AMD bets on AI chips amid 94pc profit plunge

2 Aug 2023

Image: © JHVEPhoto/

AMD plans to ramp up production of its AI accelerator chips and plans to design specific semiconductors to bypass US export issues with China.

US semiconductor giant Advanced Micro Devices – AMD – has shared a strong forecast for the year, despite issues in its latest quarterly results.

The company’s second fiscal quarter saw revenue reach $5.35bn, a drop of 18pc compared to the same period last year. Operating income dropped by 104pc, leading to a loss of $20m, while AMD’s net income was only $27m for the quarter.

This is a drop in net income of 94pc, mirroring the issues other semiconductor companies are facing. Samsung recently shared a similar quarterly plunge to its income.

Despite the results, shares for AMD have risen, largely due to the company’s plans for the rest of 2023. The company plans to ramp up production of its MI300 AI accelerator chips in the fourth quarter of 2023, according to AMD chair and CEO Dr Lisa Su.

“Our AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators at scale,” Su said.

Accelerator chips are semiconductors that are designed to support the vast amounts of data required for AI. The increased production could see AMD challenge companies such as Nvidia in the AI semiconductor market.

In an earnings call, Su also said AMD plans to design AI chips specifically for the Chinese market, in order to comply with US export rules. The US imposed restrictions last year to prevent advanced technology from being used for military applications in both Russia and China.

“China is a very important market for us, certainly across our portfolio, as we think about certainly the accelerator market. Our plan is to of course be fully compliant with US export controls, but we do believe there’s an opportunity to develop product for our customer set in China that is looking for AI solutions and we’ll continue to work in that direction,” Su said.

From shortage to chip glut

The semiconductor sector faced a supply shortage in recent years, raising fears due to how vital these components are for various products and industries.

Many companies began stockpiling chips to build up their inventories during this shortage, while efforts were made to increase supply and make the sector more resilient. The EU recently approved the Chips Act to boost its global share of chip production and make the bloc more resilient to future supply chain issues.

Unfortunately, the global economy has entered a crunch period. Demand for certain chip-related products has died down, while many consumers and businesses have tightened their spending. This shift in demand has led to a glut in the global market.

Despite this, many semiconductor manufacturers expect the market to recover later this year, while others continue to invest heavily to meet future demand.

AMD plans to invest roughly $400m in India over the next five years, while TSMC is building chip factories in the US and other countries.

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Leigh Mc Gowran is a journalist with Silicon Republic