AMD: Enterprise, Cloud Driving Significant EPYC 'Rome' Sales Ramp

'Compared to our first-generation EPYC processors, we have more than twice the number of platforms in development with a larger set of partners. We also have four times more enterprise and cloud customers actively engaged on deployments prior to launch,' AMD CEO Lisa Su says of the forthcoming second-generation EPYC launch.

AMD CEO Lisa Su said sales of the chipmaker's forthcoming EPYC "Rome" processors are "on track to ramp significantly faster" than its first-generation server CPUs as a result of heightened interest from enterprise and cloud customers.

The Santa Clara, Calif.-based company announced during its second-quarter earnings call that it will launch its second-generation EPYC processors next week on Aug. 7, opening a new challenge against Intel's second-generation Xeon scalable processors that launched in April.

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"Compared to our first-generation EPYC processors, we have more than twice the number of platforms in development with a larger set of partners," Su said. "We also have four times more enterprise and cloud customers actively engaged on deployments prior to launch."

But while the company is expecting a revenue boost from its new EPYC processors, as well as its new Ryzen 3000 desktop processors and Radeon RX GPUs, the chipmaker downgraded its outlook for full-year revenue growth to mid-single digits from the previously provided high-single digits growth figure.

The company's stock price was down as much as 7 percent in after-hours trading Tuesday.

Among the factors dragging revenue growth is lower-than-expected sales from Microsoft's Xbox One and Sony's PlayStation 4 consoles, both of which run on custom AMD chips. Both video game consoles are in the seventh year of their lifecycles, but Su reminded analysts that the company has chip deals for new consoles from Microsoft and Sony that are coming out in 2020 or later. Su said the company was also affected by the U.S. Department of Commerce's blacklisting of Chinese companies, which includes a joint venture AMD has in China called Higon.

AMD's second-quarter revenue was $1.53 billion, a 13 percent decrease from the same period last year and above Wall Street's expectations. The company's net earnings were 8 cents per share, down from the 14 cents per share figure in last year's second quarter and in line with analyst estimates.

The company largely attributed its double-digit declined in the second quarter to cryptocurrency miners no longer using the company's GPUs, which contributed roughly $106 million, or approximately 6 percent, of the company's revenue in the second quarter of last year.

Su said the company expects revenue to start growing again in the third quarter, for which the company projected sales to increase 9 percent to $1.8 billion, plus or minus $50 million, due to the ramp in sales from the company's new EPYC, Ryzen and Radeon products. AMD's previously announced deal to develop GPUs for mobile Samsung devices is also expected to boost the company's 2019 sales by roughly $100 million, according to Su.

"As we complete the first half of 2019, we have reached a significant inflection point for the company as we enter our next phase of growth with the most competitive product portfolio in our history," she said.