AMD 3분기 실적 예상치 상회(2021.10.27)

2021.10.27

 

AMD 장 마감후 3분기 호실적 발표. 다음 분기 실적 전망치도 시장 컨센서스 상회.

데이터센터 부문 매출이 전년 동기대비 2배로 증가.

매출은 43.1억달러로 시장 예상치를 2억달러 상회.

매출총이익은 48%.

2021년 전체 매출은 전년대비 65% 증가할 것으로 예상.

 

4분기 실적 예상치는 매출이 시장 컨센서를 42.5억달러를 상회하는 45억달러(플마 1억달러)를 제시.

매출 총이익 49.5% 전망.

(분석: 지난주 인텔은 실적 발표에서 다음 분기 매출 전망치를 시장예상치에 못미치고,감소하는 것으로 전망하며

다음날 11.68%의 인텔의 주가 하락을 이끌었다. 인텔은 AMD에게 시장점유율을 빼앗긴 것이지 시장 자체의

문제가 아닌 것을 이번 AMD의 실적이 보여주었다.)

 

Advanced Micro Devices EPS beats by $0.07, beats on revenue | Seeking Alpha

Oct. 26, 2021 4:19 PM ET

Advanced Micro Devices, Inc. (AMD)By: Jignesh Mehta, SA News Editor107 Comments

• Advanced Micro Devices (NASDAQ:AMD): Q3 Non-GAAP EPS of $0.73 beats by $0.07; GAAP EPS of $0.75 beats by $0.14.
• Revenue of $4.31B (+53.9% Y/Y) beats by $200M.
• Press Release
• Q3 non-GAAP gross margin of 48% vs. a consensus of 48%.
• For Q4, AMD guides revenue of ~$4.5B (consensus: $4.25B), plus or minus $100M, and non-GAAP gross margin of 49.5%.
• For the full year 2021, AMD now expects revenue to grow approximately 65 percent driven by growth across all businesses, up from prior guidance of 60 percent growth. AMD expects non-GAAP gross margin to be approximately 48 percent for the full year 2021.

• Read Now: AMD tops forecasts as data-center sales lead earnings results

AMD tops forecasts as data-center sales lead earnings results

 

• Advanced Micro Devices (NASDAQ:AMD) on Tuesday reported better-than-expected third-quarter results fueled by data center sales that doubled from the same period a year ago.
• 데이터센터 부문 매출이 작년 동기대비 배이상 증가한 덕택에 예상보다 좋은 3분기 실적 발표.

 

• After the close of trading AMD (AMD) said that for the period ending Sept. 25, it eared 73 cents a share, excluding one-time items, on revenue of $4.3 billion, compared with earnings of 41 cents a share, on $2.8 billion in sales, in the third quarter of 2020. The results topped the forecasts of Wall Street analysts, who had forecast AMD to earn 66 cents a share on revenue of $4.11 billion.
• AMD Chief Executive Lisa Su said in a statement that in adding to data center sales doubling from a year ago, the company saw particular strength from shipments of the newest version of its Epyc computer processors and business in general "significantly accelerated" during the quarter.

 

• Computing and graphics segment revenue climbed 44% from a year ago, to $2.4 billion, on higher sales of AMD's Ryzen, Radeon and AMD Instinct processor sales. Enterprise, Embedded and Semi-Custom segment revenue totaled $1.9 billion, up 69% from last year's third quarter.
• 컴퓨터와 그래픽 부문은 라이젠 CPU와 라데온 매출 증가로 전년대비 44% 증가한 24억달러 달성.

 

• In late September, Su said she sees the component shortage impacting the semiconductor market to ease by next year.

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Advanced Micro Devices, Inc. (AMD) CEO Lisa Su on Q3 2021 Results - Earnings Call Transcript | Seeking Alpha

Advanced Micro Devices, Inc. (NASDAQ:AMD) Q3 2021 Earnings Conference Call October 26, 2021 5:00 PM ET

Company Participants

Laura Graves – Corporate Vice President, Investor Relations

Lisa Su – President and Chief Executive Officer

Devinder Kumar – Executive Vice President, Chief Financial Officer and Treasurer

Conference Call Participants

Blayne Curtis – Barclays

Vivek Arya – Bank of America

Matt Ramsay – Cowen

Toshiya Hari – Goldman Sachs

Stacy Rasgon – Bernstein Research

Joe Moore – Morgan Stanley

Aaron Rakers – Wells Fargo

John Pitzer – Credit Suisse

Chris Caso – Raymond James

Ross Seymore – Deutsche Bank

Timothy Arcuri – UBS

 

Operator

Hello, and welcome to the AMD Third Quarter 2021 earnings call and webcast. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Laura Graves, Corporate Vice President Investor Relations. Please go ahead, Laura.

Laura Graves

Thank you and welcome to AMD's Third Quarter 2021 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings press release and accompanying slideware. If you have not reviewed these documents yet, they can be found on the Investor Relations page of amd.com. Participants on today's conference call are Dr. Lisa Su, our President and Chief Executive Officer, and Devinder Kumar, our Executive Vice President, Chief Financial Officer, and Treasurer.

This is a live call and will be replayed via webcast on our website. Before we begin, I would like to note that we will host our accelerated datacenter premier virtually on November 8th, with feature presentations by Dr. Lisa Su and datacenter executives [Indiscernible] and Dan Mcnamara. This event will also be available on amd.com. Dr. Su will also attend Credit Suisse 25th Annual Technology Conference on Tuesday, November 30th. Ruth Cotter, Senior Vice President Worldwide Marketing, Human Resources, and Investor Relations will attend the Barclays Global Technology, Media and Telecom Conference on Tuesday December, 7th.

And our Fourth Quarter 2021, quiet time is expected to begin at the close of business on Friday, December 10th. Today's discussion contains forward-looking statements based on current beliefs, assumptions, and expectations. Speak only as of today, and as such involve risks and uncertainties that could cause actual results to differ materially, from our current expectations. Please refer to the cautionary statement in our press release for more information on factors that could cause actual results to differ. We will refer primarily to non-GAAP financial measures during this call. The full non-GAAP to GAAP reconciliations is available in today's press release and in the slides posted on our website. And with that, I'll turn the call over to Lisa. Lisa.

 

Lisa Su

Thank you, Laura. And good afternoon to all those listening in today. Our business performed extremely well in the third quarter as our leadership product portfolio and strong execution drove record quarterly revenue, operating income, net income, and earnings per share. We delivered our fifth straight quarter of greater than 50% year-over-year revenue growth. With each of our businesses growing significantly year-over-year, and data center sales more than doubling. Third Quarter revenue grew 54% to 4.3 billion.

우리는 5분기 연속으로 전년 동기대비 50%이상의 매출 증가를 달성했다.

데이터센터 부문 매출은 전년 동기대비 2밸로 증가했다.

3분기 전체 매출은 54% 증가한 43억달러에 달했다..

 

Gross margin expanded by more than four percentage points and operating income doubled year-over-year.

Turning to our computing and graphics segment, Third Quarter revenue increased 44% year-over-year to 2.4 billion driven by our latest-generation rising Radeon and AMD instinct processors.

In client computing, sales grew by a strong double-digit percentage year-over-year and declined slightly sequentially. Rise in 5,000 processor shipments increased by a double-digit percentage sequentially, resulting in a richer product mix as we believe we gained revenue share for the 6th straight quarter.

매출총이익은 전년 동기대비 4%이상 커졌고, 영업이익은 2배로 증가하였다.

컴퓨팅과 그래픽 부문 매출은 전년 ㄷ동기대비 44% 증가한 24억달러에 달했다.

소비자 부문 매출은 전년 동기대비로는 2자릿수 증가하였으나, 전분기대비로는 약간 감소하였다.

 

In desktops, we launched our rising 5,000 processors with integrated Lyon graphics for the channel to strong demand as third-party reviews highlighted the leadership computing and graphics capabilities, and energy efficiency of these processors.

 

In notebooks, Acer, Asus, HP and Lenovo, all expanded their mobile offerings powered by rising 5,000 mobile processors, as we continue gaining momentum in the premium consumer, gaming and commercial markets. Commercial client growth year-over-year was based on new deployments across public sector and fortune 1,000 technology, energy and automotive customers as the number of AMD-based commercial notebook designs available from the largest OEMs increased significantly year-over-year.

 

We're also seeing strong growth in the workstation market. According to IDC, drug repro processors now powered the bestselling workstations in their category in both North America and EMEA as we continue winning high-volume deployments across key verticals including media and entertainment, engineering, architecture, and automotive. In graphics, revenue more than doubled year-over-year and grew by a strong double-digit percentage sequentially driven by shipments of our next-generation AMD CDNA 2 datacenter GPUs, and demand for Radian 6,000 GPUs in the channel.

 

AMD RDNA 2 GPU sales grew significantly in the quarter as we ramp production and expanded our top to bottom portfolio with the launch of the mid-range Radeon RX 6600 XTCards that delivered leadership 10 ADP gaming performance at their price point. Data center graphics revenue more than doubled year-over-year and quarter-over-quarter led by shipments of our new AMD CDNA 2 GPUs for the Frontier Exascale supercomputer at Oak Ridge National Laboratory.

 

Laura Graves

Frontier was architected specifically to deliver breakthrough HPC and AI compute performance and provide a blueprint for how super-computing enterprise and cloud customers can enable Exascale level performance over the coming years by combining AMD CPUs, GPUs, and software. We are very pleased with the performance of our AMD's CDNA2 GPUs, and look forward to providing more details on their leadership performance next month. Turning to our enterprise embedded in semi-custom segment, revenue increased 69% year-over-year to 1.9 billion driven by strong growth in epic processor and Semi-Custom sales.

 

Lisa Su

Semi-Custom revenue grew sequentially and year-over-year as demand for the latest Microsoft and Sony consoles remains very strong. We expect semi-custom revenue to increase sequentially in the Fourth Quarter as we further ramp supply to address the ongoing game console demand. Turning to server, we delivered our sixth straight quarter of record server processor revenue, as sales more than doubled year-over-year and grew by a significant double-digit percentage sequentially.

Third - gen Epic processors continue ramping faster than the prior generation, and contributed the majority of our server CPU revenue in the quarter. In Cloud, multiple hyperscalers expanded their third-gen Epic processor deployments to power their internal workloads. And both Microsoft Azure and Google announced multiple new AMD powered instances. Cloudflare, Vimeo, and Netflix also all recently announced new deployments powered by Epic processors. With Netflix highlighting how they doubled their streaming throughput per server, while also reducing their TCO.

Enterprise growth was particularly strong in the quarter as the more than 100 third-gen Epic processor platforms from Dell, HPE, Lenovo, Supermicro, Cisco, and others ramp into broader end customer deployments. We expanded our wins in the quarter with Fortune 1000 financial services, automotive, and aerospace companies, and see significant ongoing growth opportunities as our enterprise server pipeline has more than doubled year-over-year. In super computing, we won multiple installations in the quarter highlighted by Argonne National Laboratory selecting 3rd gen EPYC processors, to power the new Polaris supercomputer, that will be used to test and optimize software in preparation for future Exascale class systems.

Overall, we're very pleased with the momentum we have built in our data center business. As server, CPU and GPU revenue grew to a mid-20s percent of overall revenue in the quarter. Turning to our Xilinx acquisition, we are making good progress towards securing the required regulatory approvals, and remain on track to close by the end of the year. This Xilinx acquisition provides significant benefits to AMD, including expanding our product portfolio with leadership, adaptive computing, and AI solutions. And further diversifying our customer base into complementary markets, including wired and wireless communications, industrial, and automotive.

In closing, our record third quarter results and the significant acceleration of our business in 2021 demonstrates that we have the right products and strategies to drive best-in-class growth and significant shareholder returns. We continue growing faster than the market, driven by our consistent execution and the investments we have made to build leadership products. Our supply chain team has executed extremely well in a challenging environment, delivering incremental supply throughout the year, supporting our strong revenue growth. We're also investing significantly to secure additional capacity to support our long-term growth.

Our product portfolio and roadmaps have never been stronger, and I look forward to sharing more details about our next-generation servers, CPUs, and GPUs at our accelerated datacenter premier on November 8th. Now, I'd like to turn the call over to Devinder to provide some additional color on our Third Quarter financial performance. Devinder?

Devinder Kumar

Thank you, Lisa, and good afternoon, everyone. AMD had another excellent quarter. Our leadership products and growing datacenter momentum are driving record revenue, record profitability, and significant cash flow generation. Third-quarter revenue was 4.3 billion up 54% from a year-ago, driven by strong revenue increases across all businesses and up 12% from the prior quarter. Gross margin was 48% up 440 basis points from a year ago, driven by strong revenue mix and competitive products. Operating expenses were 1.04 billion compared to 706 million a year ago as we continue to invest in our long-term product road-maps and scaling our business.

Operating income more than double to 1.06 billion up 530 million from a year ago, driven primarily by revenue growth. Operating margin was 24%, up from 19% a year ago. Net income grew to 893 million, up 392 million from a year ago. Diluted earnings per share was $0.73 compared to $0.41 per share a year ago. This includes 15% effective tax rate compared to 3% a year ago. Now turning to the business segment results, computing and graphics segment revenue was 2.4 billion up 44% year-over-year, driven by significantly higher client and graphics processor revenue.

Computing and graphics segment operating income was 513 million or 21% of revenue compared to 384 million or 23% a year ago. The increase in operating income was primarily driven by higher revenue, which more than offset higher operating expenses. Operating margin was slightly lower year-over-year, primarily due to investments in R&D and go-to-market. Enterprise embedded and semi-custom segment revenue was 1.9 billion, up 69% from 1.1 billion the prior year.

The strong revenue increase was primarily driven by significantly higher Epic processor and Semi-Custom sales. EESC operating income was up significantly at 542 million or 28% of revenue, compared to 141 million or 12% a year ago. Operating income growth was primary driven by higher revenue and richer product mix, partially offset by higher R&D and go-to-market expenses. Turning to the Balance Sheet, cash, cash equivalents, and short-term investments were 3.6 billion. We utilized 750 million to repurchase more than 7 million shares of common stock in the third quarter of 2021 as part of our ongoing stock repurchase program. Free cash flow was 764 million compared to 265 million in the same quarter last year. and 888 million in the prior quarter.

On a quarter-over-quarter basis, free cash flow was lower as we made strategic investments in long-term supply chain capacity to support future revenue growth. Inventory was 1.9 billion, up 137 million from the prior quarter in support of continued revenue growth. Let me now turn to the Fourth Quarter Outlook. Today's outlook is based on current expectations and contemplates the current global supply environment and customer demand signals. We expect revenue to be approximately 4.5 billion, plus or minus 100 million, an increase of approximately 39% year-over-year and approximately 4% sequentially. The year-over-year increase expected to be driven by growth across all businesses.

The quarter-over-quarter increase is expected to be driven by higher server and Semi-Custom sales. In addition, for Q4 2021, we expect non-GAAP gross margin to be approximately 49.5%. Non-GAAP operating expenses to be approximately, 1.15 billion. Non-GAAP interest expense, taxes, and other, to be approximately 170 million, and the diluted share count to be approximately 1.22 million shares. For the full-year 2021, we now expect revenue to increase approximately 65% over 2020, driven by growth across all businesses, up from the prior guidance of 60%. In addition, we continue to expect gross margin to be approximately 48% for the full year.

In closing, we delivered another outstanding quarter with very strong year-over-year revenue growth, significant financial momentum, and record profitability. Our leadership products position us well to drive future growth, significant cash generation, and strong shareholder returns. With that, I'll turn it back to Laura for the question-and-answer session. Laura.

Laura Graves

Thank you. Devinder, operator, we're ready for our first question.

Question-and-Answer Session

Operator

Thank you. We'll now be conducting your question-and-answer session. [Operator Instructions] One moment please, while we poll for questions, and our first question today is coming from Blayne Curtis from Barclays. Your line is now live.

Blayne Curtis

Hey, good afternoon and great results. Thanks for taking my questions. Just kind of curious the overall outlook for Q4. So computing graphics being down, I was just curious if that was more the supply, you're still growing sequentially and obviously, I would assume you prioritize servers, just curious what you're seeing in the computing graphics market. And is it anything related to supply constraints? For you there will be down sequentially or maybe downstream constraints and then maybe for [Indiscernible], you're still growing Gross margin. I'm assuming how the Semi-Custom and service than offset each other just walk us through the nice increase in Gross margin for Q4.

Lisa Su

Sure, Blayne. Thanks for the question. So, as it relates to the fourth quarter and where we are look, we're overall very pleased with our performance in terms of the second half of the year. It's playing out about what we expect it to be in the PC market. So, as you're asking about computing and graphics, we had seen that the PC market end-user demand is strong overall, but there are some match set constraints in the PC market. And so, for that reason, we've called the PC market, really flattish. I would not have said down, I would've called it flattish as we look into the Fourth Quarter.

However, as we look overall at the business, I think the data center business has performed very well and we see strong demand there and we're continuing to see that. And as well, the console business, overall gaming is also quite strong. And so, we see growth in servers and Semi-Custom as we go into the Fourth Quarter and then on the margin dynamics, Devinder, you want to cover that?

 

Devinder Kumar

For Q4? Yeah, so Q4, it is up slightly puts on a guidance one point from Q3. And that's really product mix, higher margin from server offset by Semi-Custom revenue also being higher going from Q3 to Q4. So very pleased with the progress in the gross margin as you look at the Q3, results up 440 basis points from last year, up 80 basis points last quarter. And the progression into Q4, obviously driven by the server, our revenue growing is very pleased with that also.

Blayne Curtis

Thanks.

Lisa Su

Thanks, Blayne.

Operator

The next question today is coming from Vivek Arya from Bank of America. Your line is now live.

Vivek Arya

Thanks for taking my question, and congratulations on the strong results and the consistent execution. Lisa, how are you feeling about the spending environment in the datacenter? As we look over the next several quarters, and especially your server roadmap versus the competition because they are planning to launch several new and important products already next year. So, I was just wondering how you're thinking about the competitive landscape and the spending landscape over the next year?

Lisa Su

Sure. So, thanks for the question. I think overall, we're feeling very very good about the server business or the datacenter market. I think from a market standpoint, we've seen a strong market here in 2021 in both cloud and enterprise, and we see that continuing into 2022. I think from a competitive position standpoint, I think Milan is extremely well-positioned, so we were very pleased with sort of the adoption rate of Milan. We said that we expected it to grow faster than Rome, and it has.

And so, the crossover with Milan enrollment, the Third Quarter, is an important metric for that. Going into the fourth quarter, we continue to see a strong environment. And then as the competitive environment goes into 2022, we always expect the competition to be strong, but our focus has been consistent execution of our roadmap and we feel very good about the Zen 4 in general. In 2022, I think we feel very good about the competitive positioning there and we continue to believe that datacenters are most strategic part of our business, and we're making good progress with our customers and partners.

Vivek Arya

And for my follow-up, Lisa, AMD has done very well in terms of gaining share at the hyperscalers. Where are you in that journey? Is there still a lot of share gains to be had at hyperscalers then importantly, can you repeat that in the enterprise or do you think your competitor's incumbency limit the share gain opportunity in the enterprise? Thank you.

Lisa Su

Yeah so, Vivek, what I would say there is, our business has been more cloud-weighted with the hyperscalers than enterprise that continued here in this Third Quarter. I do believe that there is a significant additional opportunity for us in the Cloud. So, as we work with these partners, it is it is about expansion of workloads. Really, there's more tailoring of workloads as well as we go forward. And then, there's also just more customers and and broader penetration in both Tier 1 and Tier 2 Cloud, guys. So, I think that's a good market for us.

On the enterprise side, I would say we saw a very strong enterprise quarter here in the third quarter. I think the strength of Milan with our OEMs in terms of the breadth of the platforms is very good, and we're seeing a good traction with sewer Fortune 1000 companies. So, I would say, overall, I think we see a growth trajectory for both our cloud and enterprise business. I think in the enterprise, the key thing has been to get more familiarity with Epic. And we've made very good progress there. And so, I feel very good about where that's going.

Vivek Arya

Okay. Thank you, Lisa.

Lisa Su

Thanks.

Operator

The next question is coming from Matt Ramsay from Cowen. Your line is now live.

Matt Ramsay

Thank you very much. Good afternoon, everyone. Obviously, Lisa, some really strong progress with datacenter crossing, I guess a quarter of the business here with the results. I did want to ask a question specifically on your server business in China. Your competitor called out China and some of the turmoil that's gone over there as a reason why some of their cloud business had some headwinds in the Third Quarter, and maybe you could comment on how you see spending over the last quarter. And then in the next couple of quarters, specifically in that end market in China. And then I have follow-up. Thanks.

Lisa Su

Sure, Matt, so again, what I would say is our datacenter business performed very well in the third quarter. That was across both Cloud and enterprise. And in Cloud that was across geographies. So, we haven't seen anything particular as it relates to China or there. What I would say is, we continue to work with the breadth of customers and we're in the process of really rolling out broader adoption across the customer set. So, I think we saw a pretty normal environment for demand.

Matt Ramsay

Thanks for clearing that up. As my follow-up kind of unrelated. You guys mentioned in the comments still plans to get the Xilinx deal closed by the end of the year, and I think that's important as there's a lot of things that you can talk about more, maybe more openly about the heterogeneous compute strategy for the business over the long term. Lisa, maybe you could walk us through to the extent that you can talk about it.

Obviously, there's some things that you can't talk about, but the extent you can, what milestones you've achieved behind the scenes that make you feel confident and what hurdles are still there to have the confidence. I mean, I guess we got 6 weeks till we get into the month of December and things slow down a little bit regulatory-wise. So, I just wonder what gives the confidence that we can get there and what we should expect. Thank you.

Lisa Su

So, look, we've been working diligently on the closure of the Xilinx acquisition. I would say we are through the vast majority of what we need to do in the regulatory front. We're finishing up here and there's a -- there's very good progress on the integration side. So, we've done a lot on the integration. I think we're excited with the plans that we have, and then on the regulatory front, again as I said in the prepared remarks, we've made good progress and we believe we're on track to close at the end of the year.

Operator

Thanks. To our next question --

Lisa Su

Operator. Go ahead.

Operator

Certainly. Our next question is coming from Toshiya Hari from Goldman Sachs. Your line is now live.

Toshiya Hari

Hi, good afternoon. Thank you so much for taking the question and congrats on the strong results. Lisa, I had two questions as well. First, on your outlook for 2022, I realize it's early and I certainly don't expect you guys to provide a point estimate. But I think people are kind of concerned that you've been sort of over growing if you will, relative to your long-term growth rate, you grew 45% last year, you are on track to grow 65% this year. Given your long term through-cycle growth target of 20%.

Again, there is concerned that you could decelerate going into next year given PC dynamics and competitive dynamics and so on and so forth. So again, I don't expect you to give any quantification of next year, but if you could describe the year qualitatively, what are the potential pluses and minuses at this point? That would be super helpful, and then I've got a quick follow-up.

Lisa Su

Sure. So, look, as you said, it's a little bit early to talk about 2022 quantitatively. I'll say qualitatively, what we see is -- look, we see a positive demand environment, and that's a market statement, but that's also an AMD statement, right? I think the strength of our product portfolio has multiple growth vectors. Datacenter continues to be a very important one for us. I think where we continue to make progress in the graphics market, and we think graphics is a good growth vector. Our console business we would expect would be -- I had mentioned earlier that it'd be up in the Fourth Quarter and then we would expect it to be up in 2022, just given the strength of the demand environment there.

And so, on the PC side, the comments I'll make on the PC side are, the end-user demand appears to be strong. So, there's -- there's a good amount of Refresh going on, whether you're talking about consumer, high-end consumer, or commercial, or gaming. There are some supply constraints around match sets that we believe will continue into the first half of the year. That being the case, what we're using from a planning assumption standpoint is that the PC market maybe flattish as we go from 2021 into 2022.

But even within that environment, we think there are opportunities for us to continue to grow. So overall, I think we were very focused on execution, very focused on working with our customers to make sure that we're aligned with what they need, and overall, I feel very good about our product portfolio going into 2022.

Toshiya Hari

Got it. That's super helpful. Thank you. And then as my quick follow-up, similar question on gross margin, I'm not sure if this is fully for Devinder. You're guiding Q4 to 49.5%, which is obviously significant progress from a year ago. Given some of the dynamics you've talked about, whether it be the growth potential and server CPU, the mix within server CPU and I'm sure the mix dynamics on the client side.

I think most of us do expect a pretty nice some positive trajectory into 2022 potentially with a five handle in terms of again, gross margins. But any risks or any headwinds that we should be aware of? I think your foundry partner is raising pricing, there's cost inflation generally across the board, but any risk items that we should think about at this point? Thank you.

Devinder Kumar

I wouldn't say it's like that, but I think is about managing the situation. As Lisa said in over the growth sectors that we have, we expect to continue making progress from where we are currently, and especially predicated on the competitive leadership products we have. We're very pleased with the progress we've made over the last few years. But without getting into specifics, I think you can assume that we continue to make progress with the mix of revenue, mix of products, and the competitive products that we're introducing also into 2022.

Toshiya Hari

Thank you.

 

Operator

Thanks. Our next question is coming from Stacy Rasgon from Bernstein Research. Your line is now live.

Stacy Rasgon

Hi, guys, thanks for taking my questions. My first one I wanted to ask about Datacenter GPU, I know you said it more than doubled. But can you give us an approximate feeling for how big that is, are we still talking like tens of millions of dollars or is it larger than that? And what are your expectations for how that's going to ramp as Frontier and some of the other supercomputers that a lot of that stuff is going into our ramping over the next couple of years.

Lisa Su

Sure. So, Stacy, on the Datacenter GPU side, the Third Quarter was a larger quarter for the Datacenter GPU. This is where we shipped the Frontier shipments that are now in the build cycle. It is still a relatively small business compared to the CPU site. So, our expectation is that going into the Fourth Quarter, it's a lumpy business for us. So Q3 was a strong quarter given the shipments for Frontier, we would expect as we go into the Fourth Quarter that it'll be down sequentially quarter-on-quarter, but still, it's a strong growth year overall for a business that we think is a significant strategic growth driver for us over the next few years.

Laura, thank you. For my follow-up I just wanted to ask you about Q4. Obviously, you had given implied guidance for Q4 last quarter. The guidance now is obviously decently [Indiscernible]. Can you just talk a little about what is driving that upside relative to where your expectations were last quarter? Devinder, you want to talk about that or.

Devinder Kumar

On the revenue, I think -- go ahead, please.

Lisa Su

I'm sorry. Were you asking about revenue or margin, Stacy?

Stacy Rasgon

Well, both if you're willing to answer both.

Lisa Su

Okay. All right. Let me start and then let's -- I want to make sure I answer all your questions. How is that? So, look, on the revenue side. When we look at the sequential growth, we have been able -- look the supply chain -- this is about really supply chain optimization. And we have been able to secure some additional supply given some of the work that we've been doing. And we see strong demand across the board. But sequentially, what we're guiding to is stronger server demand as well as gaming.

And gaming includes the semi-custom game consoles, as well as our graphics business is doing quite well as well. And then in terms of the sequential margin, it's similar. I mean, we're having servers, some improved mix and graphics driving upside. And that's partially offset by the consoles which are below corporate average, but net-net, I think it's a positive sequential both on revenue and margin.

Stacy Rasgon

I guess what I'm asking is, for example, are your expectations for servers into Q4 now, higher than they were three months ago when you gave implied guidance for Q4?

Lisa Su

Yes. Yes, it is.

Stacy Rasgon

Got it. Okay. Thank you very much.

Lisa Su

Sure.

Operator

Thanks. Your next question today is coming from Joe Moore from Morgan Stanley. Your line is now live.

Joe Moore

Thank you. I'm wondering if you could talk about graphics a little bit. It seems like that's the business that's probably struggled the most to get silicon. And yet you've shown some pretty nice growth there. What's the prognosis for that business going forward? And in the past, you've said you're comfortable that there's relatively low crypto currency exposure there. Is that still the case?

Lisa Su

Yes, sure Joe. Look, the graphics business did have a strong third quarter. I think that's true for graphics, gaming, as well as datacenter, GPU. I think the portfolio that we have there with RDNA 2 had turned out really well, so we're pleased with how it's positioned competitively in the marketplace and overall, gaming has been a secular trend that has continued with very strong demand. In terms of Crypto, our view is that it's really negligible revenue for us in the Third Quarter, it's not a segment that we have been servicing.

We've tried very much to try to keep our gaming graphics focused on gamers. And we were able to increase some of the supply for our graphics and that's one of the reasons that we saw the sequential growth that we saw and going into the Fourth Quarter next year again, I think we see gaming overall as a strong segment for us, and the product set is very good. So, we feel good about it.

Joe Moore

Great. Thank you very much.

Lisa Su

Thanks.

Operator

Thank you. Next question is coming from Aaron Rakers from Wells Fargo. Your line is now live.

Aaron Rakers

Yes. Thanks for taking the question. I've two quick questions if I can as well, just stick on the expectations in the next year, appreciating that you're not going to give a full guide. I'm just curious how we should think about the Semi-Custom business, given how sizable that's been to the overall growth in 2021? Any framing of how you expect 2022 to shape up at this point?

Lisa Su

Sure, Aaron. So again, if you Look at the overall growth that we had in 2021, I would say was actually quite balanced across all of our businesses. The Semi-Custom business was in the second year of ramp and demand has exceeded supply. We've been unable to ramp that as we've gone through the year. As we look in to 2022, the historical view of game consoles has been a year four is the peak, at least that's what it was in the last generation.

What we expect in this generation is again, very strong demand going into 2022. So, we would expect it to grow into 2022, which would be the third year of the cycle, and then we'll see what happens after that. But overall, I think our view is we have a very balanced business with multiple growth drivers across datacenter PCs, graphics, as well as consoles.

That's very helpful. And then the follow-up question is on your own supply chain side, I know in a preferred comments you said, working on securing, adequate supply given your growth trajectory. Are you currently able to meet all of the demand that you currently see and can you give any color of what -- how we should think about the supply situation on your end?

So, I mean, we've been working on ramping the supply chain really [Indiscernible] for more than a year if you think about the dynamics here. What I'd like to say is, overall, the demand has been very, very high. So, the fact that we can grow revenue this year, 65% year-on-year, I think is a testament to the supply chain work. I think, if we had more supply, we could certainly ship more.

That being the case, I think we're prioritizing in the most strategic segments, and we have invested significantly in capacity for additional capabilities. And we will see some of that come online as we go through 2022. And we're going to continue to be aggressive to secure additional capacity because we believe our product portfolio will enable that growth.

Aaron Rakers

Thank you.

Lisa Su

Thanks.