Must-know: Investing in AMD


Aug. 18 2020, Updated 5:31 a.m. ET

AMD overview

Advanced Micro Devices Inc. (AMD) was founded in 1969. It’s a global semiconductor company. AMD designs, manufactures, and markets microprocessors for the computing, communications, and consumer electronics markets. AMD caters to the global semiconductor industry. It offers:

• x86 microprocessors for the commercial and consumer markets
• Embedded microprocessors for commercial, commercial client, and consumer markets
• Chipsets for desktop and notebook personal computers (or PCs), professional workstations, and servers
• Graphics, video, and multimedia products for desktop and notebook PCs—including home media PCs and professional workstations
• Servers and technology for game consoles

Intel (INTC) is a leading PC manufacturer. It’s the market leader in the semiconductor industry. According to Gartner, it has a 15.4% market share.

Operating segments

AMD generates revenues through two segments:

  1. Computing Solutions—mainly consisting of x86 microprocessors
  2. Graphics and Visual Solutions—mainly consisting of graphics processing units (or GPUs).

The company’s microprocessors and graphics processors are used in PCs, servers, and gaming systems. Starting on July 1, 2014, AMD had two new reportable segments:

  1. Computing and  Graphics segment
  2. Enterprise, Embedded, and Semi-Custom segment

As the above chart shows, Graphics and Visual Solutions contribute a large portion of the total revenues. Computing Solutions contributes ~40–41% to total revenues.

Top five customers

AMD’s top five customers—Hewlett-Packard Company (HPQ), Microsoft Corporation (MSFT), and Sony Corporation (SNE)—accounted for ~54% of net revenue during fiscal year 2013.

Diversified customer base

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Microprocessor customers include original equipment manufacturers (or OEMs), original design manufacturers (or ODMs), system builders, and independent distributors in domestic and international markets. Chipset product customers include PC, server OEMs, and contract manufacturers that build OEM motherboards. Its customers also include desktop and server motherboard manufacturers that incorporate chipsets into their channel motherboards.

Click here to learn more about AMD’s growth.


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