$XXX year-over-year to Revenue to Client million. declined segment. Turning our XX%

consumption the in on reducing PC fourth below quarter downstream focused ship we to continue as We inventory. further

during desktop soft, sequentially remains season. increased demand the PC sell-through holiday channel overall While

inference our in Ryzen feature latest our life battery launched processors CPU our Ryzen AMD dedicated earlier We leadership only AI, integration the Ryzen AI that in series acquisition. on-chip and AI including Xilinx which notebook January, a first industry's by architecture, and of the xXX is is closing powered processors generation to first the performance scalable deliver highly in Ryzen the IP, engine are XXXX processor. an after XDNA less year series than XXXX

based Ryzen our applications. the on first CPUs, launched competition mobile delivers triplet in content also We higher a performance creation processor significantly series that design gaming and XXXX our than

family XXXX series ultrathin launch notebook Ryzen year, processors commercial than first year-over-year XXX and our track an sale to to design February. the on have more planned We gaming go full in of this on notebooks XX% wins, increase spanning of with

segment. our GPU as Revenue Semi-Custom as SoC revenue grew consoles we to game for declined remained X% declined channel graphics Gaming inventory. to year-over-year turning graphics billion offset further lower $X.X gaming year-over-year during as downstream sales more holidays. Now the Gaming reduced demand revenue. desktop strong semi-custom higher year-over-year than revenue

in gaming X RDNA XXXX. Alienware, RDNA new first on X-nanometer sell-through announced first RX the notebooks demand and have power from triplet of launched Radeon others selected we based design. January, increased series the begin architecture our and to our ASUS GPUs are our of XXXX half mobile Channel track been Dell, GPUs of to on shipping high-end new X our GPUs sequentially, performance we Radeon In strong that that and to

healthcare, and had communications, our aerospace increased Embedded a at automotive, We markets, year-over-year of across and and segment. Revenue $X.X record defense, number significantly a industrial to including Looking sales billion. Embedded record test emulation. and our

parking some suppliers other new largest in automotive UltraScale installations wins We In + required and machine including camera, next-generation infrastructure wins DENSO's can radar applications wired industrial saw XG and and for with of deployments Automotive multiple and platform the we driven announced LiDAR communications, particular the the with XD infotainment wireless by across equipment system that Tier communications platforms by driving India growth ramps for our X automated ASINs expanded Zynq vision with multiple strength was resolution next-generation new of customers. grade autonomous recently providers. improve assist XXx. vehicle Ford ongoing

also by multiple the and customers and new We increased to our SoCs, and leadership-adaptive strong aerospace see emulation defense care, driven for and nodes. ramps in with supply across continued expansion industrial win health and SAM design quarter, growth tested

our back, Taking significantly a the acquisition well, extremely as next of business. step gone the our our growth diversifying has model we a has Xilinx and for month, financial approach integration Embedded closing become driver of business anniversary AMD, strengthening one major our the year and

In addition, products adaptive of industry-leading products as new and are breadth X,XXX-plus AMD's we revenue we opportunities with compute combine synergy expanded and Xilinx's customers seeing scale. substantial

and the Gaming and weak In strong portfolio. year our summary, grew significantly for overall, We Embedded a was our well market. product executed Data PC AMD Center, despite XXXX businesses across

first environment expect market, we XXXX, remain to In the half to mixed than for XX% demand enter with we the planning for approximately the second be we XXXX. half. TAM are the PC As down PC overall the stronger

We inventory, the downstream which guidance. is below quarter our reduce expect ship reflected to continue consumption to to first in in

year. positioning Data In portfolio. stronger strength to softer levels we our cloud customers, We believe half a a adaptive we will on do share the some high-performance and of inventory Center and well grow to our the positioned elevated half which based competitive revenue gain segments, Embedded and of XXXX of product in with are second and leadership see and lead first

very even to the investments We customers exit of continue more market the with growth. while products to conditions cycle strategic closely our with dynamic stronger current and working making the navigate set differentiated to future right drive also an

growth and which in virtually one several stages largest of service the product. Over early every opportunities the AI, of years, next is our transforming in is industry

about adoption the client. adaptive leveraging over that are needs can spectrum expect deliver coming AI software across in and GPUs inference and will in combination accelerators differentiated training years with and significantly portfolio solutions the cloud, address broad We our incredibly accelerate AI and our expertise edge of CPUs, of to full excited

fourth like I'd turn full on Jean results. financial provide Now and to the color additional Jean? over our quarter year to to some call

you, good Thank and Lisa, afternoon, everyone.

gross strong our portfolio. highlighted of business We significant diversifying expanding was and record XXXX very we cash free our AMD. a revenue, The was Pensando, year and and a by flow. also Xilinx profitability, generated for acquisitions margin, year had strategic

Data lower by XXXX the Center and revenue. segment for in billion Fourth Gaming was XX% driven revenue the segment, quarter offset a from Embedded Client partially $X.X by revenue year and ago, higher up

billion margin XX%, Embedded next go-to-market $X.X our primarily in points partially Gross product revenue with XX of investments year $X.X richer Client billion to driven OpEx Xilinx phase a growth. by higher by by segment, to revenue. ago, up basis R&D lower mix ago, the of and segment Center Data revenue expenses additional was Operating and a inclusion compared driven were the and year support from offset

declined to per earnings from was ago income year $X.XX the XX%, down income margin to compared share $X.X $X.XX was to operating million operating client per $XX share lower a XX% billion, Operating year-over-year. was Net year from year billion and primarily income. a ago, due a $X.X Diluted ago. flat

turning Revenue ramp of fourth-generation server for by Center Data XX% the strong with the EPYC in our year-over-year, driven billion, processor Now segment revenue EPYC primarily fourth and processors. $X.X third-generation up to quarter. Starting reportable early segment. was growth the

by income by operating to or driven growth. partially top income XX% was offset the support revenue million primarily compared investment or R&D center higher revenue year to stronger ago. $XXX a Higher XX% Data of operating line $XXX million was revenue,

PC shipments or was across $XXX a operating PC chain. operating $XXX weak inventory $XXX segment to to million, XX% resulting Client due primarily lower Client reduced revenue, due revenue. processor loss XX% ago from and million year correction a compared million the revenue year-over-year to supply of of was market down income significant

revenue $XXX was revenue $XXX lower due sales. billion, year semi-customer due XX% lower segment million XX% decrease to of offset revenue. by or gaming revenue, graphics operating to X% $X.X million income a or Gaming down higher graphics ago. to The Gaming partially primarily year-over-year product was was compared

revenue million segment was Xilinx by income primarily Embedded or compared inclusion million ago, billion of to Embedded from year of or $XXX a of to operating driven Embedded revenue $X.X primarily due revenue. the ago, $XX inclusion $X.X was billion, Xilinx. a year the up XX% XX%

Turning sheet. to the balance

billion a at have $X.X balance of of with end cash, quarter. strong sheet cash the fourth and We equivalents the short-term investment

a we we which to quarter, XXX% In was repurchases. returned billion the shareholders $X.X share $XXX cash flow. of free During XXXX, of returned shareholders through to total million

have share billion We remaining in to $X.X authorization repurchases.

increase compared in primarily Inventory prior ramp to million quarter, from cash quarter inventory primarily Free the was cash same year. $XXX support the $XXX flow to million decreased advanced new to due by driven Free was billion, in flow the the up higher $XXX products. process $X.X approximately last of million inventory. nodes

by XXXX increased Data pro me revenue Center billion XX% billion, full basis, AMD up year driven our Xilinx Gaming and Client forma by $XX.X offset revenue and results. XXXX. segment XX% turn segment financial year-over-year, $XX.X was the Now combined up our On in company revenue, lower to billion, compared let Embedded, partially $XX.X to revenue. XXXX was

was mix billion, driven margin XXXX. increase XXXX year compared by Data XX%, points of margin XX% with year, higher by of Embedded in XXX the up segment Center XXXX, product primarily a in XX% XX% segment, ago an $X.X $X.X XX% to and Client revenue lower margin expansion. billion, richer income operating operating up partially from was from revenue in driven were gross primarily to expenses Operating resulting from and by Gross basis of offset higher revenue revenue. compared XX% prior

flow $X.X Earnings prior Center share margin for of approximately was to We $X.XX Xilinx. $X.X from was future $X.X addition XXXX growth compared income supply compared and in revenue billion, in prior chain for cash Data cash primarily billion due to year per for invested the billion free to our long-term flow increase up XX% of billion, the Net $X.XX growth support XX% year. $X to the share. and was expectations year, free market resulting capacity year. Full

now me current turn outlook. our Today's expectations environment. current contemplates and the financial macro is based Let on to outlook

XX% plus year-over-year XXXX, For million, sequentially. or the $X.X of approximately decrease quarter revenue a X% approximately of expect first to and $XXX minus we billion, be

levels Center some and expected Gaming Gaming with due and segment expected seasonality. increase. decline is is largely grow, and Embedded decline inventory lower are to revenue revenue Data expected consistent offset to segment Client Center to are elevated revenue revenue. to cloud segment Sequentially, Year-over-year with segment Embedded by to expected customers. revenue Data Client of segment

expense, approximately Diluted expect share be to shares. we gross X.XX $XXX other non-GAAP margin million XXXX, $X.X approximately a be QX non-GAAP effective to taxes for approximately rate. non-GAAP billion; XX% addition, expenses approximately interest is In be operating be tax XX%; to count to on billion expected based and

environment. year guidance macro For uncertainty are in XXXX, to the providing the we the due full not specific of

Embedded However, share strength and me annual on let some color. provide based our and to expected expect gains. Center Directionally, the portfolio Data XXXX from of we grow revenue product

current based the revenue environment. Gaming demand to In expect addition, and we Client segment decline on the

flattish half the second We expect non-GAAP in and the year. in of the first gross margin expansion to be half the approximately

expenses We manage demand see expect to the with quarterly non-GAAP we operating flat the fourth quarter improves. until environment

non-GAAP year the effective billion purpose, be to X.XX approximately expect modeling be and the For tax rate XX% count to shares. share we for diluted

strong the our record profitability, diversification in closing, our by In with of driven a and leadership we had and revenue product portfolio business. year

earlier, discipline well believe leadership executing position to growth growing focus strong foundation growth. we'll on forward We strategy driving customer mentioned long-term us our for as Looking of XXXX, momentum financial continue and while Lisa operational our excellence. products, profitable to financial long-term and

session. turn With for to Ruth Q&A I'll it a back that,

you And audience could Thank now, if poll questions please. the operator, for you, Jean.

today Matt Ramsay Certainly [Operator Our from first is from question Cowen. Instructions] coming

Your live. is line now

afternoon. Yes, thank Good you very much.

foundation as six Jean you of years stable five the did to all well years finance company ago happened remarkable. been I and of have keep last what's congratulations, the First all, the and to or work team congrats But Devinder I since. the your seven remember mean for

Lisa, of So XXXX? retirement? is My just drivers enjoy question, the first about the

the versions overall? just think company different same I've what's Data zillion PC business in a do the inventory strength portfolio of the year? through versus the going that space and year the in script you all grow question the which if could about was in on the the You versus are on tonight, work through of about your can some kind the digestion market. Center obviously, gotten of we going right the of guys walk talked for kind But of XXXX prepared And you drivers as the Thanks. crosscurrents now us

the Matt. Thanks for absolutely, Yes, question.

to are puts XXXX, in kind takes some and there lots of the we of give drivers. So of and you want

Data the certainly is driver Center. growth largest Our

portfolio. positioned very well with our Genoa EPYC. are just launched fourth gen our We product We

have is as our map. they're to road When coming telling this of well. we also they us our year We Bergamo what the appreciate talk customers, execution cloud

to opportunity as through we year. the an And workloads more have to move go AMD we

feel good we about very So positioning. our product

As remarks, some strong we mentioned in some prepared the of very coming there customers. cloud a is off at XXXX, the of inventory

half, Data with softer stronger expecting good feel a opportunity And a so, very second grow to and we then about position Center. are market we half our share but and first

portfolio have markets. Also XXXX. in there. a side, business The we well a of number diversified very strong has would strength It's in on We say of markets. very the embedded the I set a Xilinx end done see

think And AMD. for grower so, a that's we also

we our and side, other will the Gaming On decline. believe, Client businesses,

made at in good second inventory. the look half of year of to the rebalance have We really were the progress. trying we When XXXX, we PC markets

made ship then We're from And in to below and we of think expecting progress first QX. consumption exiting quarter still go there. I the sort

Our XXXX. for coming just we segment, we there's half again, think client growth product will But the into as an a the think for We of given the TAM. off is year, opportunity we're strong. the the on of Gaming year. then And portfolio decline overall go strong very second

Gaming and and that we're terms Center And the do the the year-over-year so takes, macro watch positive product lots out. portfolio. has on would in are given and embedded we see of basis. down of quite overall, our think console But given but And be cycle, demand we'll to segments, Client gaming plays Data can a actually we and puts strong. the in been on expect I we what the And where on how

I a guess follow-up, Lisa to my I But details there. for sequentially ask drivers revenue the focus a down were longer-term bit I coming from guess, much kind margin. three or I of few despite gross on the you the little Thank points from Embedded into The margin, four of March. more as down, ago Center? question about quarters the wanted to of you all a guess, I and where wanted margin that's Data mix very

way client the any margin of lower just we quantify of if clear margin So much guys to terms in from how to might through might could Thank drivers we try it the there's much that working headwind from be is of that How maybe you. revenue? you're the the think that programs channel? What about should how And are any recovering? model? you

- driven maybe the way overall on so and Matt, is business, the to primarily by - our margin, Yes, is product mix. about think our margin

So with margin businesses it. grows - the and Embedded the as are Data expansion Center so grow,

In terms from that a product question of the the just to had QX QX, that's you mix. of sequential

So with sequentially Data that's Center being - that. lower that

working client also are inventory We through our clearing.

PC is, especially we going expect the place. the and inventory, we in we're pricing as first incentives half go as We do the through this to we're more on that some in What have sort programs marketing seeing business of do normalize of of normalization the products, year. through older of

so half client the normalization as and Jean margin Center, the would some as expansion business said the the with second in growth in And into go of prepared Data expect remarks, well. we as we Embedded

you. Thank

Next Vivek coming question of Securities. Arya is Bank from America from

is Your now live. line

and my well. Jean for side wishes from question and Devinder best taking as and thanks my to Thanks

your grow your ramp customers. Lisa, could hoping this could of the was cloud coming one, X-quarter expectations XX%? sales elevated? one it give first issue? the it think some you over Genoa the Is inventory by Is issue? server I elevated I quantification into impact a quarter because think you year, a of pace you us some Does where I among how On it mentioned

think because imagine just puts a benefit your you year? takes from you of that possibility Do about is general business Center I how get should some better through think still So Data this and pricing? we

Vivek. sure, Yes,

thing bullish our the from think about expanding mean Data very said, Genoa Center our look, important set are I gotten I I strong. And on So the we remain is business. is feedback very customer we've as workloads. that we

believe we in what In terms trying customer each the different, of terms as the inventory have normalizes, levels. so is they - achieve of to they're where inventory

said, of cloud go very the second to And worked half core is expectation sort I growth overall count the in with also half overall help said, it's and But first each as that opportunity then customer. of of ramp year. growth, go our then on for strength through. Data I like do through business softness as we the that we're gain and as the different in bullish the that's Genoa, should content higher ASPs. Our we for through have we Center more share as the And terms

also be and year-on-year competitor, Got or the it. the XX%, is pricing as shipments, PC PC the we relates when kind TAM you it from XX%. XX% and on side at And your down right, as look mentioned then - about in they the down you QX. as of right, environment, But to much be could could

down XX% So think possibility of TAM a do the there's an one? optimistic just be you could assumption that

suggest Because would soon, inventory that may clear imagine suggesting out that it but out clears I not would you're QX. until the

competitive sense you become before And could price I better market you just it starts think more recovering? was the some us recovers? So for when could give PC it do hoping

Yes.

that to sure just we're make So numbers. maybe just correlating the

being So look of sell-through - TAM take sell-in published PC million more a if in sort units, at a IDC my XXX XX% for XXXX you assuming, and down that's about a TAM of what versus just comment was about TAM. at

as consumption of last shipping or we soon been to as that the have an renormalize two So attempt sort in quarters for possible. under the sell-through

terms In do its ZIP conserve think I in of it's think I code. - the

code. ZIP it's think I the in

TAM plus minus, XXXX seems units, the right XXX about imagine million to number. you or sell-through of be if about So

be the obviously, made want environment. given We year into good the cautious, heading macro normalization. have just We inventory progress to in

be roughly we quarter, for said would PCs. First seasonal

launched desktop from note second AI a I for and PCs. I also, second us both then think we Vivek, the then and just standpoint. And second bottom there grow into half. of quarter quarter the - I notebook should - capabilities, XXXX be in mean, with and the should sort our our Series first into Ryzen We quarter from

we to our about the customers of sort in offer differentiate of strong products road very the have and this we to So, our feel focus good on to is platforms. through Obviously, normalization. get with Most product PCs. map working continuing

Thank you.

question Next is from Bernstein Stacy coming Research. from Rasgon

line Your is now live.

you Hi that questions. Can for in Or gross I give grow that us but mean second half taking idea expand full first margins the printed any color guys. us you like do for much noted Thanks you my I would give second XXXX? any just year-over-year XX% on you to in how half? that the the didn't gross said half, year, margins think expand. they from might you

this Jean. is Stacy,

Let can take this question, add. me then Lisa

our it's and margins. strong gross segment talk about we it, Center Embedded both Data As have

we second pretty good So feel half. about

which client We which of think to if half is growth The major margin Client XXXX, you of the in have and Client gross first first impact the the continue in we both side, inventory are the the really margin from major the correction, is of the XXXX segment. revenue, about facing Data headwind impact Embedded versus gross the half Center segment.

the second the into the us normalization will Client gross going segment margin. help half, to of So expand

gross that the segment, normalize segment feel gross overall, That Client we good. the expand think to level. XXXX of on I we how if it our will recover. the beyond going margin back to will depends But Client or will Once go drive margin first it's continue expand. to the pretty really half

I question guess, ask I again. So the

margins do think XXXX, expand can For over you XXXX? gross

is I where goes. given Maybe what the we've takes think say, the margin I for puts would Stacy, you and

feel the it environment. all happens second of expansion, in bit what segments. relative the our it to see macro as we'll about think a recovery we and do on I of half in depends But relates sort macro good

guess pretty just half? your my follows the second it. Center first right you Client just second about the the will, four given Embedded Do total that feel think that plus half. higher Got maybe the too, around by half, as the versus half? are a How that not channel the your more the little first in it even growing I across on and get half, do Embedded up in growth second Data the now. for presumably, should versus Data see you half at half all margin percentage sounds follow-up, of I Center mix. first is it different you be a normalization of bit how Or could under a mix be you But I like you. Thank that shipping, it to materially than it clients? first mean potential the second just half might revenue businesses is given in mix, the in from wide

Yes.

to Center about the - way is, Data stronger. I I that be expect think our the versus growth it think to think grow significantly in second half first we half,

a expect it evolves. actually TAM Again, on to of would to As be relates and depending the also bit stronger. sort macro clients, it how we

half for we right and visibility XXXX think would backlog versus full year fairly XXXX. year. over the I that grow is see already. Embedded a the second strong I ready we're coming the not I'm good expect say in the businesses, to will the that first half, Embedded the of very we say grow off versus because though, half to What into strong growth first now

And are those puts takes. the and so I think

you. Thank

Goldman Hari is from coming from Toshiya question Sachs. Next

Your now line live. is

in mature Thank you doing have if you're the set, get share taking comes And the afternoon. Good that it you gaining to often we you a pushback but shown AI, gaining you share, will. haven't for relatively do is really Lisa, markets. product really so when well, AMD is question. the but much strategy,

you're and I and your as to CPU, FPGA the point see investors, launching Pensando, and we, your You At strategy of half. GPU, do materialize will. in and profitability, talked the you second guess, potentially about quarter and in later start analysts you how MIXXX, P&L have this what shipping AI samples if

Yes. our driver Thanks for well. And be huge portfolio, AI our is of the compute it growth. believe that driver growth of should a a question. given We as

about launched training the product sort think are AI on MIXXX, you side. you in should sets in, if content We PC of I just the AI course, expect that think portfolio. GPU putting our we of Ryzen

as You coming in acceleration can our expect AI well. portfolio server additional

So see AI to you're going broadly maps. our across road

In Center terms our the GPU opportunity see it and of sort as ambitions talked before a about We we've of when there. large opportunity. - Data

As as AI the supercomputers be working of user half in or be some will year large second a we should more to workloads. cloud MIXXX, XXXX. well the expect of go we that And but contributor El launch vendors and the MIXXX to Capitan, with into sort we're in meaningful of of MIXXX closely the qualify first

So huge of lots to focus opportunity, the in just a well ecosystem us. bring with as investments software lots of on

as question very That's profitability business. I helpful. a PC my then, in your And your Lisa, client on or had business follow-up,

year with think a then, really little were I competition, ago, inventory your a relatively high. tight. profit was the Supply margins bit correction perhaps are more margins Since down. and

first margins the you things it your You in that this return levels? mode, gross then half half be still Client talked to would assume environment? the then of year were realistic of over-earning second in the the back 'XX business - sort given margins business half, first and were hindsight, Or perhaps But in about in being normalizing. in digestion to

Yes. Sure.

it's segment, certainly lower. we where I levels, Client client the first that given with say we fair inventory on be the half So will think to the believe, are

we margin, the be we're in corporate modeling the client of expect improvement the that's how half. expect overall in average, and client that second the will business We below But business. terms some

Thank you.

coming Rakers from is Wells Next Fargo. Aaron from question

up Your your is line pick now phone live. perhaps mute. your on is Aaron, handset. Please

with the of Center can ASP the to taking going well do point is ramp back and the Data help cycle question about product the product curious, there through thinking I you around business? for us the server business the the Yes. Bergamo expect that think uplift impacting Thanks start And see guess at any to specifically cycle? some I questions. about how guess I'm the Genoa. XXXX, with first the of to as Genoa piece you is we provide CPU you

Sure.

should and quarter ramped Genoa is new the that The - ramp third Aaron, for about customers. it continue way think started into our shipping or through will about to fourth platform you the So that ramp XXXX. in we is way think quarter the a I the Genoa

external introducing introducing be and going - then enterprise. to workloads first-in-cloud then they'll So of workloads sort it and internal

will it XXXX. So I be think throughout

Genoa. have XXXX. I'm do higher counts core throughout We We on sorry, have -

So first you higher core uplift those will would some the expect in that, that the products. will ASP year. we half count of launch to go Bergamo give of through us some as

the larger second see contributor Bergamo on are become a for We and launch, in that track the half. you'll

you. X crossover Zen our X that helps the year, sort the as of quarter, towards if we think So of you the end to crossover it should of that a versus Zen the X, ramp of and Zen would be see ramp, the fourth about in Zen sort X

within business. a the Xilinx. Yes, phenomenally XX% helpful. quick I then know last your doesn't follow-up, think self-reporting, that's a these It's it's largely. filings read of doing been if like-for-like here actually much on very And plus basis that as it's the Embedded the I really Xilinx I well correctly, for about, the growing ask business But but quarters. couple

your the or think in durability as growing demand through think 'XX? that move also of competitor business Xilinx a or solid Embedded about we I that you do How pace. sustainability

Sure.

has well. Aaron, So business done very that

So look is puts think we Embedded in the When there across Xilinx to up. overall see going well. what are subsegments, the I we and subsegments. But continues business, business the takes is our content do

defense, automotive. and and communications, had So in we records industrial care, aerospace health

into that's processor going Embedded also the have automotive. We content

we So that business. feel good very about

as question into look the this think I mentioned with I we in XXXX, Stacy.

a the to sequentially looks half so we visibility the the first grow quarter. given the strong, half first times first expect have good to and the very backlog. just in lead And We

of As good, continue segments and content, takes into think the we to whether demand ramp are overall half of and new Xilinx And the we're market the there'll wins momentum we some looking end in year, go overall, we some second key our there. I at is puts the just in monitoring the given how be But the design it's been, strong is and environment. business. point the win design

Thank you.

Your from next from Morgan Moore Joe question Stanley. is coming

is live. now line Your

you the of and progress down to market where consumers share continue penetrating wonder of terms better helps with XX% if about commercial, puts takes in is your to you penetrating market gain but Great, it would in share? us I market you notebook talk assume PC I the thank than the could you. a and environment. commercial what could

Joe, just market. that Actually, dynamics Yes. we now, believe - given all, and the bit the gained the are share of sell-through PC right we view that that in so PC a of noisy quarter, share numbers we inventory probably a through. little worked of fourth first general, the opportunity I in sell-in, would the bit in market being the are say all

go very As portfolio our XXXX, into is strong. we we product forward think

are and really XXXX Quite commercial few the As high-end as focused consumer on segments, at positioned where our we're sort Ryzen years the segments. the we in - and not ago, of we PCs. changing well goes on as it where we look more a premium strategy

the helpful. low end, We which is have in less penetration I think

continuing ramp go of And we're a there. the we're and think, PC work, commercial larger on commercial in server well that PCs to I marketing footprint work getting as the we're invest and on the continuing the say links and of will to very doing side focus we that side, sort resources the enterprise forward, sales to business. I to in

competitors that of issues. pretty introducing Does same environment, some with second Genoa are And at that a people - and you're dealing the Great. kind to It platform conscious question chip of adoption in you going back this your then system was like slow budget as asked the has ago, seems the high that in a a cost. all?

how does which rate the environment will Just current ramp? the at Genoa affect

particularly the benefit cost cloud Joe, say, significant. total very, would some of workloads, I very the of in ownership Yes. larger is of Genoa,

say wouldn't I the So though. that, that's necessarily is new of adoption. It platform slowing pace a

think if from to basically went similar Rome was when Milan, we platforms. it you about So

relates would Milan a expected have as we that, we just still Milan and that had was always will that through say - So instances would Genoa XXXX. that it we Genoa, But to I now, that would bit continue ramp expect ramping have faster. and coexist that are through we And XXXX.

platform the I thing coexist. see XXXX. costs Genoa higher count, the as Genoa core at of sort this when that's the so towards as introduce natural that both mentioned the and And quarter really I cutover, what And come you'll view down, will some we of of fourth the

you. Thank

coming is from Ross Deutsche question Next from Bank. Seymore

now live. line Your is

margin. to the Thanks Jean, bit of size the segments you the of letting think, hoping prior sequential then I are a the answer And three in really an and a a down magnitude Embedded going little headwind a going dropping talked mix quarter being there job. just as the up. in to I you Center me for question. congrats what mix. getting was could gross ask cited Data about question, is, new a you percent the at And I'm Lisa, on give Jean, color that of first And to

Data drop So mix just just magnitude the trying to of true. to get make on outcome the side that Center how much has to be

Sure, Ross.

would said the Gaming segments We see. and be Client seasonal. let's So

than that seasonal. expect would would Data you the be So Center more

Client that the So the Gaming that, like segments and to sequential the helps. single maybe if you more digit, help drop as think double Data digit, whereas are Center about size

that single anything Yes, it of Is up And kind does. Embedded? on similarly digits?

Yes. will sequentially Yes. Yes. digit. single Embedded grow

it. Got

you benefits you're higher Center I cost multicore, A or that see cetera, Sorry better intensity. to of et Data about your the side On ASPs, could question. on lead nitpicky whether of for one picture Client the then, talking ownership total Lisa, the business. could bigger for performance, competitive products, hand, these one

pricing point, somewhat given On costs even and on get the a overall those bit side intensity foundry the environment might things. little weaker. pressures? contradictory talk you is other side, deflationary demand And some at you competitive of Can the about

Sure.

a Center maybe Client separate and different. bit Data because they're little So me let

always the on in different because solutions Center we solution piece we actually the - would the think good are the both bring enterprise general, of but in sort it environment the performance, about you of the to that is we and do sort do total we of terms fourth that, proposition important performance, Data what cost power I side, selling of the of gen see between solutions. the quite cloud feel value overall other and ownership, most EPYC competitive, can is customers. very The

I the pricing think of for quarters environment said aggressive. we've side, that client more couple the last the is on

industry happens working is rebalancing. think on normally I when that the

working I rebalancing. partners think working OEM rebalancing. we're are working The are our on on rebalancing on retailers

aggressive a environment. - And so, there more are more pricing incentives and more

newer some think previous on, it we there's And more where normalization through that's our let's products. we it, that, will call work that, let's generation view I call generation products be as primarily added. products there about older capability as

of takes. gives bit the little that you hopefully, So a and puts

but to everyone I all terms think we see industry in sort the also elevated is us have the of in cost seen that And spending. their environment, think as CapEx of - costs, some optimizing normalize too I expect of

Thank you.

you. Thank

from from Mark Your today next is Lipacis coming Jefferies. question

live. line Your now is

taking question questions, thanks for congrats to the may. Jean seat. new my I and on Hi, if Two

us side, give sense QX a PC either can roughly QX? believe, PC you on you're and on shipping you First, side, the the under in about how far consumption,

me question to I you just am answer PC into client, say an heard but you correct quarter. second in thought wrong, that earlier I to And Lisa, expect if the I an grow

that suggest And I a on So the you PC? is the think is that Thank bottom had follow-up? you. XQ, then

Sure, Mark.

yes. and PC the some higher - in So the quarter market the we our is - question, for growth so - We bottom believe half. first our second and see for then quarter do the second second first seasonally a the PC we'll business,

the in we're we undershipped of terms think QX. - we undershipped I I mean, In QX, in under shipment,

a to undership, will lesser extent, in We QX.

single-digit from that guidance you think our I down. So infer can

back more to be And we'll then normal environment. a

though, reminder a is usually the a usually a first first - half as half just client is the anyways. seasonally not Now time weak

not the much in So, half, second expect lift so second more in we would quarter. the

your you. how some at into follow-up, wondering you helpful, would expect of a very if demand. is point, they're out? share that translate to about could kind as you ultimately, thoughts that play And might with I'm just higher may, us - COVID that Got if I would you, restrictions, thank I lifting, imagine China And then That's the the guess I lifting okay. on

the And that on as impacts can understand the the remind COVID for event Thank and you of that is, risk side supply us side rapidly supply you us to extent spreads help could you they you have there? to the the what in restrictions the the lift you.

Mark. Sure,

So we've mitigation. good in of terms supply very chain our done a risk in job

- we have to as are relates we it COVID if outbreaks, So we don't believe have any. there risk a significant that future

business, been that Data recovery. this very Center of It's relates we've seen, I difficult first the Center year to has we I year the half us. certainly saw think from China in and a the weak to benefit recovery, Data China for year of our last it second we the China business call. half As would in in mean

I recovery, think we But some would a of very Similarly, to patterns that. it's was there difficult as other If the benefit call. well. from consumer

we we'll So how uncertainty, and plays put see of macro out. the in bucket it that

Operator, from questions we'll two take two more callers, please?

Certainly.

next Our Citi. Danley from question coming Chris is from

is line Your now live.

coming. time all-female CEO, - team CFO Great, Congrats thanks on first ladies. the means being that's long

for despite So Data your gross business the guide well QX margins high-margin pretty held up going down. Center

margin the rough we So business can a quarter in similar and weak QX, resiliency? expect a Data gross has if Center remains

definitely. Yes,

the impact and level. margin business on the gross as PC client side. margin really earlier, with us I said actually current the bottoming The stabilization help at client the think of is major the I gross

gross of margin. expansion the see should we half, Second

Sure PC client business. your and my as follow-up on

So the some obviously and Can or the semi and it steeper. as happen than why should a well? Center little had industry was that folks of correction you expect in that or in its other not about should later why bit happened that little business bit a we could - - Data should the talk

of volatile, the I and post we there we during say coming PC significantly the pandemic demand pandemic, off environment Chris, as the demand I with I adjusting at uncertainty. would what think has were and - guess, pandemic, high been macro market sort we're was and did the think I very is looking all

again, I we weighted know think heavily the you Data business cloud. have Center we're towards

very they need. with customer in terms overall discussions we And of what have set good our

favor in our are expanding. in our the is I workloads think Center what's Data going

and both adopting previous. from all that And they're workloads so, we've cloud of customers than heard Genoa Milan our in more

are us also visibility us And so good they Data XXXX. confidence. think for that what And giving frankly, gives I good Center the need into customers

going is first the we're some ramp there factor the And to I we that the have compute there. cloud And to the the of in overall driver demand understand. of being very up think definitely an expect So is we something half. as that I that's production long-term also second And in half resumes. adjustment in think, important a

where we're positioned. So, we sort feel of about good

you. Thank

Our final question today from is coming from Timothy Arcuri UBS.

now Your line is live.

know your are subsidies. a thanks pretty gotten and that numbers question had the that their a in I at business. I on Hi, times But have your client lot. competitor Lisa, uses vague. filings rebates

your So I to a that legacy take answer from it question prior parts? think you on more that's

on some continue your going what worries effect just I have to it's that's hear share on and I your your And impact changes or kind of business? margins? that these lasting Thanks. particularly guess wondering had to on I'm

Tim. Sure,

me let points. of couple make a So

our with and all various of partners. working distribution work we're parts OEMs the participate with. as PC with are with We of us, channel elevated all work to think the inventory together I of retail We ecosystem the industry, in levels. through work we that And we partners. work our our work there we sort

on good I think we've made progress As that. I said,

much And we I the think pieces. various have better visibility into

And generation is - a when more that believe older the to bit products, As clearing inventory I competitive. you're particularly the see it do relates we pricing that. environment, pricing is or older environment

gross we average. client than business the margins is corporate way less modeling that modeling are look we As to be forward, we're the

than modeling. our different previous That's

was average. the diversified is think nice the our I client I bit think more - previously, more corporate quite So given a at And business now. thing like is

good with some our the to Client mentioned. normalization continues this, Center, drivers, market as I being growth through really see so businesses And we that work Data a Embedded strong of And Jean we think will be overall.

on for through Thank year just give is bias last kind but wondered the guess maybe bias sounds pieces chance for that a you could but think I the Thanks. you give the went then puts than It just not? or I like wanted up of bias. just the if what you the some to to to And that I you as a Lisa. year, takes to more me down, the for and revenue different thing, I get the well you is confirm just

Tim, and need next work But how is the to out. we about that through let's and plays how yes. positioned, quarters. see are our couple the products feel of the think, we again, macro just And I answer good work through

Thanks.

XX to leadership of call. much earnings all have Great, touching and welcome to the Devinder forward for thank today's to Jean, concludes and we you. board, we're gratitude delighted That service on to with Again, base her and his all years quarter. Thank and look you. throughout participants his

conclude and webcast. does today's teleconference That you. Thank

You time, may a We this participation your today. and line your wonderful day. at have you thank disconnect for