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AMD bullish on Xbox Series X, PlayStation 5 sales despite coronavirus

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At its second quarter earnings call, AMD expressed optimism about the upcoming console launch, still set for holiday 2020.

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While many businesses are facing a tremendous amount of uncertainty as the world continues to grapple with the coronavirus pandemic, AMD seems confident in its upcoming processor launches to pull it through the rest of the year. The company had a stellar fiscal first quarter of 2020 driven by a strong performance of its Ryzen 4000 mobile launch. It’s now looking forward to the second half of this calendar year for the Microsoft’s Xbox Series X and Sony’s PlayStation 5 to help drive the company’s growth during the holiday season.

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“We expect semi-custom revenue to increase in the second quarter and be heavily weighted towards the second half of the year as we ramp production to support the holiday launches of the new PlayStation 5, and Xbox Series X consoles,” AMD CEO Lisa Su said during her company’s earnings call, noting that these consoles will be among the biggest product launches of the year.

The company stated that revenue from its console chip business was very negligible in the quarter that just ended, as partners Microsoft and Sony both are looking to reduce inventory ahead of next-generation console launches.

“We expect to see console gross margins improve as we go through the year,” Su added. “Usually what happens is that the second quarter is the first ramp for the consoles, and so the margins start a little bit lower and continues to ramp as we go through the year.”

Microsoft

Ahead of the highly anticipated Xbox Series X and PlayStation 5 launches, both Microsoft and Sony have given rare glimpses into the performance of their consoles. Microsoft revealed that the semi-custom GPU developed with AMD in its Xbox Series X console is rated for 12 teraflops of performance, which could put most gaming rigs to shame, And Sony’s PlayStation 5 won’t be far behind in raw performance, coming in with a GPU that’s capable of 10.3 teraflops of computing power. The processors in both consoles will be based on AMD’s RDNA 2 architecture.

AMD is relying on these technology wins to help mitigate the challenges created by the global pandemic. Both consoles are still expected to be available for purchase this holiday season.

“Although there are some near-term uncertainties in the demand environment, we are well-positioned to navigate through this situation,” Su said. “We have a solid financial foundation, and our product portfolio is very well positioned across the PC, gaming, and data center markets.”

AMD claimed that it was able to “quickly [adopt its] global operations to navigate pockets of supply chain disruption and addressed geographic and market demand shifts caused by COVID-19.” The company did not disclose the extent of COVID-19’s impact on its supply chain, but during this most recent quarter, AMD saw its revenue increase 73% year-over-year driven by increased Ryzen and Radeon processor adoption.

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