Computer: Chip group AMD defies weak PC market

computer
Chip group AMD defies weak PC market

The company logo of the US chip manufacturer AMD in front of the former location in Dresden. photo

© Ralf Hirschberger/dpa-Zentralbild/dpa

After an acute shortage of chips during the pandemic, semiconductor companies are now faced with an oversupply. PCs and smartphones are bought much less. AMD is coping better than others so far.

Thanks to good business with data centers and the aviation and automotive industries, the chip company AMD is getting through the current turbulence in the semiconductor industry better than its rivals. AMD’s growth in these areas more than offset the slump in its personal computer processor business last quarter. South Korean flash memory specialist Hynix, on the other hand, was hit hard by the drop in prices in the business and slipped deep into the red.

Overall, AMD’s quarterly sales increased by 16 percent year-on-year to around $5.6 billion (5.1 billion euros), as the Intel competitor announced after the US stock market closed on Tuesday. The bottom line was a slim profit of $21 million after being in the black from $974 million a year earlier.

In PC chips, AMD sales halved year-on-year to just over $900 million. The division posted an operating loss of $152 million after a positive result of $530 million in the same quarter last year. In contrast, in the business with data centers there was an increase in sales from 1.16 to 1.65 billion dollars and an operating profit of 444 million dollars.

Lucky Strike Xilinx

The purchase of Xilinx, which specializes in chip solutions for aircraft, cars and various electronic devices, has paid off for AMD. Sales in the division jumped to nearly $1.4 billion from the $71 million purchase a year ago. AMD shares temporarily rose by around three percent in premarket trading on Wednesday.

AMD’s numbers stand in sharp contrast to those of major rival Intel, which also saw its data center business shrink by a third last quarter. AMD had brought new chip generations onto the market faster, while Intel was slowed down by problems in development.

Hynix, meanwhile, was also hit by falling prices and excessive inventories because the South Korean group Intel had taken over the flash memory business. In the past quarter, the second largest memory chip manufacturer in the world posted an operating loss of 1.7 trillion won (almost 1.3 billion euros). Hynix had achieved an operating profit of around 4.2 trillion won in the same period last year. The bottom line was red numbers of 3.5 trillion won. Sales fell 38 percent to just under 7.7 trillion won.

According to calculations by the analysis company Gartner, sales of personal computers fell by a good 28 percent in the past quarter. That was the sharpest decline since Gartner began tracking the market in the mid-1990s. At the beginning of the corona pandemic, sales of computers – especially notebooks – had grown explosively. For smartphones, the market research company Canalys calculated a drop in sales of 18 percent for the past quarter.

dpa

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