Will AMD Perform Better than Intel in 2019?



Semiconductor industry’s full-year 2019 guidance

Previously, we saw that Advanced Micro Devices (AMD), NVIDIA (NVDA), and Intel (INTC) enjoyed strong double-digit annual revenue growth in 2018 as a better-than-expected first half offset the demand weakness in the second half. This trend is expected to reverse in 2019.

In the first quarter of 2019, Intel and AMD expect to report above average seasonal declines as weak holiday season sales created excess semiconductor inventory in the channel. The consumer demand is expected to remain slow in the second quarter amid the weak macroeconomic environment and pick up in the second half of 2019 as excess semiconductor inventory is absorbed and new products hit the market.

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AMD’s full-year 2019 guidance

For the full-year 2019, AMD expects revenue to rise in the high single digits to around $7 billion driven by strong growth in Ryzen PC and EPYC server CPUs (central processing unit) and Radeon data center GPU (graphics processing unit). AMD’s high-single-digit growth rate is slower than its 2017 and 2018 growth rate of over 20% YoY. This slowdown comes as strength in PC and datacenter is offset by weakness in consumer GPU and semi-custom.

At the fourth-quarter 2018 earnings call, AMD’s CEO Lisa Su stated that she expects consumer GPU revenue to fall 10% YoY and semi-custom revenue to fall 20% YoY in full-year 2019. The semi-custom revenue is expected to fall as Sony’s (SNE) PlayStation 4 and Microsoft’s (MSFT) Xbox One, which are powered by AMD’s semi-custom chips, enter their seventh year of the product cycle. The growth in this area will likely pick up in 2020 when the companies launch next-generation game consoles.

The consumer GPU revenue is expected to fall in the full-year 2019 as a first-half sales decline will likely more than offset seasonal growth in the second half.

Intel expects 2019 revenue to grow just 1% as PC demand remains flat and data center demand slows. As Intel is a leader in these two markets, its growth is affected by the overall slowdown in the market. Despite the slowdown, AMD expects revenue to grow in the high single digits in 2019 driven by market share gains. NVIDIA is yet to give its guidance for the calendar year 2019.

Next, we will see how AMD’s revenue could grow throughout 2019.

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