AMD’s gaming revenue has taken a sharp downturn, with a 48% year-over-year decline in the first quarter of 2024, hinting at a prolonged downturn that might not reverse until 2025. The gaming segment’s downturn is largely attributed to falling sales of discrete graphics cards and diminished demand for processors used in gaming consoles. As a result, speculation is rife about a possible delay in the launch of AMD’s next-generation Radeon RX 8000-series RDNA 4 GPUs.
A Significant Decline in Gaming Revenue
AMD’s gaming revenue fell from $1.757 billion in Q1 2023 to $922 million in Q1 2024, marking a drastic 48% decrease year-over-year. This drop also represented a 33% quarter-over-quarter decline from Q4 2023’s $1.368 billion. Operating income for the gaming segment also took a hit, sliding to $151 million from $314 million the previous year.
The downturn is driven by decreased demand for AMD’s semi-custom SoCs for consoles and declining sales of discrete GPUs. “[The] gaming segment, based on current demand signals, [is expected] to decline by significant double-digit percentage,” said AMD CFO Jean Hu on a recent call with analysts and investors
Diminished Console and GPU Sales
A significant portion of AMD’s gaming revenue comes from supplying processors for the Microsoft Xbox Series X|S and Sony PlayStation 5 consoles, which are now in their fifth year. As demand for these consoles decreases, so does AMD’s revenue from their sales. Additionally, discrete GPU sales have not met expectations, with the Radeon RX 7000-series failing to capture a larger market share.
The downturn in AMD’s gaming revenue could also suggest that both Microsoft and Sony do not plan to release updated versions of their consoles in 2024, reducing demand for AMD’s gaming processors. Furthermore, AMD’s Radeon RX 7000M-series for laptops hasn’t gained significant traction, adding to the company’s revenue decline.
Given this downturn, AMD may opt to delay the launch of its Radeon RX 8000-series RDNA 4 GPUs until 2025. If launched in 2024, these GPUs may not ship in sufficient quantities to significantly impact AMD’s sales. The delay or a possible shift towards lower-end market segments, which traditionally bring lower revenues, might be a strategic decision as AMD navigates through this challenging period.
Sources
https://www.tomshardware.com/pc-components/gpus/amds-gaming-revenue-nosedives-48-not-expected-to-recover-until-2025
