AMD just announced its Q1 2024 earnings with some turbulent news on the GPU front – as well as a clear focus on AI PCs when it comes to the Ryzen CPU side of the equation.
The First quarter results its gaming division saw revenue drop precipitously to $922 million, which is down 48% from the same quarter last year – and down 33% from the previous quarter, thanks to a “decline in semi-custom revenue and lower AMD revenue “Radeon GPU Sales.”
Semi-custom refers to console revenue, but it’s clear that Radeon graphics cards for PCs are struggling, as mentioned. Worse still, things won’t get better in every respect.
Wccftech reports that Jean Hu, Executive VP and CFO at AMD, noted: “We actually think the second half will be lower than the first half, which is basically how we look at the gaming industry this year. And at the same time, Gaming’s gross margin is lower than our company average. So overall the mix will help on the gross margin side, that’s just some color on the gaming side. But you’re right: the game in the second quarter is very bad.”
Interestingly enough, AMD’s main talking points on the CPU side have been Epyc processors (for servers) and Ryzen Strix Point, next-generation laptop chips that promise to significantly raise the bar for AI (with a very powerful NPU). Team Red CEO Lisa Su announced that both Zen 5-based processor ranges were now in testing, so are on track for a launch in the second half of 2024.
However, according to the Wccftech report, there was no mention of ‘Granite Ridge’ CPUs which are also based on Zen 5 and will be the chips used in desktop PCs.
Analysis: Should we worry about the future here?
The lack of mention of the Zen 5 desktop (Ryzen 9000) could be read as a bit concerning. It’s possible that these chips were mentioned and Wccftech didn’t pick up on it, but there’s certainly no mention of the next-gen Ryzen for desktop in the materials we’ve seen regarding AMD’s first-quarter fiscal disclosures.
Could this even mean that while Ryzen Strix Point APUs are on track, Ryzen 9000 might not be? We doubt it, and that’s too much in this story. All the rumors surrounding Ryzen 9000 – including the fact that this family name has now actually been used by two motherboard manufacturers in BIOS updates that pave the way for the next generation of CPUs – seem to indicate that the processors are staying the course. A third-quarter launch seems the most likely bet, and there’s certainly no way AMD has let the Ryzen 9000 slip into next year.
So don’t worry about that idea, but it’s telling that AMD has chosen to focus on Strix Point, and more broadly on AI PCs – that is, laptops with powerful NPUs to accelerate AI workloads (these NPUs of the next generation will be three times as fast or more, compared to current efforts).
This is even more food for thought about the push being made for AI PCs, combined with recent revelations that virtually every laptop manufacturer is behind these devices and will produce notebooks with Snapdragon X Elite (ARM) chips. These will be followed later in 2024 by Strix Point, as well as Lunar Lake CPUs from Intel in the same AI-boosting vein. (All NPUs from these CPU ranges will be in the same sort of 45-50 TOPS – trillions of operations per second – territory).
What about that big drop in gaming GPU revenue? That’s an obvious concern for AMD, even if it’s downplayed by its executives, which is of course the norm when it comes to a financial announcement.
It might not be too much of a surprise, considering AMD hasn’t made any major launches this year, with only a few new RDNA 3 offerings. Of these, the RX 7600 XT received a lukewarm reception. However, there’s also the RX 7900 GRE launching outside Asia – and it’s actually a surprisingly strong mid-range offering (after some initial issues were ironed out). In fact, the GRE currently tops our rankings of the best graphics cards, even if it’s still somewhat under the radar for some gamers.
We don’t expect much else from AMD until the launch of its next-generation RDNA 4 graphics cards, and again, as with Ryzen 9000, we’re hoping for a third-quarter launch. Especially if sales of the RX 7000 aren’t as strong as the rumor mill would have us believe, which seems to be the case based on the current state of Team Red’s coffers.
RDNA 4 could well turn things around, with some seriously powerful mid-range offerings if the rumor mill is right.
