Advanced Micro Devices Inc.
reported Tuesday a 98% decline in net income for the fourth quarter as operating expenses more than doubled and sales linked to its PC clients were cut in half.
The Santa Clara, Calif.-based chip maker, whose central processing units are used to build videogame consoles and gaming PCs, said net income for the period fell to $21 million, or 1 cent a share, from $974 million, or 80 cents a share, for the same period a year earlier. The company said the decline was mostly linked to its acquisition of semiconductor company Xilinx Inc.
AMD’s fourth-quarter operating expenses jumped to $2.56 billion from $1.22 billion a year earlier. Revenue for its client segment dropped 51% to $903 million due to lower processor shipments from weaker demand in the PC market. Additionally, revenue from its gaming segment declined 7% to $1.6 billion.
Revenue increased to $5.60 billion from $4.83 billion a year earlier. Analysts polled by FactSet had forecast revenue of $5.51 billion. Growth could be seen in its data center revenue, which jumped 42% to $1.7 billion.
AMD and peers such as Intel Corp.
have reported weaker demand amid a worldwide slump in PC sales that’s expected to last until 2024. Both companies have been more directly affected by these economic woes compared to their counterparts that supply primarily to the auto industry.
Market conditions led AMD to warn investors about an anticipated sales decline for its first quarter of 2023.
The company said revenue for the first three months of the year is expected to decline about 10% to $5.3 billion, plus or minus $300 million, as sales across its client and gaming segments are expected to continue falling. Analysts polled by FactSet had forecast revenue of $5.5 billion for the first quarter.
AMD’s fourth-quarter results come shortly after the Biden administration said it would consider cutting off Chinese chip maker Huawei Technologies Co. from US suppliers due to security concerns, according to people familiar with the matter.
Write to Sabela Ojea at [email protected]
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Appeared in the February 1, 2023, print edition as ‘AMD’s Profit Plunges 98%.’