AMD this week posted its all-time-high quarterly revenue of $3.85 billion. The company's sales in Q2 2021 were up 99% compared to the same period a year ago due to extraordinary demand for the company's Epyc processors for servers, Ryzen processors for client PCs, Radeon GPUs, and semi-custom system-on-chips (SoCs) for game consoles.
AMD's revenue has been growing steadily since the company introduced its Ryzen and Epyc processors in 2017 and started to win server designs with major customers in 2018. Along with revenue, AMD's profitability is also growing. For the second quarter 2021, the company posted $710 million in net income (an increase of 352% year-over-year), 48% gross margin, and $0.58 earnings per share. Cash from operations was $952 million, up $888 million in the previous quarter and $243 million a year ago. Cash, cash equivalents and short-term investments were $3.79 billion at the end of the quarter.
Client Segment
CPUs and GPUs for client PCs remain AMD's bread and butter. The company's Computing and Graphics business unit earned $2.25 billion, up 65% year-over-year (YoY) and 7% quarter-over-quarter (QoQ). Operating income of the unit was $526 million, up from $200 million in the same period last year.
Demand for AMD's client Ryzen 4000 and 5000-series processors based on the Zen 2 and Zen 3 microarchitectures remains very high, and AMD can barely meet it (or rather cannot, since many SKUs are not available). Since AMD prioritizes production of higher-end processors that sell at premium prices, average selling price (ASP) of the company's CPUs increases, which is part of why the company set records for revenue and profits this past quarter.
Demand for AMD's Radeon RX 6000-series graphics cards is also very high and the company says that its GPU ASP grew year-over-year and quarter-over-quarter, driven by sales of Radeon RX 6700/6800/6900 graphics cards as well as Instinct GPUs for datacenters. Unfortunately, the company says nothing about unit shipments of its GPUs. Like Nvidia's RTX 30-series GPUs, all of AMD's RX 6000-series cards generally remain sold out (at least in the U.S.)
Server and Semi-Custom Segment
AMD's Enterprise, Embedded, and Semi-Custom business unit posted revenues of $1.60 billion for Q2 2021, which was up massive 183% YoY, and a 19% growth QoQ. Operating income of the segment was $398 million compared to $277 million in the prior quarter and $33 million a year ago.
AMD says that its EESC unit's sales increases were driven by persistently high demand for the company's Epyc processors for servers, as well as SoCs for game consoles. Epyc CPUs now probably command a larger share of EESC's revenue given their very high ASP and higher volumes, now that they have won multiple contracts with exascalers, enterprises, and leading server makers. At the same time, Sony has recently reported sales of over 10 million PlayStation 5 consoles.
Outlook
Traditionally, revenues of semiconductor companies peak in the third quarter as manufacturers of virtually all types of computers and equipment buy loads of chips ahead of back-to-school and holiday seasons. In AMD's case, it means increased demand for its Ryzen CPUs from PC makers, Epyc processors from server manufacturers, console SoCs from Microsoft and Sony, as well as Radeon GPUs from the channel.
The company now expects it will set another record quarter, with revenue set to hit $4.1 billion ± $100 million, an increase of approximately 46% annually and approximately 6% sequentially.
