The most recent period is the earnings season of US stocks. The last article sorted out Intel’s earnings for this quarter. Then in this article, let’s take a look at the earnings of his old rival AMD.
Let’s talk briefly first, why is a chip engineer like Lao Shi so interested in financial reports?
In my opinion, as practitioners in the chip industry, whether we invest in stocks or not, it is necessary to look at the financial reports of these listed chip companies or high-tech companies, becauseFrom it, you can see many general directions about the development of companies and technologies, and learn about some industry development trends.After all, in real life, it is rare to hear big-name CEOs such as Su Zifeng, Huang Renxun, and Elon Musk directly analyze and explain the company’s own operations, investment and development vision.
Furthermore, I personally believe that no matter what career you are engaged in, it is very necessary to continuously improve your financial quotient. Because it can better help us manage our assets and wealth without limiting ourselves to a single source of income, which is especially important for a “worker”.
The cultivation of financial quotient has nothing to do with the amount of assets. Whether you have 10,000 or 1 million in the bank, the cultivation of financial quotient is a must. More importantly, in the current education system, it does not teach us how to manage money and how to cultivate financial quotient. It even regards the word “money” as the source of evil and avoids it. This is also me personally. experience. So in my opinion, reading financial reports is one of the better means to improve financial quotient.
Next, we will briefly sort out AMD’s financial report from the aspects of AMD’s overall financial situation in this quarter and the entire fiscal year, the development of various departments, and the outlook for the next quarter. At the same time, because AMD acquired Xilinx, an FPGA company, I will also look at Xilinx’s financial report this quarter and make a simple comparison with Intel, hoping to help everyone.
AMD 2020 Fourth Quarter Earnings Overview
After the stock market closed on January 26, AMD released its fourth-quarter 2020 and full-year 2020 financial results. The financial report shows that AMD continues to maintain a very strong financial position, and various financial indicators including revenue, profit, earnings per share, etc. have achieved very large growth.
However, in the following days, AMD’s stock price fell one after another, and the stock price has fallen by 10% in a week. Next we’ll see what’s going on.
Overall, AMD’s total revenue in the fourth quarter was $3.244 billion, compared with $2.127 billion in the same period last year, an increase of 53% year-on-year, much higher than the market’s expected $3.02 billion, and higher than AMD’s own expected revenue. The upper end of the closing range, which is $3.1 billion. It is worth noting that this is AMD’s fifth consecutive quarter of revenue growth of more than 25% year-on-year.
In terms of profit, the gross profit margin in the fourth quarter was 45%, an increase of 2 percentage points year-on-year, but slightly lower than the 45.1% expected by analysts. The net profit was US$1.781 billion, an increase of 948% compared with the net profit of US$170 million in the same period last year. You are right, the net profit has increased by nearly 9.5 times.
Additionally, AMD’s EPS was $1.45 in the quarter, compared to $0.15 in the year-ago quarter, an increase of 867% year over year. Then this quarter, the company’s cash and cash equivalents, as well as financial indicators such as cash flow generated, also achieved substantial year-on-year and quarter-on-quarter growth.
Looking at this quarter’s earnings, AMD’s financials and growth are pretty sexy. Compared with the old rival Intel, various indicators have declined to varying degrees. In addition to the gross profit margin of AMD, which is not as good as Intel’s 56.8%, other aspects including revenue, profit, income and other aspects have maintained extremely rapid growth.
Let’s take a look at AMD’s data for the entire fiscal year of 2020. Total revenue was $9.76 billion, up 45% year-over-year, beating market expectations of $9.54 billion and hitting a new all-time high. Gross profit margin was 45%, a year-on-year increase of 2 percentage points. Gross profit was US$4.347 billion, a year-on-year increase of 52%; net profit was US$2.49 billion, a year-on-year increase of 630%. Earnings per share were $2.06, up 587% year over year. Cash flow was $770 million, an increase of 182% year-over-year.
After reading these data, I have to pay tribute to AMD’s CEO Su Zifeng again. Including this quarter and this fiscal year, she once again led AMD to set records. It is worth mentioning that Su Zifeng was selected as the second business person of the year by Fortune magazine in 2020, second only to Elon Musk, the Iron Man of Silicon Valley. Of course, I personally have always believed that Su Ma is the strongest CEO on the surface of the current chip and semiconductor industry, and she does not accept any refutation.
Computing and Graphics Business Unit Performance
AMD mainly has two main business groups, one is the so-called Computing and Graphics Segment, which mainly focuses on the personal computer field, and the other is mainly related to enterprise, embedded and semi-custom computing. Business (Enterprise, Embedded and Semi-Custom Segment). Next, let’s take a look at the performance of these two business groups in this quarter.
First look at CG, the Computing and Graphics Division, whose main products include desktop and notebook CPUs, as well as the related graphics card business. In the quarter, overall revenue for this segment was $1.96 billion, an increase of 18% year-over-year, mainly driven by strong sales of Ryzen processors.
In particular, I took a look at the minutes of this earnings call, where Su Zifeng mentioned that the entire PC market has grown by about 13% in 2020, but AMD has grown by more than 50% in the PC processor segment, which includes both Desktop also includes mobile. For desktop processors, Su Ma emphasized that the sales of the Ryzen 5000 processor based on the Zen3 architecture were particularly strong, with quarterly sales at least doubling compared to any previous quarter in which the Ryzen processor was released.
For mobile, Ryzen 4000-based notebook sales also set quarterly and annual sales records. In 2020, there are more than 100 Ryzen 4000-based notebook products introduced to the market.
In addition, at the just-concluded International Consumer Electronics Show CES, AMD also released the Ryzen 5000 mobile processor in the keynote speech. However, this release has been criticized by many people. For example, the famous YouTube channel Gamers Nexers mentioned in the previous article said that this is the most boring Keynote he has ever seen. He also made a statistic (see the picture below) that in this nearly one-hour speech, there are only three points in total. More than a few minutes are spent introducing new products, and most of the remaining time is spent in various business exchanges, executive interviews and other awkward chats.
If combined with the previous Intel conference, we can see that AMD never mentions itself in the conference, but the competitor Intel will keep mentioning AMD in the conference, and the operations of both are very confusing…
Enterprise, Embedded and Semi-Custom Business Unit Performance
Well, let’s take a look at the situation of AMD’s enterprise, embedded and semi-custom division EESC. Friends who have followed me for a long time should know that this part of the business is my focus area, especially its server-related business. This is the most important battlefield for AMD and Intel to compete in the future.
During the quarter, EESC’s total revenue reached $1.284 billion, an increase of 176% year over year. These included record revenue from the server business in the cloud and enterprise sectors, and sales of server CPUs doubling from last year, all very strong numbers. Many cloud computing providers, including Google, Microsoft, and Tencent, are expanding the use of EPYC processors, and companies such as Alibaba, Amazon AWS, and Oracle are deploying AMD CPU-based computing instances.
In addition, Su Zifeng also mentioned at CES that the third-generation EPYC processor, code-named Milan, will be officially released in March this year. The performance of Milan, especially whether it can win more share from Intel in the server market, is the focus of the industry.
In addition to the server business, the semi-custom business also saw strong growth, mainly driven by a new generation of game consoles, as both Microsoft’s Xbox and Sony’s PS5 are based on AMD’s processors and GPUs. However, due to the huge demand, there seems to be some problems with the current production capacity, and this situation is expected to continue in the first half of this year.
Xilinx Xilinx new quarter financial report interpretation
After talking about these two large business groups of AMD, let’s briefly talk about Xilinx’s financial report. The reason why I say Xilinx is because AMD announced that it will acquire Xilinx with $35 billion in stock. For a detailed interpretation of this matter, you can read the previous article “AMD Acquires Xilinx: The Mental Journey from a Poor Farmer to a Landlord” .
On January 27, Xilinx released its latest quarterly earnings report. According to the financial report, Xilinx’s revenue this quarter reached 803 million US dollars, an increase of 11% year-on-year, and also exceeded market expectations.
Among them, the wired and wireless communications business unit increased by 2%, which was mainly driven by the performance brought by the global deployment of 5G, which formed a certain contrast with the PSG of Intel’s FPGA division, whose overall revenue fell by 16% year-on-year in the quarter , mainly affected by the 5G commercial shift to ASIC solutions.
In addition, Xilinx’s automotive and consumer business unit revenue increased 14%, with the automotive business setting a revenue record. The Aerospace Military Industrial and Test segment grew 25% year over year, but the Data Center segment declined 15% year over year and plunged 45% sequentially. According to Xilinx, this is mainly due to the impact of the U.S. Department of Commerce’s entity list, and some companies came to a record wave of data center-related centralized purchases in the last quarter. So naturally there was a pullback this quarter.
So overall, Xilinx’s performance and financials for the quarter are pretty good. Because it is in the process of acquisition, Xilinx did not hold an earnings conference call, nor did it give a future performance outlook.
AMD’s outlook for the next quarter
Finally, let’s take a look at AMD’s outlook for the next quarter. AMD expects revenue in the first quarter of this year to be around $3.2 billion, representing a 79% year-over-year increase. Full-year revenue is expected to be $13.4 billion, an increase of 37%, which also means that AMD will set another revenue record in 2021.
So the question is, why have the stock prices of AMD and Xilinx dropped in the past few days after the release of the financial report?
As we all know, AMD’s stock price has skyrocketed in the past few years, from about two dollars in 2016, it has soared to the current eighty or ninety dollars. In 2020, AMD shares nearly doubled, far outpacing the Philadelphia Semiconductor Index’s 50% gain, while Intel’s shares fell 15% during that time.
But from the last quarter, we began to see a slowdown in the growth rate of AMD’s stock price. AMD shares rose 12% in the fourth quarter, in line with the S&P broader market, but below the 25% rise in the Philadelphia Semiconductor Index.
In order to explore the reasons, many people are more concerned about AMD’s supply chain and chip production capacity. In this quarter’s earnings meeting,Su Zifeng also admitted that AMD also encountered certain capacity problems at the end of the year due to higher-than-expected demand.However, these capacity constraints are mainly concentrated in the low-end PC market and the gaming market, and AMD expects that its production capacity in 2021 should meet current demand expectations.
In addition, U.S. stocks have been undergoing general corrections recently, and AMD is no exception, which is also a manifestation of the normal operation of the capital market. Another reason for the decline in AMD’s stock price, perhaps a deeper reason, is that the market is also looking at AMD’s next development. Especially under the premise of creating a growth miracle in the previous two years, whether AMD can further break the circle, especially in the data center field, including whether it can integrate the FPGA business well after the sky-high acquisition of Xilinx, these are all It is the focus of investors on the sidelines.
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