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"What cloud digestion?" AMD boosts 2021 guidance over $1b on hyperscale hunger

Lisa Su plays down ARM threat.

AMD has hiked guidance for full-year 2021 revenues by over $1 billion on a strong first quarter -- with revenue across the chipmaker's Enterprise, Embedded and Semi-custom segment surging 286% year-over-year to $1.35 billion, on strong growth in both semi-custom and EPYC processor sales.

AMD CEO Dr Lisa Su played down the threat from ARM-based chips on an earnings call, as analysts pressed the company on whether it would be building out its own ARM-based portfolio.

"In terms of whether we would do custom ARM designs, I think the answer is yes," said Dr Su. "That’s the whole idea of the semi-custom business. [But] I think it’s less about ARM versus x86 and much more about having the right IP in the right sort of combination to satisfy sort of the customer solutions.

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'What problem are you trying to solve? Let’s look at the collection of IP that we have and the capabilities that we have to help address that set of issues.'"

Cloud demand was "particularly strong" in the quarter as Tier 1 cloud providers expanded their EPYC processors deployments to power more of their internal infrastructure and introduced 11 new AMD powered instances, AMD said on an earnings call, adding that it expects the number of AMD powered cloud instances to double by the end of the year to 400 as Microsoft Azure, Amazon, Google, IBM, Oracle and Tencent add third gen EPYC processor-based offerings to their portfolio of cloud instances.

The earnings call came days after Intel reported data centre chip sales falling 20% on what it described as "cloud digestion". (Pressed by analysts on what made Intel think there would be a rebound — and that this was not part of a fundamental decline as cloud providers swapped to AMD and their own chips, Gelsinger said: “We work intimately with these customers... we know what their inventory levels are...”)

AMD Q1 2021 Earnings: Company investing more in dedicated substrate capacity

AMD reported overall Q1 revenues of $3.45 billion, up 93% from a year ago, and up 6% from the prior quarter. Pressed by by analysts on what gave the company the confidence to boost forward guidance to 50% year-on-year growth, versus previous expectations of 37%, CEO Dr Lisa Su said: "We’re on a product ramp cycle.

"The launch of the third-generation Milan has actually gone very, very well... We see good customer ordering patterns and strong backlog. And then, we have also seen that the supply chain has been tight overall for the semiconductor industry. And we’ve been working very closely with our supply chain partners. And so, we also have good visibility to additional supply as we go throughout the year. So, with all of that in place, I would say, we feel very good about how the year is shaping up."

Pressed on a global semiconductor supply crunch, she added: "The entire semiconductor supply chain is very, very tight... We have seen improvements that have led to the improved full year guide. We’re going to continue to work on that because right now, I would say the channel -- the inventories are very low throughout the entire supply chain, whether you talk about at our customers or in the channels. And so, there’s quite more that we would like to be able to do. That being the case, I think, we continue to work well with our partners and take lots of actions there. In the substrate side in particular, I think, there has been underinvestment in the industry. And so, we’ve taken the opportunity to invest in some substrate capacity dedicated to AMD, and that’ll be something that we continue to do going forward."

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