Sony became AMD's largest customer last year, accounting for 16% of the company's revenue as its PlayStation 5 increased its lead over competitors. Sravan Kundojjala, a semiconductor industry analyst, noted that if Xilinx results are excluded, Sony accounts for 20% of AMD's revenue, probably making it the company's largest customer in recent history.
Indeed, the gaming business unit was AMD's largest revenue generator, which indicates that sales of system-on-chips for Microsoft's Xbox Series X|S consoles were also strong. AMD sold Sony some $3.776 billion worth of chips for PlayStation 5 game consoles in 2022, which accounted for 16% of the company's revenue for the year, according to the company's filing with the SEC.
Sony confirmed (opens in new tab) at CES that it had sold over 30 million PlayStation 5 game consoles. VGChartz (opens in new tab) estimates that by now, life-to-date sales of PS5 exceeded 31.77 million units. Microsoft’s Xbox Series X|S consoles are by far not as successful as Sony’s systems, with LTD shipments of around 20.68 million units, according to VGChartz.
In fact, AMD's gaming business unit — which sells discrete graphics processors for desktop graphics cards and notebooks as well as SoCs for game consoles — earned $6.805 billion in earnings and $953 million in profits last year and was the company's main source of revenue. Keeping in mind that in recent quarters the unit sales of AMD's standalone GPUs have declined (based on data from Jon Peddie Research), consoles SoCs accounted for the lion's share of AMD's gaming business unit revenue.
"Gaming revenue declined 7% year-over-year to $1.6 billion [in Q4 2022] as lower gaming graphics sales more than offset higher semi-custom revenue," said Lisa Su, chief executive of AMD, at the company's most recent earnings call (via SeekingAlpha). "Semi-custom SoC revenue grew year-over-year as demand for game consoles remained strong during the holidays. Gaming graphics revenue declined year-over-year as we further reduced desktop GPU downstream channel inventory."
But AMD's earnings from PlayStation 5 and Xbox Series S|X SoCs will likely decline in 2023 and onwards since sales of consoles usually peak in their third year and platform holders tend to renegotiate components pricing after that. Therefore, AMD's gaming revenue is set to drop in 2023 compared to 2022.
"Given where we are in the cycle, we would expect gaming to be down on a year-over-year basis," said Su.
Analysts and investors tend to praise AMD's data center EPYC processors as they have been the company's key profit driver for about six years now. In 2022, AMD's data center unit earned $6.043 billion in revenue and was behind the company's gaming unit ($6.805 billion) as well as client computing group ($6.201 billion). Yet, based on softening demand for the PC and game console cycle, it looks like AMD's data center business will become the company's main source of revenue in 2023.
I really just need games like Demons Souls and other exclusives to come to PC, eventually. I don't care if I have to wait two years, that's fine.
...and, for the first time ever, I see it in-stock @ Newegg, for the $499 list price. So, maybe she's right and supply finally is catching up with demand.