AMD Projects Strong Growth With MI300 Artificial Intelligence Chips, Can Compete With Nvidia

JAKARTA - AMD (Advanced Micro Devices) on Tuesday 2 August projected strong growth by the end of the year, driven by an MI300 flagship artificial intelligence (AI) chip launch plan that could compete with Nvidia chips. AMD shares rose by about 3% in post-hour trading.

CEO Lisa Su said AMD is poised to increase its flagship MI300 artificial intelligence chip production in the fourth quarter. The accelerator chip, which is on supply shortage, is designed to compete against the advanced H100 chip that has been sold by Nvidia.

Su said customer interest in the MI300 series chip was very high and AMD increased cooperation with "high-end cloud service providers, major companies, and many leading AI companies" during the third quarter.

Investors argue that the MI300 chip, which will be released later this year, will challenge Nvidia in a rapidly growing market for advanced AI chips.

MI300 exceeded the performance limits for sale to China based on export controls issued in October, and in contrast to Nvidia and Intel, AMD has yet to create a dedicated chip for a lucrative Chinese market.

Nvidia modified its H100 chip to comply with US Commerce Department limitations regarding the sale of advanced AI semiconductors to China. AMD is considering similar strategies to longer MI300 and MI250 chips, Su said in a conference call with analysts on Tuesday.

"Our plan is of course to fully comply with US export controls. But we believe there is an opportunity to develop products for our group of customers in China who are looking for AI solutions, and we will continue to work in that direction," Su said.

AMD hasn't provided detailed estimates for the whole year, but says that its data center business sales, including the MI300 chip, in 2023 are expected to surpass 6.04 billion dollars by 2022.

Jenny Hardy, the portfolio manager at the Bullhound GP, which owns Nvidia and AMD shares, said Nvidia is still facing supply restrictions, leaving an opportunity for AMD chips.

"If AMD can increase production and launch MI300 chips in the fourth quarter, they will likely see strong demand as many people cannot get Nvidia chips. So we assume that AMD can effectively fill part of the gap between supply and demand," Hardy said.

"AMD has sufficient components for the MI300 chip for "aggressive" launch in the fourth quarter, and sufficient supply for 2024," said Su.

Su called the "strong interest" in their longer MI250 chip, which remains a "very good choice" for less complicated AI tasks.

In the second quarter, AMD's data center's business revenue fell 11% to USD 1.32 billion (IDR 20 trillion) while their client's business revenue fell 54% to USD 998 million from USD 2.2 billion last year.

Big cloud players like Microsoft and Google plan to increase spending on data centers in the second half of the year, analysts said, suggesting that spending will lean towards AI chips and infrastructure.

However, the decline in PC shipments has moderated and demand is starting to show signs of improvement.

"Towards the third quarter, we hope that the revenue from our Data Center and Client segments will each grow in double digits, driven by increased demand for our EPYC and Ryzen processors, partly compensated by the decline in Gaming and Embedded segments," said AMD Finance Chief Jean Hu.

The company projects current quarterly revenue of around 5.7 billion US dollars, plus or minus 300 million US dollars. Analysts surveyed by Refinitiv averaged around 5.82 billion US dollars in revenue.