Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference Transcript

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

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : First of all, Lisa, thank you so much for coming.

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : So I think this time last year, we were on this stage, we kind of kicked off the conversation by me asking you what are your key priorities and you said something along the lines of AI number one, AI number two, AI number three.

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : I think you've executed really well since last year, you've grown your data center GPU business from essentially zero last year to per year guidance, $4.5 billion this year. Reflecting back in what ways have you and your team outperformed your expectations, again, specifically in the field of AI. And going forward, again, what are your -- some of your focal points?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : That's great. You shared a 2027 AI accelerator TAM forecast of $400 billion earlier this year. A lot has happened since then. How have your long-term expectations evolved since that time to the extent you are more bullish on the opportunity set, which applications, which end markets have you seen the most upside, if you will?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : And again, was this an example of a customer or a customer sort of coming to you and say, hey, why not sort of make this move to time up, speed up your process? Or how did it sort of come about, if you will?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Got it. I have a ton more AI questions, but I want to shift gears a little bit. The server CPU market, which continues to be a very important market for AMD went through an extended correction. The market finally seems to have turned the corner from a demand perspective. What are your forward expectations for server CPU? And how would you differentiate what you're seeing in sort of the cloud hyperscale space versus enterprise. I think some of your customers are increasingly sort of worried about things like space and power consumption. Could innovation like general (inaudible) sort of catalyze replacement cycle in server CPUs?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : In terms of the competitive landscape in server CPU five, six, seven years ago, you were low single-digit market share, I believe. And today, -- from a revenue standpoint, I think you're in the low 30s. I do think you've had massive success on the hyperscale side. You're at or above 50%, I believe. On the enterprise side, it's been a little bit slower. But at the same time, you've been much more vocal in terms of the penetration or sort of the momentum you have. So like what are your thoughts on the enterprise side? And what needs to happen for you to sort of inflect higher and for your market share position to mirror what you have in hyperscale?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : And there's really no fundamental reason why your enterprise share should be so much lower than hyperscale from a technology perspective.

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Many of your cloud customers have custom CPU and accelerator programs that are running, some are way ahead, some are fairly nascent. How do you see the mix of merchant versus custom evolving over the long run, again, both on the CPU side and sort of the accelerator side and as a supplier of -- for the most part, merchant silicon, how do you sort of plan or how do you strategize competing with essentially some of your customers?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : To something like that, we might be able to see on the data center side?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : On AI PCs, from a financial markets perspective, CES was very much sort of an AI PC Fest and Computex was also another one. More recently, I think, sentiment on our side, if you will, has come down a little bit. What are your thoughts on AI PCs? What are you focused on as it pertains to killer

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Okay. And then from a competitive standpoint, I think historically, you've been better positioned on the consumer side and maybe a little bit less on the commercial side. going forward with AI PCs, could that be sort of a catalyst for you to improve your position on the commercial side?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Shifting gears a little bit, your embedded business or primarily FPGA business is about 40%, 45% off the recent peak. You did, I believe, guide that business up going forward. What are you seeing from a customer order pattern perspective? You service industrial, automotive, consumer, et cetera? Are there any applications or end markets that sort of stand out from a demand standpoint?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Got it. Coming back to AI, just on how you think about the portfolio and potentially M&A going forward. You've had Xilinx, Pensando, multiple software assets and now, again, hasn't closed with ZT systems. At this point, do you believe like you have the portfolio on the right assets to be very competitive? Or are there still holes that you feel like you need to fill?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Okay. Great. The other question that we often get is on sort of the supply chain and what's going on there. Nothing specific to AMD, but I think generally speaking, things like advanced packaging and high-bandwidth memory have been fairly tight from a supply perspective in '24 and going into '25, how supply constrained are you in your data center business? And I know this is a tough question, but at what point do you feel like supply can potentially catch up the demand? I know it's a moving target.

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Got it. On supply and sort of how you think about your manufacturing strategy, the other question we often get is, how should. How do you think about your foundry strategy going forward? You have a lot of concentration at TSMC and specifically in Taiwan and this certainly isn't specific to AMD. But how do you think about sort of plan B, if you will, if there is one, when you're thinking out three, four, five years down the line?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Okay. Great. In the last two minutes, just one last question. And how we should be thinking about OpEx leverage, your investments in the near term versus generating profits and free cash flow, if you will, for investors. Obviously, you have a rich set of opportunities as we've sort of discussed. You do have a lot of competition with very strong companies. You're a strong company as well. How do you think about that balance investments versus showing returns, if you will, for the investor base?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : In the last minute or so, then we have a little bit of time. Anything that perhaps we didn't touch in the session or as you have discussions with investors and analysts as a collective unit, any aspects of AMD or your markets that we either overlook or underappreciate?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Great. Thank you so much for the time and hope to have you back next year. 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 09, 2024 / 7:25PM, AMD.OQ - Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference