AMD warns of weak Q3 revenue as PC market weaker than expected

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Advanced Micro Devices announced in advance that its third quarter results will be lower than its previous guidance due to a weaker PC market and supply chain challenges.

It's the latest company to say it will have a weak quarter, following Nvidia's announcement that demand in China is falling off a cliff and it is slowing shipments to clear supply channels. inventory.

AMD said it expects to report third-quarter revenue of $5.6 billion, down from previous expectations of $6.7 billion. AMD's stock is down 3.8% in after-hours trading at $65.28 per share. The $55.6 billion was up 29% from the third quarter of 2021 and down 15% from the prior quarter.

AMD now expects non-GAAP gross margin to be 50%, down from the previous expectation of 54%.

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Customer revenue was surprisingly low at around $1 billion, down 40% from a year ago. Games accounted for approximately $1.6 billion, up 14%. And data center activity was $1.6 billion, up 45%. AMD said the embedded business, which benefited from its acquisition of Xilinx, was about $1.3 billion.

AMD said the shortfall in gross margin was due to lower revenue from lower shipments of customer processor units and ASPs, as well as about $160 million in inventory, pricing and related charges the company took during the quarter for PC CPU and GPU products.

“While we anticipated a weak PC market, sales to our PC OEMs and to the channel were significantly below expectations as our partners focused on reducing inventory levels throughout the PC supply chain," AMD said.

The company announces its full results on November 1. It expects third-quarter operating expenses to be about $2.4 billion and non-GAAP operating expenses to be about $1.5 billion. Non-GAAP operating expenses were lower than previous expectations by $1.6 billion, due to lower variable compensation expenses in the quarter.

"The PC market weakened significantly during the quarter," AMD CEO Lisa Su said in a statement. “While our product pipeline remains very strong, macroeconomic conditions have resulted in weaker than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate current market conditions , we are pleased with the performance of our Data Center, Embedded and Gaming segments, as well as the strength of our diversified business model and balance sheet.We remain focused on delivering our leading product roadmap and we We look forward to launching our next-generation 5nm data center and graphics products later this quarter.”

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