We had a chance to talk with AMD CEO Lisa Su to discuss its future plans and how it plans to address several new challenges in 2021. The discussion took place in a roundtable format. While we're not allowed to post the full transcript, we do have plenty of new information to share about the company's challenges in 2021, like the ongoing chip shortages that Su says will persist until the second half of the year, rising prices due to tariffs, the company's progress on the GPU side of its business, its Xilinx acquisition, and the quest for more cores. Su’s comments have been edited for clarity. (We also have an interview with Intel CEO Bob Swan.)
AMD's progress throughout 2020 has been nothing short of phenomenal: The company launched its new line of Zen 3-powered Ryzen 5000 desktop CPUs that have finally taken the performance crown from Intel for the first time since the Athlon 64 days, and the company's Radeon 6000 GPUs have given the company it's best competitive footing against Nvidia's gaming GPUs in the last six years.
AMD has also made momentous progress in the laptop market, with its Ryzen 4000 Mobile processors powering their way to its highest notebook market share in its history. We expect that momentum to accelerate with the Ryzen 5000 Mobile processors the company launched today. Things are humming along on the datacenter side of its business, too, as it continues to chew away market share from Intel, and the recent launches of the new Microsoft Xbox Series X|S and Sony PS5 signals plenty of demand in 2021.
But even though AMD is firing on all cylinders as it enters 2021, plenty of challenges, many of them unprecedented, loom ahead. Here are Lisa Su’s explanations of how the company is addressing those problems, and where it sees new opportunities in 2021.
Chip Shortages to Improve
The PC market grew faster in 2020 than it has in the last decade, with demand spurred by a shift to working from home during the most unprecedented pandemic to grip the globe in modern times. But while the PC industry is in the midst of record demand, factors related to both the US-China trade war and the pandemic have roiled supply chains across the globe, strangling supply. Like many other companies, AMD has seen rolling shortages of its products as a result, and exasperated customers have been unable to buy both CPUs and GPUs for the last several months.
Lisa Su discussed the timeline for a recovery, saying, "Paul, we are shipping a lot of parts. Volumes are continuing to increase, and that's across gaming graphics as well as CPUs. We expect that to continue to happen through 2021. I think there will be tightness, certainly through the first half of the year, but we continue to ship more into our OEM partners, as well as our general partners, to increase the overall supply. We completely [understand] why consumers want more, and so it's very high on the priority list to have supply catch up to demand." Su also clarified that the company isn’t prioritizing OEM customers over the PC builders. Instead, the company is prioritizing in real time to balance supply.
"I do want to be very specific, and I want to say to our fans and enthusiasts: I get it, I completely understand that there's a huge desire for more Ryzen 5000 and Radeon 6000 graphics cards," she said. "What I can tell you is we've shipped a lot into the channel, but it takes some time for it to work itself through, and that was some of the logistics I was talking to you about. There will be more; you will continue to see refreshes as we go into the first quarter and into the first half. I will say that it will still be tight. But there is a lot of product coming to the market, and we appreciate that there's so much interest and desire for these products. And we look forward to getting more into the hands of our users."
AMD and Nvidia seem to have been disproportionately impacted by the shortages, partially due to their respective rollouts of incredibly powerful chips that have spurred demand, but that’s led to questions about whether the companies’ status as fabless chipmakers contributes to the supply issues. Su commented, "I would say we're very happy with our manufacturing strategy and our manufacturing partners. I think it's been a competitive advantage for us. There is tightness in the supply chain, particularly around some of the consumer PC products. I think that's really a result of the overall demand environment, and not necessarily any issues from a manufacturing standpoint, as it relates to semi's."
Reports of ABF substrate shortages, a key commodity in chip manufacturing that impacts nearly every chip made for PCs, have been prevalent over the last few months. The shortage seems to have impacted a broad cross-section of the industry, even impacting chip supply for auto manufacturers that idled several manufacturing plants last week.
"I think it's fair to say you've seen some reports of substrate shortages," Su said. "And we also see tightness in the substrate market. I think, again, this is more a function of the demand that has outstripped overall worldwide capacity. You do see that more capacity is being invested in coming online, including AMD investments, but it takes some time to get that online. I think the industry is overall reacting quite broadly, because it is across the industry, by ensuring that we put more capacity online. I expect that that will continue to happen in 2021."
Those same shortages may have an impact on some of the most important products AMD has helped to bring to market this year: The Microsoft Xbox Series X|S (see where to buy the Xbox Series X) and Sony PS5 (see where to buy Sony PS5). However, those consoles have generated an unprecedented amount of demand, which contributes to the ongoing shortages.
"We're really thrilled with how the console launches went," Su said. "You've heard separately from Sony, and Microsoft, their discussions about sort of the size of the launch and the reception of the products. From our standpoint, if you think about it, with just the amount of new hardware that had to come into place, and the millions and millions of units of both consoles, or all three consoles, frankly, that needed to ship. I think it actually came together very nicely."
"In terms of what have we learned? We have learned that there's higher demand than we thought, and we're trying to put more capacity in place for that. But we're very, very happy with the launches, and very happy with the partnership with both Sony and Microsoft […] We believe that this is a big cycle. And that says a lot about just how much technology we've been able to integrate into the console form factor."
US-China Trade War and Tariffs
Even as the industry was already in the midst of supply shortages, several key tariffs, which come as a result of the US-China trade war, expired at the beginning of the year. That led several third-party graphics card makers (AIBs) to announce price hikes, but at least for now, those price increases seem to have come to Nvidia’s graphics cards while AMD remains unaffected.
Su acknowledged the tariff issues, saying, "As we came into the new year, there were some changes in tariffs policies. We have spent quite a bit of time to ensure that we have a very flexible supply chain, so I don't think that's a significant issue as it relates to AMD."
In terms of the supply and demand disparities that have resulted in price hikes, regardless of the impact of the tariffs, Su said:
"I will say, more broadly, that we're very committed to trying to keep the GPU pricing as close to suggested pricing as possible from an overall fairness standpoint. One of the things we’ve done, for example, is that typically for when we start our GPU launches, we will have our own Radeon Graphics MBAs [Made By AMD cards], and then we phase those out and go to AIBs [third-party GPUs]. We actually aren’t phasing out our MBAs with the purpose of trying to ensure that, as stock becomes available, we will offer them on amd.com at suggested pricing. And we’ll encourage our partners to do that as well.
"I will say that there are some COVID related logistics and other commodity components that have increased in pricing. And I think some of that is what's going through. And, again, these are things that we're living within the current situation that hopefully, as we get to a more normal environment in the second half of the year, we'll see some improvements."
AMD has made tremendous progress on the GPU front. However, the newly-released ‘Cezanne’ Ryzen 5000 Mobile processors still come with the company’s previous-gen Vega graphics instead of its newer solutions. That’s led to some speculation that AMD is design-resource limited, but Su says the decision was more about assuring the correct product timing.
"[…]When we think about product cadences and roadmap cadences, for example, one of the things that was very important to us with Cezanne was actually shipping and production early in 2021,” she said."And the reason for that is, if you think about the entire OEM cycle, we have a whole bunch of platforms that will now launch throughout the first half of 2021. And that's a nice way to build cadence."
"As it relates to a choice on, do we put the latest generation graphics or not? I really think it's really a choice. And it's a matter of the timing of where we want to be on that particular cadence. So nothing fundamental, and we’re not design resource-limited. It’s more on the notion of what we think is needed at any given point in time. Some people might have expected that we would have left Renoir in the marketplace a little bit longer because it's, frankly, a fantastic product. But we thought that there would be high demand for Zen 3 in the normal form factor, and so we prioritized the Ryzen 5000 series."
AMD continues to forge ahead, even as it has lost key executives like Raja Koduri, to expand its competitive stance.
"I have to say; I'm very proud of our engineering teams on the CPU side. Mark Papermaster, Mike Clark, and the team have just done a phenomenal job on a very ambitious up roadmap, and the team has executed very well,” she said. “We also know, though, that we're as good as our current architecture. And so, as excited as we are about Zen 3, and getting it out into the marketplace, all of the focus is on Zen 4 and Zen 5 and ensuring that those are also extremely competitive.
"On the GPU side, I’m very pleased with the work that David Wang and the team have done. Our focus from an engineering side is to set up long-term roadmaps, and we're looking at a five-year roadmap and how to pick the right mix. You have to take some risks to get the innovation where it needs to be. But you also want to be very predictable about when the products are going to come out. It’s really that give-and-take of the bets you make. And how do you make sure that you track progress?
"But I think we have a very strong team on both the CPU and the GPU side. And our aspirations are continuing. I know many of you asked me about our progress on GPU architecture. But I'm extremely happy with the progress we've made with RDNA2 in terms of performance per watt and overall performance, and there’s a lot of focus on our RDNA3, and beyond, to ensure that we continue to drive those leading architectural capabilities."
2021 Goals and Xilinx
Su explained that AMD’s three key goals for 2021 revolve around overall customer adoption, particularly in the enterprise and commercial markets (with a heavy focus on the server market), establishing a steady supply of processors, and closing its pending $35 billion Xilinx acquisition.
AMD’s Xilinx acquisition is a needed step to broaden the company’s portfolio and addressable markets. Still, many have opined that an acquisition of this size could serve as a distraction for AMD that might hamper its steady string of on-time execution. Su explained that the company has a solid plan to remain on track:
"Well, we are continuing to stay laser-focused on execution. So I want you all to know that is ‘job one’ overall. I think we do have a very talented management team, and I think we have the desire to have a much bigger footprint in this industry,” she said. “And so Xilinx is the right next step for us. I'm quite confident that we can both execute on the base AMD business, as well as bring over Xilinx. The fact that Victor Peng, the current CEO of Xilinx, will join us is part of that strategy to ensure a seamless transition. These are the things that leaders have to do. We have to expand and scale, and we have the capability to do that. I very much think that we can do both."
AMD’s disruptive impact on the CPU market has been propelled by a pretty simple philosophy: More of everything. That approach has manifested itself primarily in the company’s push to higher core counts, forcing Intel to follow along in order to remain competitive. That trend has decelerated with the company’s latest Zen 3 processors, though, which come with the same core counts found with their predecessors.
This raises questions about whether it’s feasible to infuse more cores within the electrical and thermal confines of today’s systems, or if software even requires a jump to higher core counts. Su says that AMD will continue to expand core counts in the future:
“If you look at what we've done between Zen 2 and Zen three, as well as between the second- and third-generation EPYC and Ryzen 4000 and 5000, we really focused on increasing single-threaded performance, as well as Improving some of the latencies and overall systems, such that we've gotten tremendous gen-on-gen performance within the same process technology,” she said.
“So, all of that is in 7nm products, and we’ve probably been able to increase performance by 20%+, depending on which metric you're looking at. There will be more core counts in the future. I would not say that somehow 64 cores is the limit, but I think they will come as we scale other parts of the system, as well.”