In the first quarter of 2024, AMD's gaming solution revenues decreased by 48% compared to the same period a year ago due to reduced demand for Radeon discrete video cards and a decrease in sales of chips for PlayStation and Microsoft consoles. The company expects its gaming revenue to continue to decline in 2024 and beyond, before having a chance to recover in 2025.
AMD earned $922 million on gaming video cards, which is almost half less than $1.757 billion in Q1 of last year, and 33% less than the previous quarter ($1.368 billion). AMD's gaming segment still shows an operating profit of $151 million, but this is a significant decrease compared to $314 million a year ago. Profit from gaming solutions accounted for 16% in the first quarter of 2024 and 18% in the first quarter of 2023.
"Sales of semi-specialized SoCs in the first quarter decreased as expected, as we are now in the fifth year of the console cycle. In the gaming graphics sector, revenues have been declining year after year. We expanded the Radeon 7000 series family by releasing our Radeon RX 7900 GRE worldwide and also introduced our AMD Fluid Motion Frames driver-based technology, which can provide high performance in thousands of games," said AMD CFO Jean Hu during a conference call with analysts and investors, according to SeekingAlpha.
It is believed that the chips for Microsoft's Xbox Series X|S and Sony's PlayStation 5 account for the majority of AMD's gaming business. These consoles have been on the market for five years, so demand for them is declining. The situation is more complicated with discrete video cards. Sales of components for desktop PCs seasonally decrease in the first quarter of each year. Although AMD increased its market share in the fourth quarter of 2023, controlling 19% of the market according to Jon Peddie Research, the company sold significantly fewer video cards in the following quarter. Solutions for laptops have the same impact as for desktop PCs, as they are sold in approximately the same quantities.
Despite the Radeon RX 7900 GRE being a successful video card, it is not enough to make the entire lineup significantly more competitive. That's why AMD expects gaming solution sales to drop by about 30% compared to the same period last year in the first half of 2024, and expects even worse results in the second half of the year.
AMD's forecasts indicate that neither Microsoft nor Sony plan to update their Xbox Series X|S or PlayStation 5 consoles this year, as otherwise AMD would have expected revenue growth from gaming. The expectations may very well mean that the company also does not have high hopes regarding sales of discrete video cards, and it is unlikely that laptop manufacturers will choose Radeon RX 7000M series products at such a late stage in their life cycle.
It is unclear whether Radeon RX 8000 video cards with RDNA 4 architecture will be released this year. If they do, it is unknown whether they will be sold in sufficient quantities to significantly impact sales. There are rumors that AMD may not even attempt to manufacture a high-end RDNA 4 chip and chooses only the budget segment.
Source: Tom's Hardware
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