AMD signals that it’ll make more GPUs to alleviate demand

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.

Comments closed
    • Mat3
    • 2 years ago

    Smart marketing says they should come out with a new SKU (a rebrand of course, with a slightly higher base clock or some other trivial difference for the marketing department to justify it) and set the MSRP much higher. If they’re going to sell all of them and at inflated prices, it should be AMD getting that extra income.

      • ludi
      • 2 years ago

      Nice idea, but AMD already milked the trivial differences out of Vega. Everyone’s testing, including TR’s, found that a small detuning of Vega kept something like 90% of the performance at a huge power savings. That means AMD can’t do much else to this architecture until they redesign or shrink.

    • tipoo
    • 2 years ago

    Sooo, I wonder if we get a glut of cheap Vegas on ebay in the next year or two…Granted, a gamble on ones used in 24/7 full load operations.

    • USAFTW
    • 2 years ago

    Make more GPUs to sell? To make mo money?
    AMD never ceases to amaze with its ingenuity.

      • Magic Hate Ball
      • 2 years ago

      I know you’re being sarcastic but they got burned in the first big mining craze years ago and overproduced GPU’s.

      They really got burned when those mining GPU’s hit the second hand market as discount prices.

    • chµck
    • 2 years ago

    whew, sounds like AMD finally hired someone with some business sense!

      • Klimax
      • 2 years ago

      Not sure. This is gamble and AMD was there once already and got almost taken out by it!

        • Amiga500+
        • 2 years ago

        Yep.

        From a gamer’s perspective, in an ideal world, AMD would be able to cripple crypto performance via drivers on the newer GPUs and have a highly optimised driver for older generations. Thus, old inventory can be sold to miners (by AMD direct or by gamers looking to upgrade) who can make better use of it and the newer stuff goes to gamers.

        From AMD’s perspective – they probably don’t care too much where the GPU ends up, a sale is a sale. But unpredictability in demand means they are not fully capitalising on their product.

          • Klimax
          • 2 years ago

          The only problem is you cannot cripple crypto. It is just bunch of operations using regular instruction set of GPU. Like with driver cheating (just rename and detect it), it would be chasing damn fast target and GPU proper doesn’t see wider context and thus cannot really do a thing about it.

            • Amiga500+
            • 2 years ago

            Agreed. They cannot do much without making GPGPU difficult for others.

            Anyway – like I said, AMD don’t have any real interest in borking the GPUs, as far as they see it, a sale is a sale is a sale.

            • mesyn191
            • 2 years ago

            GPGPU is, unfortunately, hardly used in all that much in games and CPU fall backs are still common due to the fragmented nature of the gaming consumer’s hardware.

            So yeah doing something like introducing single bit errors would mess up GPGPU and crypto its not all that big of a deal from a market perspective.

            And this is coming from someone who has been running Milkway for years now. GPGPU stuff in consumer land is pretty niche.

            • mesyn191
            • 2 years ago

            Crippling crytpo on GPU’s is easy.

            Just introduce single bit errors randomly into the workload. They won’t show up visibly in games but it’ll ruin any attempt to run buttcoin apps.

        • Bensam123
        • 2 years ago

        No, the lack of information here is appalling. Mining profits trended downhill in ’14 and beginning of ’15, but with Dagger new and old stock were bought up leading to today where 290s are still good at mining Ethereum.

        It isn’t just Nvidia cards that are sold out. That includes eBay and with the way ethereum works it’s not just the newest cards.

    • A_Pickle
    • 2 years ago

    [quote<]...it's widely expected that the price of Bitcoin and its satellite cryptocurrencies will fall from their current heights at some point. [/quote<] Oh it is, is it? News to me. Last I checked, that was the narrative at $100, $1000, $3000, etc. Bitcoin will reach a peak of value... but I don't think it's $10,000.

      • ludi
      • 2 years ago

      You must have missed the part where BTC shot off its $3k trendline in the middle of last year to reach $20k and then dropped by half back to $10k, and shook out the rest of the crypto market concurrently. That’s a pretty hefty rise and correction, and another correction of that magnitude would put a fair number of mining rigs out of commission and onto eBay.

      • Klimax
      • 2 years ago

      It’s bit hard to estimate when all idiots/ignorants with too much of money have been already exhausted.

      • f0d
      • 2 years ago

      heh i remember when it was less than $5 a coin and i was mining dozens of them to pay for my online gaming goods
      people were saying it wont last back then too

        • Klimax
        • 2 years ago

        Looks like another group exits bitcoin. Loosing value again…

    • NovusBogus
    • 2 years ago

    This is good…but…AMD’s market forecasters really should have put this in play a long time ago. Like, it’s their job to know what people are gonna want several years from now and plan accordingly. Bad planning leads to bad product requirements, bad channels, lost sales, and customer resentment. I’ve said it before and I’ll say it again, as much as my inner engineer may want to argue that anyone not R&D, IT or production is useless my professional experience has taught me that these other groups actually do really important stuff too and a successful organization needs them as much as they need us.

    On the bright side, I always did wonder what would happen when someone actually found a reason to give a hoot about GPGPU tech. Now we know: hilarity ensues.

      • Anonymous Coward
      • 2 years ago

      You complain they have not foreseen the development in cyrptocurrencies? Nobody knows what going on there. The only people who should go into that are people who are OK with loosing their money.

      AMD hasn’t boosted production because a crash in cyrptocurrencies risks leaving AMD with excess inventory, as explained in the article. AMD isn’t a company that is OK with loosing their money.

      • cynan
      • 2 years ago

      [quote<]...and a successful organization needs them as much as they need us.[/quote<] Since when do psychics and fortune-tellers need engineers? But seriously, while there could be an argument for AMD deciding to commit to more supply after the last spike in mining demand that ended last summer, as stated, mining demand going forward is almost impossible to predict with any accuracy. All these forecasters can do is build statistical models based on historical data. One of those important historical data points being when the initial bitcoin demand crashed 5 years ago after the introduction of ASICs and AMD got caught with their pants down. Forecaster: "Dr. Sue, using this autoregressive model, if we input this set of historical variables and assume X, then there is an 80% chance that we can sell 120% more GPUs for 8 months, but if we assume Y, then there is an 80% chance that sales will go down 20% for the same period" Lisa Sue: "Well why didn't you say so earlier?! It's obvious we should have hired that psychic instead of you!"

    • ronch
    • 2 years ago

    I really think crypto currencies are stupid as far as they being true currencies are concerned. It’s no different from having a printer at home that can print a certain, difficult pattern and then calling the printout ‘money’.

      • A_Pickle
      • 2 years ago

      lol

      • dodozoid
      • 2 years ago

      nice analogy – and it wastes as much ink as mid-sized industrial country

      • Amiga500+
      • 2 years ago

      How do you think a mint works?

      They’ve a rake of printers that can print a certain, difficult pattern, then call the printout ‘money’.

      Its about the same actual value too. You cannot eat or drink bitcoin, in the same fashion, you cannot eat or drink dollar bills. Yes, even the Benjamins.

      Its all perceived value.

      You want real value – go back to a barter system.

        • Magic Hate Ball
        • 2 years ago

        I don’t think it costs anywhere near $20 to make a $20 bill…

        I think you’re thinking about some coinage.

          • Amiga500+
          • 2 years ago

          In the past, there have indeed been instances where the value of the metals within coins were greater than the value of the coins themselves!

          [url<]http://www.telegraph.co.uk/news/uknews/1518128/Your-small-fortune-2p-coins-that-could-be-worth-3p-each.html[/url<] In a digital age where you no longer look up encyclopedias but instead use search engines, no longer send letters but texts or whatsapps or instagrams, no longer have to sit down at the same time(s) every week in front of a TV to watch a series, but stream it instead at your convenience... ...in a world like this - is it really that surprising that people are moving away from money whose means to avoid forgery is as archaic as how its printed on some paper? Banks & government coinage are the new RIAA. Crypto is the new napster. They need to sharpen up their act or they'll find themselves largely sidelined.

        • mesyn191
        • 2 years ago

        The difference is national mints have the backing and support of their countries which also have real world legal say over how that currency is used, tracked, and traded.

        None of the buttcoins are really currency because none of that applies to them which is why they keep trading like a bubble stock instead.

        • ronch
        • 2 years ago

        Thing is though, what if a guy at home suddenly had the capability to mint coins that they can use to buy stuff? There’s a term for that and it ain’t legal.

      • Goty
      • 2 years ago

      For your education: [url<]https://en.wikipedia.org/wiki/Fiat_money[/url<]

      • Bensam123
      • 2 years ago

      Yup you’re describing minting. The bubble is about to burst. No way BTC could be worth more then $1. I need 4 1080tis for my gaming rig I decided to build specifically in January.

      Doesn’t really matter what you think, it matters what everyone else thinks and it appears cryptos aren’t going away.

    • bandannaman
    • 2 years ago

    [quote<]AMD signals that it'll make more GPUs to alleviate demand[/quote<] No, they will alleviate [i<]upward price pressure[/i<] by supplying more GPUs, thereby better matching supply with demand. The best way to reduce (alleviate) demand is actually to raise prices.

      • blastdoor
      • 2 years ago

      Indeed!

      Or another way to say it — they are [b<]meeting[/b<] demand.

        • Srsly_Bro
        • 2 years ago

        if you dont know the number of units that would satisfy the [superbold]demand[/superbold], then you have no clue if it will [extremelybold]meet[/extremelybold] demand.

        bro….

        At best it will help to bring prices of GPUs down due to the higher supply.

        srsly..

      • Welch
      • 2 years ago

      Exactly, they can’t afford in the long run to price themselves out of the market. People are already trying to deal with high prices and you don’t want them sitting out an entire release cycles or two. If PCs were an immediate need for most consumers right now, then upping the price would be more financially responsible. In this market though, best to meet market demand, sell more and have record years so long as they are capable of meeting the demand.

    • torquer
    • 2 years ago

    In a zany profit making scheme, AMD will make more products and then sell them.

      • K-L-Waster
      • 2 years ago

      This sounds like the reverse of their old strategy.

      Does this mean that now they will make money on every card but lose it all on volume?

      [/sarc]

    • LocalCitizen
    • 2 years ago

    amd graphics is at a especially tough spot.

    we know nvidia’s volta is coming. so if amd made too much polarises (polarium?) or vegas then they might suddenly find themselves with 1 generation behind chips sitting in the warehouse. if the crypto craze continues, then amd can still make a profit on them. if that falls too, then amd may face another huge write down.

    let’s see if nvidia says anything about this. (feb 8)

    • chuckula
    • 2 years ago

    In related news, Samsung is now the largest IC supplier in the world: [url<]https://fossbytes.com/samsung-dethrowns-intel-as-the-worlds-largest-chip-maker-after-25-years/[/url<] For those of you who think they got there by selling Exynos chips, Samsung would like you to consider this [url=https://youtu.be/nKgUq5dziEk?t=41s<]musical response.[/url<]

      • Welch
      • 2 years ago

      RAM prices and demand, SSD sales, over priced smartphones and devices….. Yup. Thanks for the money LOL

      • Pancake
      • 2 years ago

      Yeah, then look at Intel’s gross margin. There’s a difference between “pile them high, sell ’em low” and making products consumers will squeal lustfully for.

      I just got a fat ($25k) pay cheque (for 1 months work) and am wanting to build a new Intel rig but I refuse because of extortionate RAM pricing. When the balls line up there will be a 8600 in my not to distant future. And a Snapdragon 835 Windows laptop.

        • chuckula
        • 2 years ago

        [quote<]and am wanting to build a new Intel rig but I refuse because of extortionate RAM pricing.[/quote<] When you are refusing to build a new system because it's the RAM that's extortionate in price and not Intel's products, Brian Krzanich cries.

        • HERETIC
        • 2 years ago

        Could be waiting a while for ram prices to drop.
        With AMD stating it’s ramping up GPU’s,but can’t get enough memory-that’s likely going
        to keep prices up for quite a while………………….
        Sadly.

          • drwho
          • 2 years ago

          AFAIK, amd/nvidia simply supply the GPU chip only, so its left to the baord makers to source and supply the ram and other extraneous bits, fans shrouds backplanes etc. So if AMD could get the board makers to commit to take a certain number of chips in advance they may feel its ok to overproduce. And supposedly it takes 6 months from Sand to chip, so a decision now could take months to come thru, But it looks like bitcoin etc is eating itself , bye bye.

    • End User
    • 2 years ago

    If I can’t buy a next gen video card in 2018 I’m gonna FREAK OUT!

      • drfish
      • 2 years ago

      [quote<]If I can't buy a next gen video card in 2018 [i<]at MSRP[/i<] I'm gonna FREAK OUT![/quote<] FTFY

        • End User
        • 2 years ago

        Bold

        • Srsly_Bro
        • 2 years ago

        Even the 1070 hasn’t reached consistently it’s MSRP since launch. MSRP has been meaningless in the 10 series from Nvidia. AMD’s products have done much better to meet MSRP. These are my observations, bro.

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