In the first quarter of 2024, AMD’s revenue from gaming solutions decreased by 48% year-on-year due to lower demand for discrete Radeon graphics cards and reduced sales of chips for PlayStation and Microsoft consoles. The company expects its gaming revenue to decline further in 2024 before recovering in 2025.
AMD earned $922 million from gaming graphics cards — almost half of the $1.757 billion in Q1 last year and 33% less than in the previous quarter ($1.368 billion). AMD’s gaming segment still posted an operating profit of $151 million, but this is a significant decline from $314 million a year ago. Profit from gaming solutions accounted for 16% of this in the first quarter of 2024 and 18% in the first quarter of 2023.
«Sales of semi-specialized SoCs in the first quarter declined in line with our forecasts as we are now in the fifth year of the console cycle. In the gaming graphics business, revenues have been declining year on year. We expanded our Radeon 7000 series family with the worldwide release of our Radeon RX 7900 GRE, and introduced our driver-based AMD Fluid Motion Frames technology, which can deliver high performance in thousands of games,» said AMD CFO Jean Hu during a conference call with analysts and investors, according to SeekingAlpha.
It is believed that chips for Microsoft’s Xbox Series X|S and Sony’s PlayStation 5 account for the lion’s share of AMD’s gaming business. These consoles have been on the market for five years, so demand for them is falling. The situation with discrete graphics cards is more complicated. Sales of desktop components decline seasonally in the first quarter of each year. Despite the fact that AMD increased its market share in the fourth quarter of 2023, controlling 19% of the market, according to Jon Peddie ResearchThe company sold significantly fewer graphics cards in the following quarter. Notebook solutions are affected to the same extent as desktop solutions, as they are sold in roughly the same numbers.
While the Radeon RX 7900 GRE is a good card, it’s not enough to make the entire lineup much more competitive. That’s why AMD expects gaming sales to fall by about 30% year-on-year in the first half of 2024, and expects even worse results in the second half of the year.
AMD’s forecasts indicate that neither Microsoft nor Sony plans to update their Xbox Series X|S or PlayStation 5 consoles this year, as AMD would otherwise expect gaming revenues to grow. The expectations may well mean that the company also does not have high expectations for discrete graphics card sales, and it is unlikely that notebook manufacturers will choose Radeon RX 7000M series products this late in their life cycle.
Unclear, whether Radeon RX 8000 graphics cards will be released with RDNA 4 architecture this year. If this happens, it is not known whether they will be sold in sufficient quantities to have a significant impact on sales. There are rumors that AMD may not even try to produce a top-end RDNA 4 chip and will choose the budget segment exclusively.
Source: Tom`s Hardware