Chipmaker projects 2019 growth in the high single digits, contrasting concerns expressed by Intel and Nvidia
AMD missed its fourth-quarter revenue target, generating $1.25 billion compared to the expected $1.47 billion. However, the miss isn’t dampening AMD’s optimism for 2019, in which the world’s second-largest chipmaker is expecting high single-digit growth.
The Lowdown: Despite the revenue miss, AMD’s earnings report wasn’t as bad as market watchers and analysts had expected. Average sales margins increased to 38 percent from 34 percent. The company expects margins to increase to 41 percent in 2019 and new graphical processors used in data center and cloud computing environments to propel sales higher over the next 11 months.
The Details: Intel and Nvidia blamed their fourth-quarter slowdowns on the ongoing trade war with China and a general softening in the IT market. AMD experienced some of the trade war fallout, but said its revenue shortfall is a result of the cryptocurrency crash. As the value of digital currencies such as bitcoin fell, demand for high-capacity processors fell correspondingly. The result, AMD said, is inventory pileups that proved difficult to clear.
The Impact: AMD expects 2019 sales to increase as partners and customers adopt new products such as its Ryzen computer processors and data-center chips. Sales of chips in the company’s computing and graphics business accounted for nearly 20 percent of its gross revenue.
Background: The health of processor manufacturers such as Intel, AMD, and Nvidia is traditionally seen as a leading indicator of the overall technology market’s health, as these companies provide the core components of hardware that powers servers, endpoints, and data center equipment.
Intel missed its fourth-quarter revenue targets due to a decline in demand in China, the impact of the trade war, and — most of all — misreading demand for PCs, which caused inventory shortcomings that dampened sales.
Nvidia, best known for producing high-performance