Intel Corp. promised to fight Advanced Micro Devices Inc. for the crucial data center market, but AMD CEO Lisa Su is not afraid.
“We will always fight for every socket,” Su said of AMD’s AMD,
Tuesday’s earnings call, mimicking Intel INTC,
CEO Pat Gelsinger’s pledge “to fight for every socket on the market” he made three months ago in the bigger chipmaker’s earnings call.
Su’s statement comes from a stronger position, however, after AMD raised its annual forecast Tuesday on the expectation that sales to cloud providers would be even better in the second half of the year. In its second-quarter fiscal results released Tuesday afternoon, revenue from enterprise embedded and semi-custom chips — the unit that includes data center and game console revenues — nearly tripled to $1.6 billion, compared to $565. million a year ago.
See also: Intel seems to be feeling AMD’s competitive heat
Analysts polled by FactSet estimated $1.44 billion. Traditionally, AMD has not separated data center sales from games sales.
However, during the conference call with analysts, Su gave some clarity about those numbers. During the call, Su said data center sales accounted for more than 20% of AMD’s second-quarter revenue — which would equate to more than $770 million, or about half of the $1.6 billion in data center/gaming segment sales. – and that percentage is expected to grow.
“We believe the data center business will continue to be a strong driver for us in the second half of the year,” Su told analysts. “It will be a larger percentage of our total revenue in the second half of the year.”
Last week, Intel reported a better than feared 9% drop in data center sales, but the forecast did little to bolster confidence amid a global chip shortage.
Read: Intel has changed the name of its chips, but analysts say the story hasn’t changed
As for the global chip shortage and chip-making capacity, Su said AMD has made progress in securing “additional” resources in the second quarter, and expects to continue to do so. “It allowed us to exceed the original guidelines as we head into the second half of the year,” Su said. “Which leads to the increase in the full-year outlook that we have.”
Some analysts suggest AMD may receive preferential treatment from its silicon wafer supplier Taiwan Semiconductor Manufacturing Co. tsm,
as Intel is trying to take away some customers from the third-party fab with its Intel Foundry Services business.
AMD has again raised its full-year forecast and now expects sales to grow about 60% year over year, compared to a 50% growth forecast in the previous forecast. AMD reported revenue of $9.67 billion last year, so that suggests revenue of about $15.47 billion this year, while analysts forecast revenue of $14.65 billion, according to FactSet.
AMD expects third-quarter revenue of $4 billion to $4.2 billion, while analysts had forecast $3.82 billion, according to FactSet.
The company reported second-quarter net income of $710 million, or 58 cents per share, compared to $157 million or 13 cents per share in the same period a year ago. Adjusting for stock-based compensation and other factors, the Santa Clara, California-based company reported earnings of 63 cents per share, compared to 18 cents per share in the same period a year ago. Revenue rose to $3.85 billion, from $1.93 billion in the same quarter a year ago.
Analysts polled by FactSet had forecast adjusted earnings of 54 cents a share on revenue of $3.62 billion, after AMD estimated between $3.5 billion and $3.7 billion. Shares were up a whopping 2% in after-hours trading but were largely muted, after falling 0.9% in the regular session to close at $91.03.
Read: The chip crunch continues, but one sector can offer relief
In the computer and graphics segment, AMD reported second-quarter revenue of $2.25 billion, up from $1.37 billion last year, compared to analyst expectations of $2.17 billion.
The chip sector is facing supply shortages and more results will be revealed this week, with Qualcomm Inc. QCOM,
and Lam Research Corp. LRCX,
win on Wednesday and KLA Corp. CLAC,
profit on Thursday.
In the past 12 months, AMD shares are up 32%. For comparison: the PHLX Semiconductor Index SOX,
gained 53%, the S&P 500 index SPX,
is up 36%, and the tech-heavy Nasdaq Composite Index COMP,
has increased by 39%.