Technology

Blockchain not our Core Focus, but Remains Important Technology, says AMD’s Su

“Bitcoin Mining” (CC BY 2.0) by wuestenigel

Advanced Micro Devices’ earnings in this year’s first quarter were kept afloat by revenue from cryptocurrency mining, although the chipmaker suggested that volatility is proving to be an issue.

AMD’s stock rose by 11 percent in April after an announcement was made that they had performed over and above earnings estimates. The company earned a higher percentage of revenue from graphics chip sales used to power computers in cryptocurrency mining for such digital currencies as ethereum and bitcoin. AMD, however, is preparing for a potential decline in Q2 from blockchain revenue, in spite of the fact that cryptocurrency has begun to show signs of recovery. With that being said, AMD CEO Lisa Su predicts that mining demand is here for the long haul. She clarified while on the call with Seeking Alpha when she said that blockchain isn’t going anywhere while it continues to serve numerous currencies and applications.

The results speak for themselves

AMD’s first-quarter revenue from computing and graphics stood at $1.12bn, an impressive 95 percent increase from the same period last year. The company says that this is down to strong sales of both Ryzen and Radeon products.

Devinder Kumar, AMD’s CFO, was also on the call. Ms Kaur said that blockchain and gaming demand drove Radeon’s strong performance and that the company believes that blockchain accounted for approximately 10 percent of first-quarter revenue.

Su talked about how sales performed well out of season, due in no small part to an increased demand for blockchain aligning with the firm’s 500 series and Radeon Vega graphics cards sales. Amid an increased demand for its graphics processors, the firm’s stock has increased by over 250 percent in just two years.

Reality check

AMD further offered guidance for its Q2 performance, when it cautioned investors to limit any expectations they may have for blockchain demand. The guidance did manage to surpass expectations from Wall Street analysts, however. The company also issued guidance for 2018 as a whole. It predicts that revenue will see a mid-20’s percent increase from 2017, largely due to the ramp of its new products. It also estimates that revenue from blockchain will be in the mid to high single-digit percentage.

Greater visibility

Su said that there had been numerous talks surrounding cryptocurrency mining and blockchain, and that management invests time with customers, which includes commercial miners. Su described the company as having greater visibility with regards to demand for individual cryptocurrency miners versus commercial miners, the former of which has a shared use-case between mining and gaming.

Su also noted that the market’s innate volatility is a good enough reason to hold modest expectations for the second quarter’s blockchain demand.

Blockchain and crypto

Su referenced concerns from trading firm Susquehanna, which suggested AMD’s revenues were helped by Ethereum crypto mining. She that the firm feels that they know what customers are using their products for, so, while the growth factor is nice, it isn’t a dominant one. That’s important, as crypto mining has led to an increased cost of enthusiast graphics processing units, typically used by gamers.

Su said that people are watching Bitcoin’s daily activity and they see it as aligning with daily sales figures. She warned that the two don’t align, however. While Su believes blockchain to be an important technology, she insisted that it isn’t the company’s core focus.

Blockchain is here to stay

Su noted that blockchain is important when looking at it from a long-term perspective, adding that they’re spending a lot of time with key influencers and that they believe it will still be here for a few more years at least. What it does tomorrow, compared to what it did previously, however, she believes is up in the air. Of course, there are numerous advantages and disadvantages to blockchain, just like there are with any young technology still finding its feet. One of them is certainly increased privacy in the form of anonymous transactions. However, anonymity goes both ways: just like the buyer of a service or product is anonymous, so is the receiver, and for that reason, users are warned of scammers posing as legitimate brands to get their hands on bitcoins and other cryptos. AMD sees pros and cons to blockchain too. Su added that while that a decentralized market and the ability to enable peer-to-peer transactions are both significant, blockchain can also be a distraction and that they are looking to focus on core markets.

Long-term strategy paying off

Su also spoke to CNBC’s Squawk on the Street when she further discussed the company’s first quarter performance, along with its plan moving ahead. During the interview, Su said how both she and AMD are pleased with their first quarter performance and how 2018 has started out for them. She believes that it’s down to the company’s long-term strategy, which is clearly paying off. She added that they saw a nice ramp across their product lines in the data center, PC, and gaming. Su said that gaming is a profitable market, with so many gamers, from casual gamers to genuine enthusiasts, and that AMD works with the segment as a whole. With regards to the data center, she said that we all need more power when it comes to the cloud, which makes it another great market segment.

Su proudly went on to say that AMD added Lenovo, Dell, and HP as commercial PC clients, and predicts that they will help the company’s growth in the second half of 2018, as their clients launch new computers. She said that unannounced customers are also in the pipeline and that Microsoft will be ramping things up with AMD’s server products.

Looking ahead

Su is optimistic that the company’s products will contribute towards driving an improved market share in the year’s second half.

With regards to Intel and NVIDIA, she said that high-performance computing is worth $75bn and that AMD has a chance to address the whole market. She also said that the company feels that the technology they have is highly competitive. She added that there is a demand for numerous solutions and that their customers are happy with their growth map and excited to talk about what they have.

While Su may have expressed caution surrounding cryptocurrency and blockchain, she did tell CoinTelegraph in December of last year that AMD remains interested in its involvement with blockchain and cryptocurrency mining.

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