Why AMD is faring much better than Intel in the same tough economy

AMD and Intel are fierce competitors successful a hard marketplace for chips, but 1 has a overmuch brighter short-term outlook than the other. While Intel is expecting declines crossed the board, AMD's information halfway concern is increasing with the instauration of a caller chip, and its pandemic-era acquisition of specialty chip-maker Xilinx is besides contributing growth.

On Tuesday, AMD said it expected $5.3 cardinal successful income successful the March quarter, which would beryllium a 10% year-over-year diminution successful sales.

That's not a rosy outlook, but it's overmuch stronger than Intel's usher for the March quarter. Last week, Intel said it expected astir $11 billion successful sales, which would beryllium a 40% year-over-year decline.

Neither chipmaker gave full-year guidance, citing economical uncertainty. "We privation to beryllium cautious evidently heading into the twelvemonth conscionable fixed the macro environment," AMD CEO Lisa Su told analysts connected the company's net call.

But the banal marketplace is reflecting however the 2 companies are diverging.

After Intel's report past week, it fell implicit 7% successful extended trading. AMD roseate nether 2% aft its net study connected Tuesday.

Both companies are facing a slump successful PC market, aft 2 years of elevated income during the Covid pandemic, arsenic radical bought caller computers to enactment oregon spell to schoolhouse from home.

AMD's PC spot radical gross declined 51% connected a year-over-year ground successful the 4th quarter. Intel's declined 36%, but from a larger base. Overall, AMD CEO Lisa Su said connected Tuesday that it expects the full PC marketplace to beryllium down 10% successful 2023, but said that AMD really gained marketplace stock successful the 4th quarter.

"It's just to accidental that we judge fixed wherever we are with the lawsuit inventory levels, the archetypal fractional volition surely beryllium lower. We expect immoderate betterment successful the 2nd half," Su said.

The companies diverge much dramatically erstwhile it comes to information halfway chips.

Sales for Intel's datacenter radical fell 33% from the erstwhile twelvemonth to $4.3 billion, partially due to the fact that of a precocious merchandise of its latest server spot family, Sapphire Rapids.

AMD's information halfway concern is increasing strongly, however, up 42% connected an yearly ground to $1.7 billion. AMD released its latest information halfway chips, the fourth-generation Epyc processors, successful November. AMD expects its information halfway concern to turn this twelvemonth portion PC chips and graphics processors for gaming decline.

AMD's information halfway concern faces pugnacious macroeconomic conditions too, but connected Tuesday, Su signaled to investors that its gains would travel astatine Intel's expense.

"In our Embedded and Data Center segments, we judge we are good positioned to turn gross and summation stock successful 2023 based connected the spot of our competitory positioning and leadership," Su said.

AMD besides had occurrence with its 2020 acquisition of Xilinx, which it bought for $35 billion. Xilinx, which makes processors that execute specialized tasks similar encryption oregon video compression, was the main contributor to $1.4 cardinal successful income for AMD's embedded division, an yearly summation of 1,868%, according to the company.