AMD’s Ryzen Threatens Intel in the PC Processor Market
Preview of AMD’s Ryzen
At the Deutsche Bank Technology Conference, AMD’s chief financial officer, Devinder Kumar, stated that the company is seeing growing adoption of Ryzen with all major PC OEMs announcing premium Ryzen-based desktop products. These OEMs include Acer, Dell, Asus, HP Inc. (HPQ), and Lenovo.
Kumar stated that Ryzen Threadripper, Ryzen 7, Ryzen 5, and Ryzen 3 helped AMD “play across the board.” The rich product mix increased AMD’s overall ASP (average selling price), thereby pulling the company’s CG (Computing and Graphics) segment out of multiyear losses.
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Sales of AMD’s Ryzen and Intel’s Core
AMD has been rolling out its Ryzen desktop processors in phases. According to sales data of German retailer Mindfactory, out of the total CPUs sold in March 2017, 72.4% were Intel processors and 27.6% were AMD’s Ryzen processors. This was the timeframe when AMD launched its first Ryzen 7 series.
The contribution of Ryzen in the retailer’s overall CPU sales increased to 36.5% in April 2017 as AMD ramped up the production of Ryzen 7 and launched the Ryzen 5 series.
Ryzen sales picked up from June 2017 onward as AMD ramped up production of its Ryzen 5 and launched the Ryzen 3 series. Ryzen’s sales contribution increased to 47.6% in June and 48.7% in July. The Ryzen 5 1600 processor, priced at $220, turned out to be the most popular AMD processor.
Ryzen surpassed Intel’s CPU sales on Mindfactory in August, with the former accounting for 56.1% of the retailer’s overall CPU sales for the month. This is because AMD launched its high-end Ryzen Threadripper processor.
The chart above shows that sales of Ryzen Threadripper 1950X, which is priced at $999, surpassed that of Intel’s competitive i9 7900X in August 2017.
This data is only applicable to one retailer. However, North American stores like Newegg and Amazon (AMZN) are also reporting a similar trend, indicating that the market is increasingly adopting Ryzen.
Impact on AMD’s Computing and Graphics earnings
The overall growth in Ryzen sales and increase in ASP contributed to 51% YoY (year-over-year) revenue growth of AMD’s CG segment. Another revenue driver was high graphics card demand from cryptocurrency miners.
In fiscal 2Q17, the CG segment reported operating profit for the first time in almost four years. However, the company’s operating expenses increased as it continues to launch new products. The company is in the middle of its Ryzen rollout. It plans to launch mobile variants of its Ryzen CPUs in the consumer space in 2H17 and the commercial space in 1Q18.
Next, we will compare the performance of AMD’s Ryzen with Intel’s Core processors and look at the latter’s response to increasing competition.