Advanced Micro Devices Inc at Citi TMT Conference Summary

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

Question: Christopher Danely - Citibank Cameroon SA - Analyst : <_ALACRA_META_ABSTRACT>I'm Chris Danely, your friendly neighborhood Semiconductor analyst here at Citigroup. It's our distinct pleasure to have AMD, Advanced Micro Devices up next, although is the rumor true you're going to change it to AI Micro Devices or what's going to happen there? Anyway, we have Jean Hu, the CFO; and Matt Ramsay, my idol, parlayed a successful sell-side career to becoming a big mucky-muck at one of the coolest fastest-growing companies out there. He's the VP of Financial Strategy and Investor Relations. So thanks, again, for coming, gang.t

Question: Christopher Danely - Citibank Cameroon SA - Analyst : It's our pleasure. So let's just dig right into the AI business. Maybe talk about how the segments sort of trended this year. There's been some volatility. We have quite a bit of growth for the AI segment in the second half of this year and next year. Maybe just give us a timeline on how that business has gone so far, and we'll just go from there.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : I'm not alone.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. I'm sure we'll expect more on the 400 and 500 at the Analyst Day in November. I'm not above a shameless plug for one of my favorite companies. In terms of the forecast, so in the past, you guys have given a forecast for the out year or the year and now you're not. Maybe just talk about the whys of that. Is that just because of the volatility or why I'm -- kind of shy away from the forecast?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. We'll take whatever we can get. Maybe just talk about the second half drivers and into next year. I think we have your AI business going pretty close to $10 billion next year. Is this new customers in the second half? Is it just the existing spending? We'll get into -- you mentioned some sovereign growth drivers as well. But in your own words, what are the big drivers for the AI business in the second half of this year and next year?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : That's interesting. And I had actually one of your customers or potential customers ask me about this. Do you guys see longer term, the AI chip model almost being like or the business almost being like the CPU business where you've got various tiers and sort of multiple different SKUs, all at the same time, satisfying different customers at different levels. You expect it to grow into a business like that eventually?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. And so how do you sort of secure enough wafers and enough peripherals, whether it's HBM or what have you? Do you foresee any issues procuring enough wafers or memory, especially going into next year when hopefully, me and everybody else's models come through, and we continue to see this impressive growth.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Yes. And then just looking at your latest and greatest AI TAM numbers, I think it's gone from $400 billion to $500 billion, so now it's over $500 billion. Can you maybe give us a sense of like how you guys come up with that number what factors or what factors go in there? I don't even know if it matters because when we're sitting down in November, it's probably going to go up again. But what all goes into that model?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : A sell-side question.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Definitely gives us sell-siders something to do and keep us busy. One thing that you guys mentioned on the previous conference call, I believe, was the sovereign growth driver, sovereign wealth funds. Maybe can you give us any sense of how big you think this could be or when you think that this could potentially start to drive material revenue growth for AMD, how you're positioned there?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : And you said 40 other engagements? 40? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 2:50PM, AMD.OQ - Advanced Micro Devices Inc at Citi TMT Conference

Question: Christopher Danely - Citibank Cameroon SA - Analyst : That's pretty good.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. Now in terms of your AI business, as we talked about before, huge ramp, obviously, last year, then there was some volatility in the first half of this year. Some of that was the China issue; some of that was, I guess, something else. Why do you think the business -- if we take out the whole 308 thing, why do you think the business has been so volatile? And can we expect this type of volatility going forward or do you think it will be a little bit smoother now that the business is gaining in size and maturity, I guess, on a relative basis?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Okay. Great. And then just to put the 308 issue to bed, how do you guys view the 308 business? We essentially just strip it out of the model. But how do you guys see that? Are you moderating your investments there? Do you anticipate some sort of continually modified chip that you'll be able to ship to China? How do the executives at AMD view that type of business?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. Very helpful. And then on the AI business, a couple of more questions there. So the margins are, I guess, slightly dilutive. Can you talk about why they're slightly dilutive? And is the plan to bring them up to the corporate average or what should we expect there?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Yes, clearly, it hasn't hurt the stock, one iota. I want to make sure that we heard it was slightly dilutive, not dilutive or very dilutive to, hopefully, one of my former colleagues. And then in terms of the customer concentration, how do you expect that to trend over the next few years? Would you expect there to be maybe a small handful, 4, 5 or something like that, driving most of the business or do you see this really spreading out in a much longer tail? How do you think that's going to trend?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Yes. I think your two notable, I guess, competitors or other semi companies that service AI would say the exact same thing. A couple of questions I get from investors just on the sort of pricing going forward, especially into next year. We know the die sizes are going up. I mean, can you guys leverage pricing and get better margins? I think, Jean, on one of the conference calls, you said that, yes, the die size is going up, but the pricing should go up about as much as the as the BOM. I just wanted to clarify any comments you've made in the past on what we should expect from like margins or pricing going forward? If there's any changes?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. So it's not like necessarily it's going to be gross margin dilutive or accretive?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : How much of the BOM of these systems, I guess, is memory? I mean, is it like 20%, 30%, 50%?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Sure. And then one of the most common questions I get is how do you see the market evolving between GPUs versus ASICs? And how do you see your share going forward? It sounds like the MI400 has got some pretty impressive performance statistics. Maybe we can expect to hear some at the Analyst Day in November?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Great. I'd be remiss if I didn't offer up any questions to the audience. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 2:50PM, AMD.OQ - Advanced Micro Devices Inc at Citi TMT Conference Unidentified Participant I have one question. For high-level strategy of AMD, you have mentioned a lot of TCO, you want to offer the best TCO for customers. But TCO is kind of (inaudible) measure, performance and cost, right? I want to know what is the -- or what is the best description of your mandate for that kind of strategy that is? First, it's kind of -- you offer the best performance, but with better price. The second is kind of you offer a decent or moderate performance but with much better price. So if you could describe your strategy.

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Thanks. Anything else from the audience? In the back? Over there, I think. Unidentified Participant Hey, guys. I was wondering if I can get some clarity around the comments on the Tier 2 and 3 kind of workloads that you're seeing right now from some of your customers. Can you just maybe go into more detail as to what the longer-term strategy is? I understand that they're kind of onboarding it now to get ready for MI400, but is it more of a when not if, to getting those training workloads? Just kind of curious about kind of like the longer-term layout. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 2:50PM, AMD.OQ - Advanced Micro Devices Inc at Citi TMT Conference

Question: Christopher Danely - Citibank Cameroon SA - Analyst : I think there was one more question in the back. Unidentified Participant I guess just to end with something of a general question, and I apologize, I missed the very beginning. So if it was addressed, I apologize, just skip it. Can you just talk, or do you have any views on the current debate around overbuilding across the industry, over ordering, et cetera? There have been a couple of people talking about a bubble forming. And obviously, this is -- I'm trying to phrase it as general as possible. I was just wondering if you had any thoughts on the industry and data center expansion more generally?

Question: Christopher Danely - Citibank Cameroon SA - Analyst : Perfect timing, Jean. We're out of time. Thanks, everyone.