AMD's revenue from the sale of video chips fell by 48%

AMD published its financial results for the first quarter of the year, which indicated that revenue from the sale of video chips decreased by 48%.

AMD Earnings Report Details

According to AMD's report, the company's revenue was $5.47 billion for the first quarter, compared with the average analyst estimate of $5.46 billion. However, AMD's gaming segment brought in only $922 million in profit. This is 48% less than in the comparable period of the previous year ($1.757 billion) and 33% less than the last quarter ($1.368 billion).

In turn, operating profit from video chips amounted to $151 million, which is significantly less than the $314 million received a year earlier.

Reasons for the decline in income from video chips

The bulk of AMD's gaming business consists of video chips for Microsoft Xbox and Sony PlayStation consoles. These products have been on the market for five years, so demand for them is decreasing.

PC component revenue typically declines in the first quarter of each year. And the unsuccessful design of Radeon RX 7000M video cards for laptops also affected AMD's revenues.

In addition, enterprises seeking to implement generative AI are prioritizing spending on AI server processors, reducing demand for traditional GPUs. These GPUs cannot effectively solve complex AI problems.

Development prospects 

Even though the Radeon RX 7900 GRE is the best GPU, it's not enough to make the entire lineup competitive. As a result, AMD expects sales of its gaming solutions to decline by 30% year-on-year and predicts an even greater decline in the second half of the year.

In the future, the company plans to give priority to products that generate profit. These are processors and video cards for data centers. Thus, the revenue of the data center division jumped by 80% to $2.3 billion. Given this development scenario, AMD may leave the gaming market.