Q4 2021 Advanced Micro Devices Inc Earnings Call

Speaker 1: Hello and welcome to the AMD fourth quarter in full year 2021 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the form of...

Hello, and welcome to the AMD fourth quarter and full year 2021 financial results conference call at this time, all participants certainly listen only mode.

A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this cop-

If anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Laura Graves corporate Vice President of Investor Relations. Laura. Please go ahead.

Speaker 1: It's now my pleasure to turn the call over to Laura Graves, Corporate Vice President ofisations.

Speaker 2: Thank you and welcome to AMD's fourth quarter and fiscal year in 2021 financial results conference call. By now you should have had the opportunity to review a copy of our earnings release and accompanying slideware. If you have not reviewed these documents yet, they can be found on the investor relations page of AMD.com.

Thank you and welcome to Amd's fourth quarter and fiscal year end 2021 financial results Conference call by now you should have had the opportunity to review a copy of our earnings release and accompanying slide where.

If you have not reviewed these documents yet they can be found on the investor relations page of AMD Dot com.

Speaker 2: Participants on today's conference call or Dr. Lisa Sue are President and Chief Executive Officer and Devinna Kumar are Executive Vice President, Chief Financial Officer and Treasurer.

Participants on today's conference call are Dr. Lisa Su, our President and Chief Executive Officer, and Devendra Kumar, Our executive Vice President Chief Financial Officer and Treasurer.

Speaker 2: This is a live call and will be replayed via webcast on our website.

This is a live call and will be replayed via webcast on our website.

Speaker 2: Before we begin, I would like to note that Dan Massimera, Senior Vice President and General Manager of Server, will attend the virtual CESCO HANA Financial Group 11th Annual Technology Conference on Thursday, March 3rd.

Before we begin I would like to note that Dan Mcnamara Senior Vice President and General manager server will attend to virtual Susquehanna financial group's 11th annual Technology Conference on Thursday March 3rd.

Speaker 2: Our first quarter 2022 quiet time is expected to begin at the close of business on Friday, March 11th, and AMD will host its 2022 Financial Analyst Day on Thursday, June 9th.

Our first quarter 2022 quiet time is expected to begin at the close of business on Friday March 11.

And Andy will host the 2022 financial Analyst day on Thursday June nine.

Speaker 2: Today's discussions contain forward-looking statements based on current beliefs, assumptions and expectations, seek only as of today and as such involve risks and uncertainties that could cause actual results to differ materially from our current expectations.

Today's discussions contain forward looking statements based on current beliefs assumptions and expectations speak.

Only as of today and as such involve risks and uncertainties that could cause actual results to differ materially from our current expectations.

Speaker 2: Please refer to the cautionary statement in our press release for more information on factors that could cause the results to differ.

Please refer to the cautionary statement in our press release for more information on factors that could cause the results to differ.

Speaker 2: We will refer primarily to non- GAAP financial measures during this call. The full non-gap to gap reconciliation are available in today's press release and the slide posted on our website. Now with that, I will hand the call over to...

We will refer primarily to non-GAAP financial measures. During this call the full non-GAAP to GAAP reconciliations are available in today's press release and the slides posted on our website.

Now with that I will hand, the call over to Lisa Lisa.

Speaker 3: Thank you, Laura, and good afternoon to all those listening in today.

Thank you Laura and good afternoon to all those listening in today.

Speaker 3: 2021 was an outstanding year for AMD, as we exceeded our aggressive growth goals and delivered another record year.

'twenty one was an outstanding year for AMD as we exceeded our aggressive growth goals and delivered another record year.

Speaker 3: Each of our businesses grew significantly and set new annual revenue records highlighted by data center revenue more than doubling year over year.

Each of our businesses grew significantly and set new annual revenue record highlighted by data center revenue more than doubling year over year.

Speaker 3: annual revenue grew 68% to a record 16.4 billion and we expanded gross margin for the sixth six great year.

Annual revenue grew 68% to a record $16 4 billion and we expanded gross margin for the sixth straight year.

Speaker 3: We also delivered record net income in EPS, both of which more than double year over year.

We also delivered record net income and EPS, both of which more than doubled year over year.

Speaker 3: Looking at the fourth quarter, we ended the year exceptionally strong with our sixth quarter of greater than 45% year over year revenue growth.

Looking at the fourth quarter, we ended the year exceptionally strong with our sixth straight quarter of greater than 45% year over year revenue growth.

Speaker 3: Fourth corner revenue grew 49% from a year ago to a record 4.8 billion.

Fourth quarter revenue grew 49% from a year ago to a record $4 8 billion.

Speaker 3: We expanded Gross Margin by more than 5% of the point and doubled operating income year over year.

We expanded gross margin by more than five percentage points and doubled operating income year over year.

Speaker 3: Turning to our computing and graphic segments, revenue increased 32% year over year to 2.6 billion, driven by growth in both rising and radion processor sales.

Turning to our computing and graphics segment.

Revenue increased 32% year over year to $2 6 billion driven by growth in both ryzen and Radeon processor sales.

Speaker 3: Record client computing revenue grew by a double digit percentage from a year ago led by record notebook sales.

Record client computing revenue grew by a double digit percentage from a year ago led by record notebook sales.

Speaker 3: We've got strong demand for premium AMD notebooks and their higher-end desktop CPUs in the quarter as Ryzen 5,000 processor unit shipments grew by a double-digit percentage sequentially.

We saw strong demand for premium AMD notebooks and their higher end desktop Gpus in the quarter as Ryzen 5000 processor unit shipments grew by a double digit percentage sequentially.

Speaker 3: As a result, we believe we gained client processor revenue share for the seventh straight quarter.

As a result, we believe we gained client processor revenue share for the seventh straight quarter.

Speaker 3: We launched our Ryzen 6000 Series Notebook CTU's at CES last month, featuring our new Zen 3 Plus Core that further extends the leadership compute, gaming, and battery life capabilities of our mobile process.

We launched our Ryzen 6000 series notebooks Cpus at CES last month, featuring our new Zen three plus core that further extends the leadership compute gaming and battery life capabilities of our mobile processors.

Speaker 3: We increase the number of premium gaming and commercial design wins from Acer, Aceso, Dell, HP, Lenovo, and other major PC providers to more than 200, including more than 20 AMD advanced snow books that combine Ryzen CPUs, Radiant GPUs, and Radiant software to deliver the ultimate gaming.

We increase the number of premium gaming and commercial design wins from Acer Asus, Dell HP, Lenovo and other major PC providers to more than 200, including more than 20, AMD advanced notebooks that combine ryzen Cpus Radeon Gpus and Radeon software.

Deliver the ultimate gaming experience.

Speaker 3: We also provided the first public demonstration of our upcoming Ryzen 7000 desktop processors at TES.

We also provided the first public demonstration of our upcoming Ryzen 7000 desktop processors at CES.

Speaker 3: Ryzen 7000 Series Desktop CPUs provide a significant performance increase compared to our current Ryzen processors by combining our high performance 5 nanometers Zen 4 core with our next generation memory and IOT technology in the new AM5 stock.

Rising 7000 series desktop Gpus provide a significant performance increase compared to our current ryzen processors by combining our high performance five nanometer Zen four core with our next generation memory and Io technology in the new E M five sockets.

Speaker 3: There's a lot of excitement in the market for our next gen Ryzen desktop processors and we're on track to launch in the second half of 2020.

There's a lot of excitement in the market for Nexgen Ryzen desktop processors and we're on track to launch in the second half of 2022.

Speaker 3: In graphics, review more than double-view over year for the third straight quarter.

In graphics revenue more than doubled year over year for the third straight quarter.

Speaker 3: Radiant 6000 series GPU unit shipments and revenues both grew by double digit percentages sequentially led by strong demand across our RDNA2 desktop family.

Radeon 6000 series GPU unit shipments and revenue both grew by double digit percentages sequentially led by strong demand across our rdna two desktop family.

Speaker 3: At TEF, we announced that we extended our Radeon 6000 Series GPU portfolio with our first mainstream RDNA2 desktop GPU, Christ at $199.

At CES, we announced that we expanded our Radeon 6000 series GPU portfolio with our first mainstream rdna, two desktop GPU priced at $199.

Speaker 3: We also introduce new mobile GPUs that deliver up to 20% more performance than our prior generation and our first mobile graphics chips for thin and light gaming books.

We also introduced new mobile Gpus that deliver up to 20% more performance than our prior generation and our first mobile graphics chips for thin and light gaming notebooks.

Speaker 3: Data center graphics revenue more than doubled year over year, driven largely by HPC wins for our latest Instinct MI200 accelerant.

It has been our graphics revenue more than doubled year over year, driven largely by HPT wins, where our latest instinct M. I 200 accelerators.

Speaker 3: We are seeing growing customer engagements for our data center GPUs based on the leadership AI and HTT performance of our new MI200 accelerators, highlighted by multiple supercomputing wings and an expanded set of platforms on track to launch from Atos, Dell, HP, Lenovo, Supermicro, and others starting later this quarter.

We are seeing growing customer engagements for our datacenter Gpus based on the leadership AI and HTC performance of our new M. I 200 accelerators highlighted by multiple supercomputing wins and an expanded set of platforms on track to launch from a post Dell HP, Lenovo Supermicro and <unk>.

Others, starting later this quarter.

Speaker 3: Turning to our enterprise embedded in semi-custom segment, revenue increased 75% year over year to $2.2 billion, driven by record epic processor and semi-custom sales.

Turning to our enterprise embedded and semi custom segment revenue increased 75% year over year to $2 2 billion driven by record epic processor and semi custom sales.

Speaker 3: Semi-custom sales increase year over year as the current game console cycle continues outpacing all prior generations.

Semi custom sales increased year over year as the current game console cycle continues outpacing all prior generations.

Speaker 3: We expect revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles.

We expect revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles.

Speaker 3: Turning to server, we had another outstanding quarter.

Turning to server, we had another outstanding quarter.

Speaker 3: Revenue more than double year over year and increased by a double digit percentage to quenchally, driven by demand across both cloud and enterprise customers.

Revenue more than doubled year over year and increased by a double digit percentage sequentially driven by demand across both cloud and enterprise customers.

Speaker 3: In cloud, revenue more than doubled year over year as the largest providers expanded internal deployment and more than 130 new AMD-powered instances launched from Amazon Web Services, Alibaba, Google, IBM, Microsoft Azure, and others.

In cloud revenue more than doubled year over year as the largest providers expanded internal deployments and more than 130, new AMD powered instances launch from Amazon Web services, Alibaba, Google IBM, Microsoft Azure and others.

Speaker 3: Microsoft Azure previewed a new HPC instance powered by our 3rd Gen EPYC processors with 3D-stacked memory that delivers up to 80% more performance than currently available instances.

Microsoft Azure or previewed a new HTC instance, powered by our third Gen epic processors with three D stacked memory that delivers up to 80% more performance than currently available instances.

Speaker 3: Our differentiated 3D stacking technology further extends the leadership performance of EPIC processors in technical computing workloads like EDA, fluid dynamics, and complex simulation.

Our differentiated <unk> stacking technology further extends the leadership performance of epic processors in technical computing workloads like E D a fluid dynamics and complex stimulations.

Speaker 3: We started volume production of Epic processors with 3D stacked memory earlier this quarter in advance of OEM platform launches with all our major server partners.

We started volume production of epic processors with <unk> stacked memory earlier this quarter in advance of OEM platform launches with all our major server partners.

Speaker 3: In enterprise, revenue doubled year over year, driven by the ongoing ramp of more than 100 third-gen EPIC platforms available from Dell, HC Enterprise, Lenovo, Supermicro, Cisco, and others.

In enterprise revenue doubled year over year, driven by the ongoing ramp of more than 103rd Gen epic platforms available from Dell HP enterprise.

Novo Supermicro, Cisco and others.

Speaker 3: In HPC, EPIC processor adoption was highlighted by the number of AMD-powered supercomputers on the November Top 500 Fastest Supercomputers list, tripling year-over-year to 72.

In H P. C. Epic processor adoption was highlighted by the number of AMD powered supercomputers on the November top 500 fastest supercomputers list tripling year over year to 73.

Speaker 3: Epic processors also dominated the green 500 list and are now powering 8 of the top 10 most efficient supercomputers in the world.

Epic processors also dominated the Green 500 list and are now powering eight of the top 10, most efficient supercomputers in the world.

Speaker 3: Turning to our overall data set of visits, we made outstanding progress in the last year.

Turning to our overall data center visits we made outstanding progress in the last year.

Speaker 3: We exited 2021 with data center revenue contributing a mid-20s percentage of overall revenue, and we expect 2022 to be another year of significant growth based on the strong customer demand signals for our current and next generation products.

We exited 2021 with data center revenue contributing a mid twenties percentage of overall revenue and we expect 2020 to be another year of significant growth based on the strong customer demand signals for our current and next generation products.

Speaker 3: In November , we provided first details of our next-generation EPYC processor, codenamed Genoa, that will feature up to 96 Zen 4 cores and next-generation memory and I.O. technologies, including breakthrough memory expansion capabilities.

In November we provided first details of our next generation Epic processor code named Genoa that will feature up to 96 Gen. Four cores and next generation memory, and Io technologies, including breakthrough memory expansion capabilities.

Speaker 3: Customer excitement for Genoa is extremely high as it extends our performance leadership across a broad range of workloads.

Customer excitement for general is extremely high as it extends our performance leadership across a broad range of workloads.

Speaker 3: We also announced the addition of Bergamo to our server roadmap, featuring a version of our Xen4 core called Xen4c that has been specifically optimized for cloud-native computing.

We also announced the addition of Bergamo to our server Roadmaps featuring a version of our Gen. Four core called Zen foresee that has been specifically optimized for cloud native computing.

Speaker 3: Fergamo is a high core count, power efficient CPU that can be used in the same platforms as Genoa.

First of all is a high core count power efficient CCU that can be used in the same platforms as Genoa.

Speaker 3: It will feature up to 128 CTU cores and deliver significant performance and power efficiency for cloud workload.

It will feature up to 102000, Acu cores and deliver significant performance and power efficiency advantages for cloud workloads.

Speaker 3: We are sampling Genoa processors to customers now and are on track to launch later this year with Bergamo shipments planned to follow in the first half of 2023.

We are sampling general processors to customers now and are on track to launch later this year with Bergamo shipments planned to follow in the first half of 2023.

Speaker 3: Turning to our Xilinx acquisition, we were pleased to announce that China's State Administration for Market Regulation approved the transaction on January 27.

Turning to our Xilinx acquisition, we were pleased to announce the China State administration for market regulation approved the transaction on January 27.

Speaker 3: The only remaining regulatory approval required is FTC approval of our HSR refiling, and we expect to close the transaction in the first quarter of 2022.

The only remaining regulatory approval required is FTC approval of our HSR re filing and we expect to close the transaction in the first quarter of 2022.

Speaker 3: I am more excited than ever about the benefits of the acquisition for both AMD and Xilin stakeholders.

I am more excited than ever about the benefits of the acquisition for both AMD and xilinx stakeholders.

Speaker 3: Customer excitement is also high as they look forward to the opportunity to deepen their strategic engagements with AMD based on our expanded technology and solutions portfolio.

Customer excitement is also high as they look forward to the opportunity to deepen their strategic engagements with AMD based on our expanded technology and solutions portfolio.

Speaker 3: In summary, I am incredibly proud of our performance in 2021.

In summary, I'm incredibly proud of our performance in 2021.

Speaker 3: Our record annual results highlight our strong execution over multiple years to establish the technical, operational, and strategic foundation to position AMD as a high-performance computing leader.

Our record annual results highlight our strong execution over multiple years to establish the technical operational and strategic foundation to position AMD as a high performance computing leader.

Speaker 3: Each of our businesses performed extremely well in 2021, with growth significantly ahead of the long-term financial model we outlined at our Financial Analyst Day in 2020.

Each of our businesses performed extremely well in 2021 with growth significantly ahead of the long term financial model, we outlined at our financial analyst day in 2020.

Speaker 3: I want to take a moment to recognize and thank the AMD employees whose passion, dedication, and execution have enabled this success.

I want to take a moment to recognize and thank the AMD employees, whose passion dedication and execution have enabled this success.

Speaker 3: Turning to 2022, demand for our products is very strong and we look forward to another year of significant growth and share gain as we ramp our current products and launch our next wave of Zen 4 CPUs and RDNA 3 GPUs.

Turning to 2020 to demand for our products is very strong and we look forward to another year of significant growth and share gains as we ramp our current products and launch our next wave of Zen four Cpus and rdna three Gpus.

Speaker 3: We have also made significant investments to secure the capacity needed to support our growth in 2022 and beyond.

We have also made significant investments to secure the capacity needed to support our growth in 2022 and beyond.

Speaker 3: Looking out over the long term, we are confident in our ability to continue growing significantly faster than the market based on our expanded roadmap investments and the deep relationships we have established with a broad set of customers who view AMD as a strategic enabler of their success.

Looking out over the long term, we're confident in our ability to continue growing significantly faster than the market based on our expanded roadmap investments and the deep relationships. We have established with a broad set of customers, who view AMG as a strategic enabler of their success.

Speaker 3: Now I'd like to turn the call over to Devinder to provide some additional color on our fourth quarter and full year financial performance.

Now I'd like to turn the call over to the vendor to provide some additional color on our fourth quarter and full year financial performance.

The vendor.

Speaker 4: Thank you, Lisa, and good afternoon, everyone. We had a very strong 2021 with increased demand for our product.

Thank you Lisa and good afternoon, everyone. We had a very strong 2021 with increased demand for our products.

Speaker 4: Excellent execution resulted in record annual revenue, continued gross margin expansion, record profitability, and significant cash flow generation.

Excellent execution resulted in record annual revenue continued gross margin expansion record profitability and significant cash flow generation.

Speaker 4: Fourth quarter 2021 revenue of $4.8 billion was our sixth consecutive quarterly record, up 49% from a year ago, driven by strong revenue increases across all businesses.

For the fourth quarter of 2021 revenue of $4 8 billion was over six consecutive quarterly record of 49% from a year ago, driven by strong revenue increases across all businesses gross margin was 50% up 560 basis points from a year ago driven.

Speaker 4: Gross margin was 50% up 560 basis points from a year ago, driven by a richer mix of products and data center revenue growth.

By a richer mix of products and data center revenue growth.

Speaker 4: Operating expenses were $1.1 billion compared to $789 million a year ago as we increased investments in our long-term product roadmaps to support the significant growth trajectory of our business.

Operating expenses were $1 1 billion compared to $789 million a year ago as we increase investments in our long term product roadmap to support the significant growth trajectory of all of this was operating income doubled from a year ago to a record $1 3 billion up six.

Speaker 4: Operating income doubled from a year ago to a record 1.3 billion up 665 million primarily driven by significant revenue growth and higher growth margin.

<unk> hundred $65 million, primarily driven by significant revenue growth and higher gross margin.

Speaker 4: Operating margin was 27%, up from 20% a year ago. Net income was a record $1.1 billion, up $486 million from a year ago. Diluted earnings per share was $0.92 compared to $0.52 per share a year ago. This includes a 15% effective tax rate compared to a 3% rate a year ago.

Operating margin was 27% up from 20% a year ago net income was a record $1 1 billion up $486 million from a year ago.

Diluted earnings per share was <unk> 92.

Compared to <unk> <unk> per share a year ago. This includes a 15% effective tax rate compared to a 3% rate a year ago.

Speaker 4: Now turning to fourth quarter business segment results. Computing and graphic segment revenue was 2.6 billion, up 32% year over year, driven by higher graphics and client processor revenue.

Now turning to fourth quarter business segment results.

Computing and graphics segment revenue was $2 6 billion up 32% year over year, driven by higher graphics and client processor revenue comps.

Speaker 4: Computing and Graphics Segment Operating Income was $566 million, or 22% of revenue, compared to $420 million a year ago. The increase in operating income was driven primarily by higher revenue, partially offset by higher operating expenses.

Computing and graphics segment operating income was $566 million or 22% of revenue compared to $420 million a year ago. The increase in operating income was driven primarily by higher revenue, partially offset by higher operating expenses.

Speaker 4: Enterprise embedded and semi-custom segment revenue was $2.2 billion, up 75% from $1.3 billion the prior year. The strong revenue increase was driven by significantly higher EPIC processor and semi-custom sales.

Enterprise embedded and semi custom segment revenue was $2 2 billion up 75% from $1 3 billion. The prior year. The strong revenue increase was driven by significantly higher epic processor and semi custom sales.

Speaker 4: EESC segment operating income grew significantly to $762 million or 34% of revenue compared to $243 million or 19% a year ago. Operating income growth was driven primarily by higher revenue and richer product mix, partially offset by higher R&D and go-to-market expenses.

<unk> segment operating income grew significantly to $762 million or 34% of revenue compared to 243 million or 19% a year ago.

Operating income growth was driven primarily by higher revenue and richer product mix, partially offset by higher R&D and go to market expenses.

Speaker 4: Turning to the balance sheet, cash, cash equivalents, and short-term investments were $3.6 billion at year-end.

Turning to the balance sheet.

Cash cash equivalents and short term investments was $3 6 billion at year end.

Speaker 4: As we continue returning capital to shareholders, we repurchased $756 million of common stock in the fourth quarter and closed out the year with $1.8 billion of repurchase.

As we continue returning capital to shareholders, we repurchased 756 million of common stock in the fourth quarter and closed out the year with $1 8 billion of repurchases. Additionally, we have repurchased $1 billion to date in the first quarter of 2022.

Speaker 4: Additionally, we have repurchased $1 billion to date in the first quarter of 2022 and have $1.2 billion remaining under the authorized $4 billion share repurchase plan.

And have $1 2 billion remaining under the authorized $4 billion share repurchase plan.

Speaker 4: Quarterly free cash flow was $736 million compared to $480 million in the same quarter last year and $764 million in the prior quarter.

Quarterly free cash flow was $736 million compared to $480 million in the same quarter last year and $764 million in the prior quarter.

Speaker 4: Inventory was $2 billion, up $53 million from the prior quarter.

Inventory was $2 billion up $53 million from the prior quarter.

Speaker 4: Now let me turn to our full year financial results. 2021 revenue was $16.4 billion, up 68% year-on-year, driven by strong growth across all business.

Now, let me turn to our full year financial results 2021 revenue was $16 4 billion up 68% year on year, driven by strong growth across all businesses gross margin was 48% up 370 basis points from the prior year.

Speaker 4: Gross margin was 48%, up 370 basis points from the prior year, driven by the strength and competitiveness of our EPIC, Radeon, and Ryzen processors.

Driven by the strength and competitive.

Of our epic Radeon and ryzen processors.

Speaker 4: Operating expenses for 24% of revenue compared to 28% in 2020.

Operating expenses were 24% of revenue compared to 28% in 2020.

Speaker 4: 2021 operating income was up 146% from a year ago to $4.1 billion, resulting in an operating margin of 25% compared to 17% in 2020. Net income was $3.4 billion, up 118% from the prior year.

2021, operating income was up 146% from a year ago to $4 1 billion, resulting in an operating margin of 25% compared to 17% in 2020 net income was $3 4 billion up 118% from the <unk>.

Prior year.

Speaker 4: Full-year free cash flow was a record $3.2 billion resulting in free cash flow margin of 20% for the year. In addition, we invested approximately $1 billion during 2021 in long-term supply chain capacity to support our expectations for future revenue and market share growth.

Full year free cash flow was a record $3 2 billion, resulting in free cash flow margin of 20% for the year.

In addition, we invested approximately $1 billion during 2021 in long term supply chain capacity to support our expectations for future revenue and market share growth.

Speaker 4: Let me now turn to our financial outlook. Today's outlook is based on current expectations and contemplates the current global supply environment and customer signals and does not contemplate the addition of Xilinx as that transaction has not yet closed. First quarter 2022.

Let me now turn to our financial outlook today's outlook is based on current expectations and contemplates the current global supply environment and customer signals and does not contemplate. The addition of Xilinx has that transaction has not yet closed.

First quarter 2022 revenue.

Speaker 4: is expected to be approximately $5 billion, plus or minus $100 million, an increase of approximately 45% year-over-year and approximately 4% quarter-on-quarter.

<unk> is expected to be approximately 5 billion plus or minus $100 million, an increase of approximately 45% year over year and approximately 4% quarter on quarter.

Speaker 4: The year-over-year increase is expected to be driven by growth across all businesses.

Year over year increase is expected to be driven by growth across all businesses.

Speaker 4: The quarter and quarter increase is expected to be driven by higher server and client revenue.

Quarter on quarter increase is expected to be driven by higher silver and client revenue.

Speaker 4: In addition, for Q1 2022, we expect non-GAAP gross margin to be approximately 50.5%, non-GAAP opening expenses to be approximately 1.2 billion, non-GAAP interest expense taxes and others to be approximately 207 million based on a 15% effective tax rate, and the diluted share count to be approximately 1.22 billion shares.

In addition for Q1 2022, we expect non-GAAP gross margin to be approximately 55% non-GAAP operating expenses to be approximately $1 2 billion non-GAAP interest expense taxes, and others to be approximately $207 million based on the 15.

<unk> percent effective tax rate and the diluted share count to be approximately one 2 billion shares.

Speaker 4: For the full year 2022, we expect revenue to be approximately $21.5 billion, an increase of approximately 31% driven by growth across all businesses.

For the full year 2022, we expect revenue to be approximately $21 5 billion, an increase of approximately 31% driven by growth across all businesses.

Speaker 4: We expect non-GAAP gross margin to be approximately 51 percent, non-GAAP operating expenses to be approximately 24 percent of revenue, non-GAAP effective tax rate to be 15 percent, and non-GAAP cash tax rate to be approximately 9 percent due primarily to the U.S. tax requirement to capitalize R&D and the full utilization of our U.S. net operating losses and tax credits in 2022.

We expect non-GAAP gross margin to be approximately 51% non-GAAP operating expenses to be approximately 24% of revenue non-GAAP effective tax rate to be 15% and non-GAAP cash tax rate to be approximately 9% due primarily to the U S tax.

Requirement to capitalize R&D and the full utilization of our U S net operating losses and tax credits in 2022.

Speaker 4: In closing, we had an outstanding quarter and an excellent year with very strong revenue growth and numerous financial records. As we enter 2022, our leadership products and growing customer momentum continue to position us very well for long term growth.

In closing, we had an outstanding quarter and an excellent year with very strong revenue growth and numerous financial records as we enter 2022, our leadership products and growing customer momentum continue to position us very well for long term growth.

Speaker 4: I look forward to AMD delivering another year of very strong financial performance. With that, I'll turn it back to Laura for the question and unprofession. Laura?

I look forward to AMD delivering another year of very strong financial performance with that I'll turn it back to Laura for the question and answer session Laura.

Speaker 1: Thank you, Divinder, and thank you, Lisa, operator, we're ready for our first question. Certainly. When I'll be conducting a question and answer session, if you'd like to be placed in the question.

Thank you to vendor and thank you Alicia operator, we're ready for our first question.

Certainly, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad one moment. Please when we poll for questions.

Speaker 1: Our first question today is coming from Aaron Rakers from Wells Fargo. Your line is now live.

Our first question today is coming from Aaron Rakers from Wells Fargo. Your line is now live.

Speaker 5: Yeah, thanks for taking the question and congratulations on the quarter. Just thinking about the full year, you know, guidance, I know that you had mentioned in your prepared remarks that you expect the semi-custom segment to grow. I'm curious if you could help us maybe appreciate how you're thinking about the semi-custom segment relative to the server segment and whether or not.

Yes, thanks for taking the question and congratulations on the quarter.

Just thinking about the full year guidance I know that you had mentioned in your prepared remarks that you expect the semi custom segment to grow I'm curious if you could help us maybe appreciate how youre thinking about the semi custom segment relative to the server segment and whether or not.

Speaker 5: That 30% contribution from total data center still applies for 2023. The outlook that you had provided at the last day or you think that's what we're tracking above that trend. Thank you.

At 30% contribution from total data center is still applies for 2023. The outlook that you had provided at the last analyst day or do you think thats what were tracking above that that trend. Thank you.

Speaker 3: Sure, Erin, thanks for the question. So for 2022, our current view is that we'll see growth in all of our businesses. We see strong.

Sure Erin Thanks for the question so for.

2022.

Our current view is that we will see growth in all of our businesses, we see strong.

Speaker 6: you know, demand for products as well as, you know, we have increased supply capability given what we've done with our with our partners. So relative to, you know, the growth from the different businesses, the growth will be led by server. So from what we see from customers and, you know, sort of design wins and platforms and all that.

Demand for our products as well as we have increased supply capability, given what we've done with our with our partner so.

Relative to the growth from the different businesses the growth will be led by server. So from what we see from customers and sort of design wins in platforms and all of that.

Speaker 6: A server will be very strong next year. But we also expect growth from our other businesses, including consoles, including our PC business, our graphics business, and our embedded business.

Server will be very strong next year, but we also expect growth from our other businesses, including consoles, including RPC business, our graphics business and our embedded business. So we expect the.

Speaker 7: So we expect the percentage of data center to continue to increase as we go into next year and we'll give more on that as we go through the year. Thank you. Thanks, Erin. Thanks, your next question today is coming from Matt Ramsey from Cowan & Company. Your line is now live. Thank you very much, good afternoon. For the whole team, but Lee Six.

Percentage of datacenter.

We continue to increase as we go into next year, and we'll give more on that as we go through the year.

Thank you.

Thanks Sharon.

Thank you. Our next question today is coming from Matt Ramsay from Cowen and company. Your line is now live.

Thank you very much good afternoon.

For the whole team, but Lisa congrats on getting close on Xilinx excited to see what that brings and obviously the strong results.

One of the questions I'm getting Tonight.

With such a strong start greater than 30% guidance for revenue in 2022 can you just kind of walk us through maybe with a little more specificity. Some of the things that you've done in the supply chain around substrates around backend test and package around.

Wafer demand and just to give people comfort that theres coverage, there and visibility in the potential for upside, particularly as you take server and desktop onto five nanometer I imagine seven nanometer capacity won't go away. It will it'll stay as that new capacity comes online. So I just wanted to make sure I understand all the variables around the confidence and supply. Thanks.

Speaker 6: Yeah, absolutely Matt, thanks for the question. So, you know, we've been working on, you know, sort of the supply chain, really for the last four or five quarters, you know, knowing the growth that we have from a product standpoint and, you know, the visibility that we have from customers. So, in regards to your question on 2022 supply environment, we've made significant investments in, you know, wafer capacity as well as substrate capacity and back end capacity. We feel very good about our progress in the supply chain.

Yeah, absolutely Matt Thanks for the question so we've.

We've been working on sort of the supply chain.

For the last four or five quarters.

Knowing the growth that we have from a product standpoint, and the visibility that we have from customers. So in regards to your question on 2022 supply environment, we've made significant investments.

In wafer capacity as well as substrate capacity in back end capacity and we feel very good about our progress in the supply chain.

Speaker 6: to meet the 2022 guidance. And our goal is frankly to have...

To meet the 2022 guidance and our goal is frankly to have.

Speaker 6: enough supply to satisfy the demand out there. So, you know, our view is we're going to continue to work with our partners and our customers to ensure that we know what they need.

Our supply to satisfy the demand out there. So our view is we're going to continue to work with our partners and our customers to ensure that we know what they need and like.

Speaker 6: And likewise, our capacity investments are...

Likewise, our capacity investments are for 2022, but also beyond 'twenty two because.

Speaker 6: for 2022 but also beyond 22 because you know as a business rose we need to continue to forecast and make plans for that and that's what we've been working on.

The business grows we need to continue to forecast and make plans for that and that's what we've been we've been working on.

Speaker 7: Thanks for that. Just as a follow-up, I've been hearing more and more, and as you guys roll out the 5-nanometer portfolio, many of those products in server and in desktop will include...

Very good thanks for that just as a follow up.

I've been hearing more and more and as you guys roll out the five nanometer portfolio.

Many of those products and server and desktop will include.

Next generation Infinity fabric and it's been a con.

Conversation for a while about what you guys are branded sort of <unk>, plus a A&P CPU and GPU together I Wonder as you look out over the next several quarters, how we sell how would you characterize that combination and importance to your company strategy and the growth. Thanks.

Speaker 6: Yeah, well, we're very excited about our five nanometer products. I think Zen4 is very, very critical. It's a focus for this year for both our server roadmap as well as our client roadmap. And then the work with the Infinity Fabric really is just on top of that and allows us to continue to optimize the AMD CPU and GPU ecosystem together. So whether on the data center side with our data center GPU products, you know, working with Epic in high performance computing or on the PC side when we have our, our, you know, AMD APUs plus our discrete graphics, you know, plus the software on top. So it is, it is an important, very important element of our strategy.

Yeah, well, we're very excited about our five nanometer products I think gen. Four is.

<unk>.

Very very critical it's a focus for this year for both our server roadmap as well as our client roadmap and then to work with the Infinity fabric really it really is just on top of that and allows us to continue to.

To optimize sort of the AMD CPU and GPU ecosystem together, so whether on the datacenter side.

With our data center GPU products working with epic in high performance computing or on the PC side, when we have our.

Our our AMD <unk>, plus our discrete graphics plus the software on top so it is it is an important very important element of our strategy and it just goes to continuing to differentiate with the overall portfolio as we as we go into these new platforms.

Speaker 6: And, you know, it just goes to continuing to, you know, differentiate.

Speaker 6: with the overall portfolio as we go into these new platforms.

Thank you Matt Operator next question. Please certainly our next question is coming from Ross Seymore from Deutsche Bank. Your line is now live.

Speaker 1: Matt, not for your next question please. Certainly our next question is coming from Ross Seymour from Goetheabankerline. Is that a lot?

Speaker 8: Hi, thanks for letting me ask a question. Congrats on the strong results and the strong guide. Lisa, I just want to talk about the computing segment, the client computing side. At least in my model, that was a significant portion of the upside in the quarter after, I believe, last quarter, you talked about not wanting to

Hi, Thanks for letting me ask a question congrats on the strong results and a strong guide Lisa I just wanted to talk about the computing segment. The client computing side at least in my model that was a significant portion of the upside in the quarter. After I believe last quarter, you talked about not wanting to fill the channel and make sure you shipped according to demand so in the near term what chain.

Speaker 8: fill the channel and make sure you ship according to demand so in the near term what changed and and perhaps more importantly as you look into 2022 it appears that you're

And perhaps more importantly, as you look into 2022. It appears that you are.

Speaker 8: planning for significant sharegames to continue in that sector. Can you talk a little bit about what gives the confidence for that sharegain please?

Planning for significant share gains to continue in that sector can you talk a little bit about what gives the confidence for that sugar <unk>. Please.

Speaker 6: Sure, Ross. So, you know, your question about the Computing and Graphic segment. Well, you know, our focus in this segment is to be a very closely aligned with our customers and what they're doing in the market. So we've been monitoring.

Sure Ross so.

Your question about the computing and graphics segment are.

Our focus in this segment is to be a very closely aligned with our customers and what they're doing in the market. So we've been monitoring sell in and sell out and sell through trends very carefully I think the strength that we saw in the fourth quarter was very much a result of sort of the product strengths.

Speaker 6: you know, Sellin and Sellout and Sellthrough trends very carefully. I think the strength that we saw in the fourth quarter was, you know, very much a result of, you know, sort of the product strength. And, you know, we saw, you know, very nice notebook demand continuing at the premium.

And we saw.

A very nice notebook demand.

<unk> at the premium.

Speaker 6: part of the market in commercial gaming premium ultra-thin. So we believe that the PC performance was a bit above our original guidance, but we believe that was to match and user demand.

Part of the market in.

Commercial gaming premium ultra thin so.

So we believe that the.

The PC performance was a bit above our original guidance, but we believe that was too.

End user demand.

Speaker 6: Going into 2022, you know, again, same story. I think the, you know, what we see is, you know, 2021 was a strong year for PCs overall. You know, the industry shipped, you know, approximately 350 million units.

Into 2022 again same story I think the what we see is 2021 was a strong year for Pcs overall, the industry shipped approximately 350 million units.

Speaker 6: I think our view is that 2022 will be roughly flatish from a unit standpoint, but we will see some mixed changes in there with enterprise and premium being stronger than, for example, low end.

I think our view is that 2022 will be roughly flattish from a unit standpoint, but we will see a some mix changes in there with enterprise and premium being stronger than for example, low end and.

Speaker 6: education. So, you know, from our standpoint, it's revenue share that we believe we can gain. It's the strength of our rising 6000 series that we just launched at CES.

Education, so from our standpoint, its revenue share that we believe we can gain.

The strength of our rising 6000 series that we just launched at CES. We have 200 platforms from all of the OEM customers and we have pretty good visibility in working with our customers on that so I think we feel good about it and again the client business is one of them.

Speaker 6: We have 200 platforms from all of the OEM customers. And we have pretty good visibility and working with our customers on that. So I think we feel good about it. And again, the client business is one of all of our businesses will grow. And I like that diversity, frankly, in the portfolio. But we feel good about the progress we've made in PCs and we'll continue to ensure that we're matching.

All of our businesses will grow and I like that diversity frankly in the portfolio, but we feel good about the progress we've made in Pcs and we will continue to ensure that we're matching sell in with sell out so that there is not inventory build.

Speaker 6: selling with sell out so that there is not inventory build in the

In the business.

Speaker 8: Thanks for all that color. Maybe a quick follow up on the pricing side of the equation. You talked about getting enough supply to grow the impressive targets that you guys have for the year. Conceptually and strategically, how do you think about pricing? Is that something you pass along? Is it a tailwind to gross margin? And I don't know if you could give any sort of precision, but out of the 30% plus that you're guiding to for the fiscal year, roughly, how do we think about pricing as a tailwind within?

Thanks for all that color, maybe a quick follow up on the pricing side of the equation you talked about getting enough supply to grow the impressive targets that you guys have for the year.

Conceptually and strategically how do you think about pricing is that something you pass along is it a tailwind to gross margin and I don't know if you could give any sort of precision but out of the 30% plus that youre guiding to for the fiscal year, roughly how do we think about pricing as a tailwind within that.

Speaker 6: Yeah, well, you know, I would say the way to think about pricing is, you know, the industry has seen, you know, some price increases across the supply chain.

Yeah well.

I would say the way to think about pricing is the industry has seen some.

Some price increases across the supply chain and that's as to be expected given the amount of capacity that we're all putting on.

Speaker 6: And that's as to be expected, given the amount of capacity that we're all putting on to satisfy this strong demand. So we're always in this for the long term and working with our supply chain partners as well as our customers to ensure that we find a way to kind of share.

To satisfy the strong demand so.

We're always in this for the long term and working with our supply chain partners as well as our customers to ensure that we find a way to kind of share.

Speaker 6: the additional costs, but our focus is on ensuring that we have the supply to meet the high demand. And I think what you're seeing is

The additional costs, but our focus is on shoring uninsured that we have the supply.

Meet the meet the high demand and I think what Youre seeing is.

Speaker 6: you know growth in the model from the standpoint that you know we've always kind of said we're underrepresented in the business you know when you look even today with all of our growth we we're still underrepresented in the business whether you're talking about you know the server business or the the PC business and so you know we believe that our products rank and our you know customer engagements are such that that we can grow significantly in this environment.

Growth in the model from the standpoint that we've always kind of said we're underrepresented in the business. When you look even today with all of our growth, which we still underrepresented in the business, whether you are talking about the server business or the.

The PC business and so we believe that our product strength.

And our customer engagements are such that that we can grow.

Secondly in this environment.

Thank you.

Thanks Ross. Thank you. Our next question today is coming from Vivek Arya from Bank of America. Your line is now live.

Speaker 1: Your next question today is coming from the VecAria from Bank of America. Your line is out of line.

Speaker 9: Thanks for taking my question. Lisa, I wanted to get your thoughts on the competitive landscape in the server market this year versus last. You know, your competitor, Intel, is launching their Sapphire Rapids platform. They seem to be very excited about that. You know, they're adding a lot of capacity in their fabs. Enterprise spending, which has tended to favor them in the past, right, is also coming back. So I'm just curious, how are you thinking about AMD's ability to gain more share in servers this year?

Thanks for taking my question, Lisa I wanted to get your thoughts on the competitive landscape in the silver market this year versus last.

Your competitor Intel is launching their sapphire rapids platform they seem to be very excited about that.

Adding a lot of capacity in their fabs enterprise spending which has tended to favor them in the past.

Brighthouse is also coming back so I'm just curious how are you thinking about <unk> ability to gain more share in servers. This year.

Speaker 6: Yeah, Vivek, so look, we we always expect the competitive environment to be, you know, to be very strong and very aggressive. And that's the way we plan our business.

Yeah, Vivek. So look we always expect the competitive environment to be.

You have to be very strong and very aggressive and thats the way we plan our business.

Speaker 6: That being the case, I think we're very happy with the growth that we've seen in the business sort of last year. And as we look forward, we see opportunities in both cloud and enterprise. Now on the cloud side, we're in 10 of the largest hyper-scalers in the world, are using AMD. As they get familiar with us over multiple generations, they're expanding the workloads that they're using AMD on. So we see that across internal and external workloads in the enterprise segment.

That being the case I think we are.

Very happy with the growth that we've seen in the business.

Last year and as we look forward, we see opportunities in both cloud and enterprise on the <unk>.

Cloud side.

We're in 10 of the largest hyperscale in.

In the world are using AMD.

As they get familiar with us over multiple generations, they're expanding the workloads that they're using AMD on so we see that across internal and external workloads.

In the enterprise segment, we doubled.

Speaker 6: You know, year over here in 2021, we continue to add more field support to have more people get familiar with our architecture. We have very strong OEM relationships. So I feel very good about our server trajectory and yes, it's very competitive out there, but we think the data center business is...

Year over here here in.

In 2021, we continue to add more field support to have more people get familiar with our architecture.

Very strong OEM relationships, so I feel very good about our server trajectory and yes, it's very competitive out there, but we think the data center businesses.

Speaker 6: a secular growth business and within that we can grow significantly faster than the market.

Secular growth business and within that we can grow significantly faster than the market.

Speaker 9: So my follow-up, Lisa, the semiconductor industry just went through a very tough time last year and even into this year given all the supply shortages.

Alright.

A follow up lease up.

The semiconductor industry, just went through a very tough time last year and even into this year given all the supply shortages.

Speaker 9: I'm curious, what is that done to help you build stronger relationships with the customers who are perhaps looking for a more consistent execution on the roadmap and more reliable sources of supply? How is the shortage environment in semi-chains the way customers are looking at AMD today, then how they use to look at your historic.

Curious what is back down to help you build.

Stronger relationships with their customers, who are perhaps looking for a more consistent execution on the roadmap and more reliable.

Which is a supply so how is the shortage environment in semi change the way customers aren't looking at AMD today than how they used to look at your historically.

Speaker 6: Yeah, I think the most important thing that we are working on with our customers is really consistent execution.

Yeah, I think vivek.

Important thing that.

That we are so.

So we're working on with our customers is really consistent execution.

Speaker 6: And so when you look at the last year and some of the supply demand imbalance, it has actually caused us to work much, much more closely with our customers.

And so when you look at the last year and sort of some of the supply demand imbalance.

Has actually caused us to work much much more closely with our customers I think we have we're talking about visibility now.

Speaker 6: I think we have, you know, we're talking about visibility now, you know, multiple quarters and in some cases multiple years out.

Multiple quarters and in some cases multiple years out.

For the type of capacity that we're talking about for the size of the customers that we're talking to we need to do that to plan to have the <unk>.

Speaker 1: have the capability to support all of that capability. So overall, I think we have definitely deepened the relationships with customers. And by the way, also, we've deepened the relationships with our supply chain partners. So I think the entire food chain needs to come together to deliver the very strong demand that's out there. So that's certainly what we've been working on. Thanks. Thanks, Rebecca. Thanks. Our next question today is coming from Toshiya.

Capability to support all of that capability. So overall I think we have definitely deepen the relationships with customers and by the way also we deepen the relationships with our supply chain partners. So I think the the entire sort of the entire food chain needs to come together to deliver on the very strong demand that's out.

There. So that's certainly what we've been working on.

Speaker 10: here's it

Thanks.

Speaker 1: Thanks, Rebecca. Thank you. Our next question today is coming from Toshia Hari from Goldman Sachs, your line is now live.

Thanks Vivek. Thank you. Our next question today is coming from Toshi Hari from Goldman Sachs. Your line is now live.

Speaker 11: Great. Thank you. Congrats on the strong results, Lisa. I had two questions as well, one relatively short-term and one on Xilinx. The short-term question, just on Q1 revenue, you're obviously guiding total company revenue up on a sequential basis. Your nearest competitor talked about CPU inventory corrections in the quarter. Is that something that you're seeing in the market? And if so, is that contemplated in your guidance?

Great. Thank you.

That's on the strong results Lisa I have two questions as well one relatively short term and one on xilinx.

The short term question just just on Q1 revenue, you're obviously guiding total company revenue up on a sequential basis. Your nearest competitor talked about.

CPU inventory corrections in the quarter is that something that youre seeing in the market and if so was that contemplated in your guidance.

Speaker 6: Sure, Tosia, thanks for the question. So yeah, our guide in Q1 actually is up sequentially, usually we're down sequentially just given normal seasonality, but the demand patterns are such.

Sure Toni Thanks for the question.

So yeah. Our guide in Q1 actually is up sequentially, usually were down sequentially, just given normal seasonality, but the demand patterns are such that demand is strong and we have additional supply coming on board and so that's why we're guiding sequentially up as it relates to CPU inventory whether.

Speaker 6: that demand is strong and we have additional supply coming on board and so that's why we're guiding sequentially up. As it relates to CPU inventory, whether in PCs or in servers, we don't believe there is any significant inventory of our products.

Pcs are in servers, we don't believe there is.

Any significant inventory of our products.

Speaker 6: whether at our customers or sort of in the retail or channel. So from that standpoint, I think we've been watching very carefully the selling and sell through patterns and we believe we're matched to end user demand.

Whether at.

Our customers or sort of in the India and the retailer channel. So from that standpoint, I think we've been watching very carefully.

<unk>.

Selling and sell through patterns and we believe we are matched to to end user demand.

Speaker 11: Great. As my quick follow-up on Xilinx, it's been a while since your initial announcement. I'm sure you've had quite a bit of back and forth with your customers. You've had time to monitor how they've been performing as a standalone company. How has your view on the company and the technology and the potential revenue synergies going forward evolved at all? I know you're still waiting to close this thing, so maybe you can't say too much, but I'm just curious how your view on things have evolved as it relates to Xilinx. Thank you.

Great and as my quick follow up on Xilinx.

It's been a while since your initial announcement I'm sure you've had.

Quite a bit of back and forth with with your customers you have.

At a time to monitor how they've been performing as a standalone company.

How has your view on the company and sort of the technology and the potential revenue synergies going forward evolved at all I know youre still waiting to close this thing. So so maybe you cant say too much but just curious how your view on things have evolved as it relates to xilinx. Thank you.

Speaker 6: Yeah, absolutely. Look, I'm extremely excited about Zyling. So I mean, I would say that we very much have been planning for the integration over this period of time. We've had customers anxious to talk to us about combined road maps.

Yeah, absolutely look I am extremely excited about xilinx I mean, I would say that we very much have been planning for the integration over this period of time.

Had customers anxious to talk to us about combined roadmaps.

Speaker 6: When we think about sort of the technology that they have, it's very complementary to ours, very, very strong team. And their business results were just posted last week, and their business is also doing very, very well. So I think the combination is gonna be very exciting. We look forward to telling you a lot more about it as we get to close and beyond.

When we think about sort of the technology that they have it's very complementary to ours very very strong team and their business results were just posted.

Last week.

Their business is also doing very very well. So I think the combination is going to be a very exciting.

Look forward to telling you a lot more about it.

As we get to close and and beyond.

Thank you. Our next question today is coming from John Pitzer from Credit Suisse. Your line is now live.

Speaker 1: your next question today is coming from John Pitzer from Credit Suisse, your line is now lost.

Speaker 11: Yeah, good afternoon, guys. Lisa, thanks for letting me ask the question. Lisa, a couple questions. First, I'm wondering if you could just help me better understand.

Yes. Good afternoon, guys. We should thanks for letting me ask the question Lisa a couple of questions first I'm wondering if you could just help me better understand the fungibility of your capacity planning throughout the year IEA I understand that your view on the PC market. This year is sort of flattish with a better mix and you're gaining share but in the <unk>.

Speaker 11: the fungibility of your capacity planning throughout the year, i.e., I understand that your view on the PC market this year is sort of flattish with a better mix and you gaining share, but in the event that come midyear that were to change and perhaps be a little bit worse than thought, do you have the ability to rejigger your sort of supply chain to move towards server and CPU? How does that kind of math work?

Come mid year that were to change and perhaps be a little bit worse than thought do you have the ability to rejigger your sort of supply chain to move towards server and CPU, how does that kind of math work.

Speaker 6: Yeah, John , so we've certainly worked very hard to give ourselves plunge ability amongst the various capacity corridors that we have.

Yeah, John so.

We've certainly worked very hard to give ourselves fungibility amongst the various capacity corridors that we have.

Speaker 3: So we've done numerous cross qualifications and new factory bring-ups and all that stuff. So I would say it's not 100% fungible, but there is an ability to move across the different businesses.

So we've done numerous cross qualifications and new factory bring ups and all of that stuff. So I would say, it's not 100% fungible.

But there.

It is there is an ability to move across the different businesses.

Speaker 6: And, you know, we make that a dynamic allocation decision, you know, sort of like weekly, you know, based on what we see going on. So I think we have a pretty good pulse on the market. We sort of understand sort of what's going on.

And we make that a dynamic allocation decision sort of like weekly.

Based on what we see going on so I think we have a pretty good pulse on the market.

We sort of understand sort of what's going on.

Speaker 6: You know, our customers are giving us signals on a regular basis, and so, you know, I think we'll be able to manage through, you know, all of the puts and takes as we go through the year.

Our customers are giving us signals on a regular basis and so I think we'll be able to manage through.

All of the puts and takes as it goes as we go through the year.

Speaker 11: That's helpful. And then my second question, just on data center and GPU, where does that factor in to kind of your growth expect?

That's helpful. And then my second question just on data Center, and Gpus, where does that factor into kind of your growth expectations for this year and now that you've created sort of a strong beachhead of epic inside the data center does that help the sales cycle at all to get more GPU penetration.

Speaker 11: for this year. And now that you've created sort of a strong beachhead of Epic inside the data center, does that help the sales cycle at all to get more GPU?

Speaker 6: Yeah, sure. So data center GPU had a very strong year in 2021. It was, you know, sort of a key year for us as

Yeah sure. So our datacenter GPU had a very strong year in 2021.

<unk>.

Sort of a key year for us as we launched the <unk> 200 family and we had several large supercomputing wins. This year for data center GPU is about the cloud and about sort of expanding beyond sort of the large <unk> wins.

Speaker 6: We launched the MI200 family, and we had several large supercomputing wins. This year for data center GPU is about the cloud and about sort of expanding beyond sort of the large HPC wins.

View it as a strategic growth vector for us over the next several years.

Your question is a good one about sort of the.

Paul now that epic is very sort of while established.

And these accounts some I do think that that helps us with data center GPU, but the way to think about it is this is this is a long term investment for us.

Speaker 12: The hardware is very, very good. We've been investing more in the software. We've been working with our customers to ensure that our tool chain gets them the performance that they need. And so I would say this is a longer term driver, but I'm pleased with the progress that we made, certainly through this last year. Thanks a lot. Thanks. Thank you. Our next question is coming from Blaine Curtis from Berkeley. Your line is now live. Hey, thanks for taking my question. I was curious about on the epic side. In the free table, you could clearly strong trends in cloud enterprise and HBC. Here's on the common channel. You had a press release recently with Nokia. I know it's kind of early days, but any kind of.

Where is a very very good we've been investing more in the software we have been working with our customers to ensure that our tool chain.

Let's get some of the performance that they need and so I would say this this is a longer term driver, but I'm pleased with the progress that we made.

Certainly.

Through this last year.

Speaker 13: Thanks a lot.

Thanks, a lot.

Thanks.

Speaker 12: Next question is coming from Blaine Curtis from Berkeley. Your line is now live. Hey, thanks for taking my question. I was curious about, on the epic side, in the free humble, you could clearly strong trends in cloud enterprise and HBC. I'm curious on a common channel. You had a press release recently with Nokia. I know it's kind of early days, but any kind of comments you had in terms of your design progress there is kind of the last area that you haven't really kind of trained in service.

Thank you. Our next question is coming from Blayne Curtis from Barclays. Your line is now live.

Thanks for taking my question I was curious on the epic side in the preamble you can clearly strong trends in cloud enterprise and HBC just curious on the Comm channel you had a press release recently with Nokia I know, it's kind of early days, but any kind of comments you had in terms of your design progress there it's kind of the last area that you havent really penetrated servers.

Speaker 3: Yeah, it's still very early, but yeah, we're very happy with the partnership with Nokia that was announced, you know, we, as you said, this is an area where.

Yeah sure Blaine, it's still very early but yes, we're very happy with the partnership with Nokia that was announced as you said this is an area where.

Speaker 6: You know, we're early in the cycle. It's an area where we're building relationships. And so, you know, I feel, you know, good about the progress there. But, you know, I would say it's still quite early. And then, you know, you didn't ask this, but just one of the other things, you know, with the communications and 5G, you know, as we bring Xylinks into the...

We're early in the cycle.

It's an area, where we're building relationships.

So I.

I feel good about the progress there, but I would say it's still quite early and then you didn't ask this but just one of the other things with the communications and <unk> as we bring xilinx into the.

Speaker 6: into the equation, you know, they also have very deep relationships with a number of these accounts. And so, you know, we see that as an incremental positive as we think about EPIC in communication.

Into the equation. They also have very deep relationships with a number of these accounts and so we see that as a as an incremental positive.

As we think about epic in.

Communications.

Speaker 12: And then maybe for my follow-up, just on the March guidance, semi-custom typically has a pretty seasonal decline. It's been anything but typical, and you had very strong trends, it seems like, at the end of the year. So I'm just kind of curious, within that March guidance, is there anything you can provide in terms of – I'm assuming it's probably down, but I'm just kind of curious versus normal levels. If you could just dial us in on anything, that would be helpful.

And then maybe for my follow up just.

The March guidance.

Semi custom typically has a pretty seasonal decline than anything but typical and you had very strong trends. It seems like at the end of the year. So I'm just kind of curious within that March guidance, whether you can provide in terms of.

I'm, assuming it's probably down but I'm, just kind of curious versus normal levels.

If you can stylus and anything that would be helpful.

Speaker 6: Sure, so for the Q1 guide, the sequential up is being driven by, primarily by server and then also by client. For semi-custom, it is normally significantly down and this year it is flatish into the first quarter. And as you said, the seasonal patterns aren't there. The man continues to be strong and we continue to support our customers with the additional product there.

Sure. So for the for the Q1 guide the sequential up is being driven by primarily by server and then.

Then also by by client for semi custom is normally significantly down and this year. It is flattish into the first quarter and it's as you said the seasonal patterns arent there.

And continues to be strong and we continue to support our customers with.

With additional product there.

Sure.

Thank you. Our next question is coming from Stacy <unk> from Bernstein Research. Your line is now live.

Speaker 1: Our next question is coming from Stacey Razgon from Bernstein Researcher Line is now.

Speaker 14: Hi guys, thanks for taking my questions. First, I want to revisit the pricing question. I don't think you quite answered it. I get the inflationary environment, I get your costs are going up, you know, it's fair to pass it along. But of the 31% growth in 2022, how much of a tailwind is pricing? I mean, is it none? Is it some? Like how much? What's the number?

Hi, guys. Thanks for taking my questions first off I want to revisit the pricing question I don't think you've quite answered yet.

I guess, the inflationary environment I get your costs are going up.

To pass those along but of the 31% growth in 2022, how much of a tailwind is pricing I mean is it non is it some like how much what's the number.

Uh huh.

Speaker 3: Stacey, I don't think I'm going to answer that exactly. But what I will say is what I said before. Look, we are sharing. As we go through this environment, the key is to have long-term relationships, both on the supply chain side and on the customer side. But without a doubt, the predominant growth is

Stacy I don't think I'm going to answer that exactly.

But what I will say is what I said before I look where we are we are sharing.

As we go through this environment.

The key is to have long term relationships, both on the supply chain side and on the customer side, but without a doubt the predominant growth is.

These products, so it's units and asps from the mix of the product and.

Speaker 6: units and ASPs from the mix of the product.

Speaker 6: And, you know, that's the predominant growth.

That's that's the predominant.

Dominic growth.

Speaker 14: Okay. Okay. Um, my follow up. Um, look, I feel really bad about nitpicking on a 51% gross margin, but but I am going to so I apologize.

Okay. Okay.

Follow up.

Feel really bad about nitpicking on a 51% gross margin, but I am going to so I apologize in advance but.

Speaker 14: But I'll be honest, like just given that the mix seemingly should be getting quite a bit better year over year in 22 versus 21, and you're almost sitting at 51 percent, I mean even going into Q1 anyways, like why doesn't that margin?

Honestly, just given that the mix seemingly should be getting quite a bit better year over year, and <unk> 22 versus 21.

And you're almost sitting at 51%, maybe even going into Q1 anyways like why why does we've got margin.

Speaker 14: Go higher. Can you give us some feeling of the drivers? I guess the way you're sitting right now in Q4, the Q1 guide, through the year, like why should we expect more upside to that cross margin? Give me where the mix is.

Go higher can you give us some feeling of the drivers I guess from where you're sitting right now in Q4. The Q1 guide through the year like why should we expect more upside to that gross margin.

Given where the mix is going.

Speaker 4: Yeah, Stacy, I can take that. You know, as you heard Lisa talk about the semi-customs and semi-customs.

Yes, Stacy I can take that.

Currently so as to have about the semi custom.

Speaker 4: Q4 to Q1, you would expect an increase, but it is flattish. And really, it's product-mix dependent, right? I think looking at any particular quarter is sometimes not the way to do it. It's kind of looking at the long term. You know, we did 48-plus percent in 2020, and we're going to 51%.

Reported Q1, you would expect an increase but it is flattish and really its product mix dependent right I think looking at any particular quarter is sometimes not the way to do it is kind of looking at the long term.

Did 48 plus percent in 2020, and we're good at 51%.

Speaker 4: as a guide in 2022 and if you look at it from that standpoint the margin of the company continues to go up in a very steady way as data center grows as we get to a better mix of product within the client and and profit species and that's I think the better way to look here is this.

In 2022, and if you look at it from that standpoint, the margin of the company continues to go up in a very steady way as data center grows as we get to a better mix of product within the client and Dropbox business and Thats I think the better way to look at it.

Okay got it thank you guys.

Speaker 1: Our next question is coming from Mark Lopezis from Jeffrey's, your line is now live.

Thank you. Our next question is coming from Mark when pieces from Jefferies. Your line is now live.

Speaker 15: Thanks for taking my questions. I have one for Lisa and one for Devinder, if I may. Lisa, it seems like one of the potential threats

Hi, Thanks for taking my questions I had one for Lisa one for <unk>, if I may lease.

Lisa.

It seems like one of the potential threats.

Speaker 15: to the merchant processor players like yourself who said your own customers are designing their own processors. And I'm wondering this AMD have a role working with your customers to provide customized solutions be it.

Two.

The merchant processor players.

Players like yourself, who said your own customers are designing their own processors and I'm wondering does AMD have all have a role.

Working with your customers.

To provide customized solutions be it tweaking X 86, or <unk> or co designing something.

Speaker 15: tweaking x86 or, or, or co-designing something.

Speaker 15: more specific together, hand-in-hand. I don't know if Xilinx would play a role in that. Could you just talk about what you're doing with your customers?

More specific together hand in hand.

It's <unk>.

<unk> would play a role on that could you just talk about what youre.

Duane on them with.

With your customers on that effort.

Speaker 6: Yeah, sure, Mark. So, you know, actually it's a very exciting area. It's just considerate and evolution of, you know, we've always had a semi-custom model like the work that we do with the console guys to design specifically for their application. As we look at the broader set of applications, you know, including some of these data center applications.

Yeah sure Mark So, yes, actually it's a very exciting area.

Just consider it and an evolution of we've always had a semi custom model like to work that we do with the console guys to designed specifically for their application as we look at the broader set of applications.

<unk> some of these data.

Datacenter applications, we do believe that there is a sort of the next leg of the stool in terms of deep customer relationships. So we already do a lot of customization.

Speaker 6: We do believe that there's a sort of the next leg of the stool in terms of

Speaker 6: deep customer relationships. So we already do a lot of customization around product skews and you know specific optimization points, but we can certainly imagine both customer IP or you know different incarnations of our IP to really optimize because as you know as these applications end up really requiring so much volume it really does justify you know additional customization for those.

Around product Skus in specific optimization points, but we can certainly imagine.

Both customer IP or different incarnations of our IP to to really optimize because as you know.

As these applications end up really.

Acquiring so much volume it really does justify.

Additional customization for those cases.

Speaker 15: Gotcha. Thank you. And then I followed for a Dementor. If I made a Vider and you know, five, 10 years ago, I don't think a lot of people would have expected to hear you talk about buying back billion dollars worth of stock. So congratulations on that progress. The question on this topic is.

Got you. Thank you and then a follow up for <unk>, if I may.

510 years ago, I don't think a lot of people would have expected to hear you talk about buying back billions of dollars worth of stock. So congratulations on that progress. The question on this topic is.

Speaker 15: Where are, where's AMD in terms of evolving?

Is where our AMD in terms of evolving this.

Speaker 15: recent capital return push into a policy. Are you at the point where you're just looking opportunistically to buy and back stock, or some company say we're gonna return, you know.

This recent capital return.

Push into a.

Policy or are you at the point, where you're just looking opportunistically buying back stock or some type of companies say, we're going to we're going to return.

Speaker 15: percent of our cash flow to shareholders, whereas AMD and this in the evolution of capital

X percent of our cash flow to shareholders.

Whereas AMD in this.

The evolution of capital return.

Speaker 4: Thank you. I think we just started in 2021, $1.8 billion. We did another billion dollars early in 2022. And Zuri, those purchase are part of a long term, $4 billion share, the purchase program.

Thank you and I think he just started in 2021 $1 $8 billion with another $1 billion early in 2022, and really that those puts as a part of our long term $4 billion share repurchase program to your question about policy I don't think we're quite there yet, but just thoughts on pillar evaluated as we close to xilinx.

Speaker 4: I do a question about policy. I don't think we're quite there yet. We just started really evaluated as we closed the Zalling Protection and also in our outlook of the business, confidence in the business, and then evaluate what we do from an overall standpoint as we look out to the future. Cut next few years here.

And also in our outlook of the business confidence in the business and then evaluate what we do from an overall standpoint, as we look out to the future next few years here.

Fair enough. Thank you.

Thanks Mark.

Speaker 1: your next question is coming from Joe Moore from Morgan's family. Your line is out.

Thank you. Our next question is coming from Joe Moore from Morgan Stanley . Your line is now live.

Speaker 16: Great, thank you. You've always done a great job of bringing on supply, but it seems like AMD product is still relatively tight kind of everywhere. Do you see the constraints being more severe in any of the end markets versus any of the others?

Great. Thank you, you've obviously done a great job of bringing on supply.

It seems like AMD product is still relatively tight kind of everywhere or do you see the constraints being more severe in any of the end markets versus any of the others.

Speaker 6: Sure, Joe. Well, I think overall, you know, we have been in a mode of demand is is larger than then supply, although we made a lot of progress through 2021 and I expect to make more progress You know really incremental capacity will come online through 2022 Especially in the second half. So you know, I think it's it's really about sort of

Sure Joe well I think overall, we have been in a mode of demand is.

As larger than than supply, although we've made a lot of progress through 2021, and I expect to make more progress.

No really incremental capacity will come online through 2022.

Especially in the second half so.

It's really about sort of our prioritization decisions and trying to ensure that we spend that.

Speaker 6: prioritization decisions and trying to ensure that we're satisfying our customers' needs.

We're satisfying our customers' needs.

Speaker 6: But, you know, we're definitely working on getting more supply.

But we're definitely working on getting more supply.

Speaker 6: as we go through the year. And I think you should see it loosen up.

As a as we go through the year and I think you should see it loosen up a bit.

Speaker 16: Great, thank you. And then for my follow-up, you mentioned, I think, within server that both enterprise and cloud were up over 100%, which is pretty good. Can you talk about the mix of enterprise versus cloud within that business? Give us some qualitative sense of how big enterprise has become?

Great. Thank you and then my follow up you mentioned I think within server that both enterprise and cloud were up over 100%.

She was pretty good can you talk about the mix of enterprise versus cloud within that business give us some qualitative sense of how big enterprise.

Has become.

Speaker 6: Yeah, so Enterprise has grown nicely. I mean, we're still cloud-weighted. So if you look, sometimes these patterns, it's better to look on a full-year basis. So we are still cloud-weighted relative to Enterprise. But Enterprise has made really nice progress. It's a sizable business. And we've made progress with the larger OEMs, as well as across a number of regional OEMs.

Yeah. So enterprise has grown nicely I mean, we're still cloud weighted so if you look.

Sometimes these patterns, it's better to look on a full year basis. So we are still cloud weighted.

Relative to enterprise, but enterprise has made a really nice progress it's a sizable business.

And we've.

We've made a progress.

With the larger Oems as well as across a number of regional Oems.

Great. Thank you very much.

Thanks.

Speaker 1: Operator, we have time for two more, please. Certainly. Our next question is coming from Chris Caso from Raymond James. Your line is now.

Really we have two more please certainly our next question is coming from Chris Caso from Raymond James Your line is now live.

Speaker 14: Yes, thank you. Good evening. First question is, if you could give some indication of the strategy behind some of the processor variants that have come out, most recently Milonex and Bergamot coming up. Do those variants represent incremental revenue to AMD? You know, what's the strategy behind it? How does that help you, help the product?

Yes. Thank you good evening first question is.

If you could give some.

Indication of the strategy behind some of the processor variance would come out, but most recently <unk> and <unk>.

Tomorrow.

Coming up do those variants represent.

Incremental revenue to AMD.

Whats the strategy behind it how does that.

Help you would help the product line.

Speaker 6: Sure, Chris. Well, I think the strategy is, you know, as we have gotten more scale in the business, we can invest more and we see ways to, you know, further differentiate our product portfolio. So, I mean, I think, you know, Milan X.

Sure, Chris well I think the strategy is.

As we have gotten more scale in the business, we can invest more and we see ways to further differentiate our product portfolio. So I mean, I think Milan X.

Speaker 6: you know, is really, you know, sort of the highest of the highest end, and, you know, we see that for, you know, for technical computing and some of these EDA workloads that, you know, that does give us a very differentiated product.

It's really.

As far as the highest of the highest end.

And we see that for technical computing and some of these.

EDA workload set.

That does give us a very differentiated product.

Speaker 6: And then we have the regular Milan product line, we'll have Genoa. And Bergamo is really optimized for cloud. So I do believe it gives us more opportunity to expand from a market share and a footprint standpoint. And I think the broader statement, Chris, is that the data center is so large. There's so many different workloads.

We have the regular Milan product line will have Genoa, and Bergamo, who is really optimized for cloud. So I do believe it gives us more opportunity to expand from a market share and our footprint standpoint, and I think the broader statement Chris is that the data center. So large there's so many different workloads that.

Speaker 6: that you can optimize. Like, by doing these variants, we will actually get a better solution for the customer, give them better total cost of ownership, and hopefully give us a larger footprint in that workload as well.

You can optimize like by doing these variance, we will actually get a better solution for the customer give them better total cost of ownership and.

Hopefully give us a larger footprint in that work load as well.

Speaker 11: Thank you. As a follow-up, follow-up questions about supply and just following up on some of your earlier comments.

Thank you as a follow up the follow up questions about supply and just following up on some of your earlier comments, but can you tell us how youre approaching that now with getting the additional supply. It is it a factor of.

Speaker 11: But can you tell us how you're approaching that now with getting the additional supply? Is it a factor of your customers coming to you with requirements and then you going back to the foundry and obviously you need to make commitments to the foundries right now. Are those backed up by customer commitments? And, you know, in the event that, you know, business, you know, turns out to be better, you know, as it was last year, are you able to procure that additional supply, you know, in time for when the big.

Your customers coming to you with the requirements and then you're going back to the foundry and obviously you need to make commitments to the foundries right now are those backed up by customer commitments and in the event that.

Business it turns out to be better.

Was last year or are you able to procure that that additional supply in time for when the business needs. It.

Speaker 6: Yeah, we've set out a roadmap for, frankly, not just 2022, but beyond, which allows, let's call it very aggressive growth goals.

Yeah, we've set out a roadmap for frankly, not just 2022, but beyond.

Which allows let's call it very aggressive growth goals.

Speaker 6: You know, we work that on a regular basis with our customers and our supply chain partners. I would say we have better visibility than we have ever had from a customer demand standpoint. And so that gives us, you know, pretty good confidence in terms of what is needed. But there are always going to be some puts and takes, and so we have enough flexibility to do that. But, you know, our goal is to dimension for success, right? At the end of the day, that's what we want to do is we want to satisfy customer demand, and so we're dimensioning for success.

We work that on a regular basis with our customers and our supply chain partners I would say, we have better visibility than we have ever had.

From a customer demand standpoint, and so that gives us.

Good confidence in terms of what what is needed, but they're always going to be some puts and takes and and so we have enough flexibility to do that but our goal is to dimension for success right at the end of the day. That's what we want to do is we want to satisfy customer demand and show what to mentioning for success and work with our customers as their demand evolves.

Speaker 6: and, you know, work with our customers as their demand evolves. Thank you.

Thank you.

Thank you. Our final question today is coming from Harlan sur from Jpmorgan. Your line is now live.

Speaker 17: Hi, good afternoon. Just wanted to ask about your embedded business. You know, it's not often talked about, but it's a great market rate diversified across various different markets.

Hi, Good afternoon, just wanted to ask about your embedded business you know, it's not often talked about but it's a great market rate diversified across various end markets.

Speaker 17: also leverage your leading edge and mature portfolio. You've got a pretty good lineup of Epic-based and Ryzen-based processors targeting Embedded. You've also gotten some pretty good design win tractions.

You can also leverage our leading edge mature portfolio, you've got a pretty good lineup of epic based in ryzen based processors targeting them, but you've also got some pretty good design win traction.

In the automotive with guys like personnel, you've got wins in retail with digital signage wins in networking Iot edge platforms, and then with Xilinx, you can sort of really leverage their exposure in industrial automotive common consumer end markets. It's a small part of the business today, but how do you see the embedded opportunity for AMD looking out over there.

The next several years.

Speaker 18: Yeah, thanks for the question, Harlan. Look, I like the embedded business. I've always liked the embedded business. It's a nice, picky business over many years. It is smaller, but it has grown nicely. And the volume design wins in automotive.

Yeah. Thanks for the question Heartland look I like the embedded business I've always liked the embedded business.

It's nice sticky business over over many years it is smaller but it has grown nicely and.

The volume design wins.

In automotive in and they've now sort of expanded their usage.

Speaker 6: And they've now expanded their usage. They've recently expanded their usage over a broader part of their product portfolio. We've focused on networking and storage as key markets.

They've recently expanded their usage over a broader part of their product.

Folio.

Focused on networking and storage as as key markets I do think there is a very good synergy with xilinx in terms of just the customer set and the channels and so I do see it as a nice grower for us as we as we go through it and there's very good reuse from.

Speaker 6: I do think there is a very good synergy with Xilinx in terms of just the customer set and the channels. And so I do see it as a nice grower for us as we go through it, and there's very good reuse.

Speaker 6: from our server products as well as our client products. So again, we'll talk a little bit more about it as the business gets to more size. And that'll be part of our financial analyst day conversation when we get to that in June . Perfect.

From our server products as well as our as well as our client products. So.

We'll talk again, we will talk a little bit more about it as the business gets to more size.

And that'll be part of our financial analyst day conversation when we get to that in June .

Perfect. Thanks, Lisa thank.

Thank you Harlan.

Speaker 1: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further

Thank you we reached end of our question and answer session I would like to turn the floor back over for any further or closing comments.

Speaker 2: Everyone, thank you very much for joining us for our fourth quarter and full year 2021 earnings call. We appreciate your support of our company and look forward to seeing you again soon. As a reminder, we will have our financial analyst day this year on June the 9th. Thank you, everyone. Have a great day.

Everyone. Thank you very much for joining us for our fourth quarter and full year 2021 earnings call. We appreciate your support of our company and look forward to seeing you again soon as a reminder, we will have our financial analyst day. This year on June Tonight. Thank you everyone have a great day.

Speaker 1: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a

Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.