AMD expects to become a chipmaker that banks $40 billion in annual sales in the next three years. In 2021, AMD reported record revenue of $16.4 billion. Let that sink in.
On Thursday, at the company’s first financial state of the union in two years, AMD CEO Lisa Su unpacked how the business plans to achieve the $40 billion revenue target by 2025: in large part, through data center chips. Company-wide, AMD is targeting a $300 billion slice of the overall chip market, and it thinks $125 billion of that target will go to chips that power servers, AI, networking infrastructure and graphics.
“So, what’s happened in the data centers?” Su said. “First, we've seen a tremendous increase in cloud demand and everything that's going on in the data center. We've seen a tremendous increase in AI and sort of the demand for AI workloads. We've added [total market size] when we think about the networking and telco and other opportunities.”
Underlying the message is a seemingly undeniable reality. The world needs more computing horsepower, and the demand for silicon is only going to get more intense as tools such as AI become commonplace. Inside the Santa Clara, California conference room populated by Wall Street’s sell-side analysts seated in white, leather chairs, AMD executives made the case that the company was going to ride that computing wave.
“We still are underrepresented in the market,” Su said of the data center processor market. According to Mercury Research, in the first quarter of 2022, AMD had 11.6% of the market for x86 data center chips, up from 8.9% last year.
AMD made a big show of its forthcoming data center chips, talking up the performance gains resulting from the company’s (in its own eyes) superior designs. Its partnership with TSMC is part of that success, and AMD must develop its latest designs together with the manufacturer in order to ensure it can take advantage of the latest fabrication techniques to eke the most performance out of each piece of silicon.
Part of AMD’s plans for the data center and AI include its $35 billion acquisition of Xilinx. The addition of the programmable chipmaker added billions of dollars of new sales and new markets in cars, wireless tech and embedded chips used by the military and in health care. But Xilinx also brought technology that will help broaden AMD’s efforts in the data center.
AMD was once a clear second-class citizen next to Intel, and that appears dead. Gone are the days of the disastrous Barcelona server chip rollout and the tumultuous period following its critical decision to get out of the chip-manufacturing business, which in the end served it well. If the company manages to achieve its projections, it will have cemented the decade-long effort by Su to transform the company.