Advanced Micro Devices Inc at Barclays Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tom O'Malley - Barclays - Analyst : So speaking of last year, we sat here a year ago and chatted on market share and how you have come from a place both on the PC side and the server side, where it was really a second-source story coming from the bottom kind of to moving to parity and in some instances, to leadership. So can you talk about that journey? And really from here, where are the aspirations focused on across those businesses?

Question: Tom O'Malley - Barclays - Analyst : Super helpful. And all of these good things are happening, and of course, I'm going to zone in on one area, where you're a little under-indexed, which is on the enterprise side in terms of server. So I guess, the question there is, why hasn't the success translated as quickly? I know enterprises are more slow moving? And what kind of steps can you take to further penetrate that market?

Question: Tom O'Malley - Barclays - Analyst : And a question that I think I've heard a lot this week, and I had the co-CEOs of Intel here this morning is, obviously, you don't wish ill upon your customers. But when there are changes, customers are going to change their preferences and profiles and conversations. So you mentioned like the enterprise game is really a ground game. Like you go CIO, CIO, CIO those conversations that win you market share over time. Have you seen any change in the very recent history as in two weeks in those conversations? And how would you think about your business there given the change? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, AMD.OQ - Advanced Micro Devices Inc at Barclays Global Technology Conference

Question: Tom O'Malley - Barclays - Analyst : So I guess, broadly speaking about the market versus the competitive dynamic, there's this view that dollars are being sucked out of the traditional server market and into the AI ecosystem, which you had benefit, and we'll move to AI after. But just on the traditional server market, when you look out at next year, is this a year where you see some recovery? Or is it similar to what we've seen over the past couple of years with maintained muted spend?

Question: Tom O'Malley - Barclays - Analyst : Okay. Regardless of how that traditional market continues to grow or at the rate of which it grows, you have seen some really impressive growth in the MI series this year. I think if we sat here a year ago, you had confirmed to the ground that you do more than $5 billion this year people would have been shocked. It's a really, really strong ramp. So can you talk about how that is going in terms of the total ramp today, you're going to see a transition in product for the really the first time in that series. So when is that transition occurring? And then just any kind of change in your outlook versus the last time we kind of spoke? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, AMD.OQ - Advanced Micro Devices Inc at Barclays Global Technology Conference

Question: Tom O'Malley - Barclays - Analyst : So first, I want to talk about the cadence of product transitions and then about customer diversity. But in terms of upgrade cycles with different chip families, generally, there's digestion and then there's a ramp-up period of time. And you guys have done a really good job of kind of masking that even with your first transition last -- at the end of last year in December. Can you talk about how you manage that? How do you manage through that? Is that a conversation with customers? Do you naturally see a wind down quicker than you see on wind up? Anything that you can give just to talk about the cadence of those ramps?

Question: Tom O'Malley - Barclays - Analyst : And then there's the aspect of customer diversification as well. Obviously, reinvent was very recently. You have one large customer that's well known today. But in terms of customer diversification, could you talk to where you're seeing green shoots maybe with other large customers and REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, AMD.OQ - Advanced Micro Devices Inc at Barclays Global Technology Conference your ability to kind of expand? Is that a function of just seeing more inferencing in the market or is that just really customers taking more time to come to your platform?

Question: Tom O'Malley - Barclays - Analyst : So customer diversification is going well. It seems that's checkmark number one. Two is, I think that increasingly, you've seen the diversification and the differentiation in the market between NVIDIA and other players is their ability to scale to system-based solutions, right? They have their own protocol. They're scaling up and scaling out they're clustering. I think what's been more difficult for non-NVIDIA players just broadly has been the fact that you need a bunch of different players to come together in order to get that scaling architecture to work. So you obviously acquired ZT; that's part one. But how is it going in terms of your ability to replicate that sort of systems-based architecture? Are you running into kind of any walls in terms of that process? And how are you thinking about scaling that architecture over time.

Question: Tom O'Malley - Barclays - Analyst : Okay. And then I think that you've been very prescriptive, which has been helpful on the gross margin ramp of the MI series. And then there will also be the layer on of a more systems-based architecture. So you said over time, moving more towards corporate average than perhaps surpassing that. Could you give us an update on how that margin structure is progressing? When you see that crossover point? Anything that varies in terms of your initial expectations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, AMD.OQ - Advanced Micro Devices Inc at Barclays Global Technology Conference

Question: Tom O'Malley - Barclays - Analyst : Helpful. Using gross margin as a bridge here, I want to go to the PC side and talk about AI PC. So we've heard a whole bunch of different things about what the AI PC market is it's updated pretty frequently. What is your view of the AI PC market moving into '25? And we've heard it's a gross margin headwind. Is it gross margin tailwind, it's been all over the place. What is it for AMD? Is this something that should help ASPs?

Question: Tom O'Malley - Barclays - Analyst : And then obviously, the gross margin side of that, I know that you've done a very good job with ASPs driving some growth on the PC side. But does AI PC lend to ASP increases or is that more of a competitive dynamic?

Question: Tom O'Malley - Barclays - Analyst : And then I just wanted to kind of conclude the topic on competition. You're hearing more about ARM. There was exclusivity going into the end of this year. You're going to see more engagement with the ARM ecosystem into the beginning of next year. What's your view on what the right level of penetration will ultimately be from an ARM perspective? Is that something that you factor in when you look at the growth of your business in the '25?

Question: Tom O'Malley - Barclays - Analyst : Perfect segue into your embedded business. That's been going through a bit of a longer recovery than I think most would have expected. And you kind of talked about some growth into the 2025 period has not been super prescriptive there. But two questions. One, are you starting to see some green shoots in that business? I know that one of the takeaways from the conference for us thus far has been, you've seen a little bit better telco. So that's obviously not their wireless business as much, but maybe a little on the wireline side. And then two, you're hearing about a potential spinout of the main competitor to Xilinx, do you think that changes the competitive dynamic in any way?

Question: Tom O'Malley - Barclays - Analyst : So I want to just ask on the broader model in '25 really quickly. So it sounds as though the server, core server business is doing well, PC, more second half weighted and you talked about the last earnings call, a little bit stronger end of this year, maybe a little softer first half of next year. But in terms of like the total growth of the business, things sound good. In terms of the operating leverage that you can get, how do you think about spend? And if I look at -- you've grown quite robustly over the past couple of years. If spend is not as -- if revenue was not as aggressive as those big growth years of the bottom, how do you think that you can move that OpEx lever to get more drop down to the bottom of the model?

Question: Tom O'Malley - Barclays - Analyst : All right. Well, I really appreciate the time. Thank you for being here. It's a pleasure as always.