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Strong EPYC CPU Adoption Drove AMD’s Data Center Business in 2018

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AMD gains server CPU market share

In 2018, Advanced Micro Devices (AMD) saw the strong adoption of its first-generation EPYC server CPU (central processing unit), Naples, across the cloud, HPC (high-performance computing), and virtualized enterprises.

On AMD’s fourth-quarter earnings call, its CEO, Lisa Su, confirmed that the company had earned a mid-single-digit server CPU market share as of the end of 2018, up from a 0% share in 2017.

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The market share gain was visible in AMD’s EPYC shipments. Its EPYC server CPU shipments more than doubled sequentially, whereas Intel’s (INTC) data center CPU shipments fell 3% sequentially in the quarter. Its EPYC shipments rose as it was adopted by Amazon Web Services (AMZN) and Microsoft Azure (MSFT) and for HPC purposes by Procter & Gamble, the US Department of Energy, the University of Stuttgart’s High-Performance Computing Center, and Lawrence Livermore Labs.

Su stated that data center CPUs and GPUs (graphics processing unit) accounted for a mid-teen percentage of the company’s fourth-quarter revenue, equating to $213 million. She added that the CPU and GPU revenue mixes were roughly the same at over $100 million.

Data center profitability

While the company’s data center revenue rose, its data center business reported losses, as it had spent a large amount on go-to-market expenses. The company will have to ramp up the production of its server CPUs to bring the business back to profit. Its expenses are currently high, as it’s bringing its next-generation Rome server CPU to the market by mid-2019.

On AMD’s fourth-quarter earnings call, its CFO, Devinder Kumar, refused to provide estimates for its data center profits. Instead, he said, “We’ll see how it evolves over the year.” Such a statement comes as AMD faces the risk of the slow adoption of its new Rome server CPU. It remains to be seen whether Rome can deliver similar or better growth than its predecessor, Naples, in a weak demand environment.

Next, we’ll see how 2019 looks for AMD’s data center business.

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