AMD Profit Margin And Profit Breakdown – Data Center, Gaming, Client, etc.

Cloud computing. Pexels Images.

This article looks at Advanced Micro Devices (AMD)’s profit breakdown by segment. AMD’s segments consist of data center, client, gaming, and embedded.

AMD derives its profit primarily from the data center and embedded segments. These two segments alone accounted for nearly 80% of its total operating profit in fiscal year 2023.

Let’s look at the numbers!

Investors interested in AMD’s revenue breakdown by segment may find more resources on this page: AMD revenue breakdown by segment.

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Definitions Of Segments

To help readers understand the content better, the following terms and glossaries have been provided.

Data Center: AMD’s data center division focuses on delivering high-performance computing solutions, primarily through its EPYC family of processors.

Designed for enterprise applications such as cloud computing and data analytics, EPYC processors are known for their high core counts and efficient architecture.

Key features include scalability for various deployment sizes, energy efficiency to reduce operational costs, built-in security for data protection, and compatibility with a wide range of software and operating systems.

Client: AMD’s client segment primarily delivers high-performance microprocessors and graphics solutions for consumer devices. Key offerings include:

1. **CPUs for Desktops and Laptops**: The Ryzen series caters to gamers, content creators, and general users, providing efficient processing capabilities and multi-core performance.

2. **Graphics Cards**: AMD’s Radeon graphics cards enhance gaming experiences and support professional graphics work, making them popular among enthusiasts and industry professionals.

3. **Integrated Solutions**: AMD also develops APUs (Accelerated Processing Units) that combine CPU and GPU functionalities, delivering versatile performance for thin and light laptops.

This segment emphasizes innovation and performance. It competes with other major players by offering powerful and energy-efficient solutions suited to diverse consumer needs. With a focus on gaming and general computing, AMD aims to capture a significant share of the expanding client market.

Gaming: AMD’s gaming business delivers high-performance products tailored for gamers and enthusiasts. Key components include:

1. **Graphics Cards**: The Radeon series is at the forefront, designed to provide exceptional graphics performance, catering to both casual and professional gamers.

2. **CPUs**: The Ryzen processors, known for their multi-core capabilities, enhance gaming performance and support demanding applications, making them ideal for gaming rigs.

3. **APUs**: These Accelerated Processing Units integrate both CPU and GPU functionalities, offering versatile performance for lighter gaming needs in compact devices.

AMD aims to provide innovative, energy-efficient solutions that enhance gaming experiences while competing effectively in the dynamic gaming market. By focusing on performance and tailored technologies, AMD seeks to capture a significant portion of the growing gaming audience.

Embedded: AMD’s embedded business provides specialized processors tailored for various industries and applications. This segment leverages AMD’s advanced technology to deliver efficient and robust solutions for embedded systems. Key aspects include:

1. **Diverse Applications**: AMD’s embedded solutions are utilized in various fields, including automotive, industrial automation, healthcare, and networking, enhancing the functionality and performance of embedded devices.

2. **Performance and Efficiency**: The processors are designed to deliver high performance while maintaining energy efficiency, making them suitable for environments with strict power constraints.

3. **Customization**: AMD offers flexible solutions that can be customized to meet specific industry needs, enabling clients to implement them effectively in their respective applications.

4. **Long Lifecycle Support**: AMD provides long-term support for its embedded products, ensuring reliability and stability for industries that require consistent performance over extended periods.

Overall, AMD’s embedded segment emphasizes innovation and reliability, aiming to meet the growing demand for powerful and adaptable embedded systems across various sectors.

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How Does AMD Generate Profit?

AMD generates profit primarily through the sale of its various technology products and solutions across several key sectors:

1. **Microprocessors**: Revenue from CPUs, especially the Ryzen series for desktops and laptops, caters to gamers and general users, driving considerable sales in the consumer market.

2. **Data Center Solutions**: The EPYC line of processors designed for servers and workstations captures a significant market share, particularly in cloud computing and high-performance computing sectors.

3. **Graphics Processors**: AMD’s Radeon graphics cards are popular among gamers and professionals, contributing to sales in both consumer and enterprise markets.

4. **Embedded Solutions**: Processors for embedded systems across various industries add to AMD’s revenue streams.

5. **Licensing and Royalties**: Income from licensing its technology and intellectual property offers an additional revenue source.

6. **Software and Services**: AMD supports software tools and services, complementing its hardware offerings and enhancing overall customer value.

By diversifying its product portfolio and focusing on high-growth areas like gaming and data centers, AMD aims to capture a larger share of the market and increase profitability.

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Profit In Data Center, Client, Gaming, And Embedded Segments

amd-operating-profit-breakdown-by-segment

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AMD’s profit by segment is evaluated based on the operating profit of each segment, as depicted in the chart above. The definitions of AMD’s segments are available here: data center, client, gaming, and embedded.

Among all segments, AMD’s embedded business generates the most profit. In fiscal year 2023, AMD’s embedded business produced an operating profit of $2.6 billion, which was significantly higher than any operating profit generated in other segments.

AMD’s data center produced an operating profit of just $1.3 billion in fiscal year 2023, only about half of the number of the embedded segment, while the client segment even incurred an operating loss of $46 million.

AMD’s operating profit in the gaming segment came in at a much smaller figure in fiscal year 2023, only topping $971 million.

Between fiscal year 2021 and 2023, AMD’s operating profit in the embedded segment has averaged $1.6 billion, the highest among all of its business segments.

The average operating profit in data center was $1.4 billion over the last three years, while the client business generated $1.1 billion in average profit during the same period.

AMD’s operating profit in the gaming business topped $953 million in the last three years, the lowest among all segments.

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Profit Margin In Data Center, Client, Gaming, And Embedded Segments

amd-operating-profit-margin-by-segment

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AMD’s margin by segment is evaluated based on the operating profit margin of each segment, as depicted in the chart above. The definitions of AMD’s segments are available here: data center, client, gaming, and embedded.

AMD’s embedded segment generates the highest profit margin compared to other segments, topping 49% in fiscal year 2023. On average, its operating margin has averaged 39% between 2021 and 2023, making this segment one of the most profitable businesses of AMD.

AMD’s data center comes in second as one of the segment with the highest profit margin. In fiscal year 2023, its operating margin topped 20%. On average, the operating margin has averaged 26% between 2021 and 2023.

AMD’s client business generated a negative profit margin of -1.0% in fiscal year 2023, indicating an operating loss. However, it had been profitable between fiscal year 2020 and 2022, with an operating margin soaring to more than 30%. On average, AMD’s client segment generated an operating margin of around 16% over the last three years.

AMD’s gaming business has one of the lowest profit margin compared to other business segments. For example, its average operating margin topped just 15% between 2021 and 2023. However, its 2023 result came in at 15.6%, which was way better than the operating loss in the client segment.

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Percentage Of Profit In Data Center, Client, Gaming, And Embedded Segments

amd-operating-profit-breakdown-by-segment-in-percentage

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AMD’s profit by segment is evaluated based on the operating profit of each segment, as depicted in the chart above. The definitions of AMD’s segments are available here: data center, client, gaming, and embedded.

Again, AMD’s embedded segment contributes the largest profit to the company, primarily driven by its soaring profit margin. In fiscal year 2023, its share of the operating profit was nearly 55% of the total, indicating that it contributed more than half of the profit to the company. On average, the embedded segment has contributed over 30% of profit to the company in the last three years.

AMD’s data center is the second largest profit generator after the embedded segment. Between 2021 and 2023, its average profit contribution totaled 27%. In fiscal year 2023, the data center produced about 26% of AMD’s overall operating profit.

AMD’s client segment used to be the biggest profit contributor to the company. For example, in fiscal year 2020, its operating profit contribution reached a staggering 97%. In other words, the client business covered nearly the entire profit of AMD in that period. However, its operating profit has significantly dived over the years. In fiscal year 2023, it even incurred an operating loss. On average, AMD’s client segment produced an average operating profit of 23% of the total over the last three years.

AMD’s gaming segment is the smallest profit producer among all. Its profit contribution totaled 20% in fiscal year 2023. On average, it produced 20% of AMD’s overall operating profit over the last three years.

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Growth Rates Of Profit In Data Center, Client, Gaming, And Embedded Segments

amd-growth-rates-of-operating-profit-by-segment

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AMD’s profit by segment is evaluated based on the operating profit of each segment, as depicted in the chart above. The definitions of AMD’s segments are available here: data center, client, gaming, and embedded.

In terms of profit growth by segment, AMD has experienced mostly negative growth rates in most business segments. For example, AMD’s profit growth was limited to only the gaming and embedded segments, while the rest of the segments registered profit decline.

AMD’s profit growth in the embedded segment has averaged 172% over the last three years, while the data center has measured 152% during the same period.

AMD’s profit growth in the client segment has averaged -39% versus -257% for the gaming business between fiscal year 2021 and 2023.

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Conclusion

To recap, AMD gets the majority of its profit from the embedded segment, with operating profit from this segment accounting for 30% of the total in the last three years.

AMD’s data center segment came in at 27% in terms of profit contribution between 2021 and 2023, while the client segment contributed an average of 23% in the same period.

The gaming segment produced operating profit of around 20% of the total on average in the last three years.

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References and Credits

1. All financial figures presented in this article were obtained and referenced from AMD’s SEC filings, quarterly and annual reports, earnings calls, presentations, etc., which are available in AMD Financial Reports.

2. Pexels Images.

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Disclosure

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