During its earnings call yesterday evening, AMD CEO Lisa Su signaled a possible change in the company's tack on cryptocurrency-mining demand for its Radeon products. As recently as October of last year, Su predicted that cryptocurrency demand would soften throughout the fourth quarter of 2017. The consistently high prices of Bitcoin and other forms of cryptocurrency in the intervening time, plus the gold-rush levels of excitement from folks hoping to cash in on the boom with GPU mining rigs of their own, have shattered that prediction. Su said that roughly a third of the company's $140 million sequential revenue growth in its Computing and Graphics business came from miners' appetites for its products last quarter. Demand for graphics cards to mine crypto-coins remains strong and appears as though it'll remain that way for some time yet.
Even if demand from the crypto market is healthy today, it's widely expected that the price of Bitcoin and its satellite cryptocurrencies will fall from their current heights at some point. Despite that potential volatility, Su told investors that AMD is "working to replenish [the] channel environment" and "ramping up production" in response to the state of the graphics-card market. AMD's commitments to increased chip production are notable because the semiconductor industry doesn't turn on a dime. The company will likely need months to get silicon back from its foundry partners, and cryptocurrency prices could as easily double as they could fall back to earth during that time.
Not ordering enough chips isn't the worst scenario in the world for AMD, but the downsides of ordering too many are much more troublesome. AMD especially has reason to be wary of sticking itself with excess inventory, as its $100 million write-down of Llano APUs some time ago underscores. After the last major cryptocurrency boom, retailers regularly ended up selling Radeon R9 290 and R9 290X cards for hundreds of dollars less than their suggested prices, too. Goosing production too much now could result in similar fire-sale prices down the line, and neither retailers nor board partners would likely be pleased by a repeat of that bust.
Su also stated that the challenges of getting more graphics cards to market were not in supplying more of its GPUs to its board partners. Instead, she says the company and its partners are limited by memory supplies, both for HBM and GDDR RAM. If that's the case, it'll be interesting to see how much leverage AMD can apply to memory makers in securing more of those chips for its partners. The potentially fluid demand for crypto-mining hardware might deter memory makers from switching production away from other forms of RAM, and AMD may ultimately not have much control over those market forces. Su remarked to investors that memory supply "will be certainly one of the key factors as we go through 2018," so releasing the pressure cooker of today's graphics-card prices may be more gradual than sudden. We'll continue to keep our fingers crossed for some kind of relief ASAP.