AMD partners with Meta, seeks to 'advance semiconductor ecosystem in United States,' CEO says

AMD CEO Lisa Su speaks with Yahoo Finance's Brian Sozzi about the semiconductor manufacturer's new partnership with Meta, formerly Facebook, and their growth within the United States' semiconductor industry.

Video Transcript

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KARINA CONTRERAS: AMD just unveiled some work-tailored innovations and products at its Accelerated Data Center premiere. And here to break down that announcement, Yahoo Finance's Brian Sozzi. Definitely some news in that announcement.

BRIAN SOZZI: Yeah, you're seeing the shares really rock here, Karina, up close to 10%. It's not just the new products. AMD also revealed a pretty big deal with Meta. I caught up with AMD's CEO, Dr. Lisa Su, just moments ago on the deal.

LISA SU: It is a big day for AMD. We're very excited to talk about our new data center offerings. And this high-performance computing megacycle, it's just an amazing time right now. So everything that we're doing, individually, in our businesses, in large enterprises, it really requires more and more computing, whether you're talking about collaboration or you're talking about high-performance simulations.

All of the world's toughest problems need more computing. And we're very happy to be the ones providing a lot of that high-performance computing.

BRIAN SOZZI: Does this cycle ever end? I don't see it ending. But I don't see how it stops.

LISA SU: Well, I'd like to say it's a new normal. The new normal is everybody needs more compute. And our expectations of compute are also increasing. If you think about the pre-pandemic times, we had one expectation. And we've now all learned to live with the pandemic. And in the post-pandemic world, there's just an expectation of a lot more hybrid work, our expectations of what we can do in businesses. Then you add in machine learning and AI and what we can do with that. So when you put it all together, it's just a need for a lot more computing cycles in everything that we do.

BRIAN SOZZI: Full disclosure, Lisa, and this probably doesn't surprise you. I'm not an engineer. I'm not a data scientist. So these new chips you are talking about, how are they different compared to the ones you have had in the market?

LISA SU: Well, I think the biggest thing to think about, Brian, is, as there's more computing that's in both the cloud and the enterprise, people really want the right processors for the right applications. We call it workload optimization.

And so we're talking about some of our new CPUs, so Epic is our processor line. We've actually enhanced Epic with what we call Milan X, which is actually a 3D-stacked chip for the data center. And it just dramatically increases our performance in certain workloads.

We've also actually also unveiled today our MI 200 accelerator family, which are GPUs that can be used with our CPUs. These are very, very exciting accelerators as well. And they're going into the first frontier exaflop system for the United States at Oak Ridge National Labs. So those are some of the large announcements that we're making today.

BRIAN SOZZI: One large announcement is you just grabbed Meta. Take us through this deal you signed with the company.

LISA SU: Well, our goal is to really work with the largest hyperscalers in the world and give them the right performance, the right power, and really partner with them in terms of what they need in the data center. So we're very excited to announce that Meta is now using our processors in their data centers.

This has been something that we've worked on for several years. And again, this is a place where every hyperscaler has a different way that they're optimizing their data center based on the workloads that they're building and that they're using. And so this is what we're doing. We're working with these hyperscalers.

And, look we're very proud of all of our partners, actually, if you look across, whether it's Microsoft or Google or Tencent. But adding Meta is certainly a very significant piece. And we're very excited to talk about that today.

BRIAN SOZZI: Is there a value on this deal you can share? To me, it sounds like a pretty big one.

LISA SU: Well, what I would like to say is if you think about going back to this high-performance computing megacycle, I mean, there's just a tremendous need for more compute. And our goal is to partner with the largest hyperscalers in the world.

If you look at our data center business, it's been a huge growth driver for us as a company. So our data center business doubled year over year. And it has had six straight record quarters. So a very significant piece of the growth for AMD.

And overall, our work with the cloud hyperscalers is a big piece of that. So we're excited, again, about working with all of our cloud partners.

BRIAN SOZZI: Something you said on your last earnings call, Lisa, that caught my attention. You're looking for a flat PC market for next year. Why is that?

LISA SU: Well, when we look at the PC market-- again, the PC market is a great market. Again, it's another market that requires lots of computing. But the PC market has had two extremely strong years. I mean, if you look at this year in the PC market, we're probably going to ship somewhere around 340 to 350 million units as an industry. So when I talk about a flattish PC market, I'm talking about still 350 million units, which is a very big market for us.

I would say that it's hard to predict what's going to happen over the next 12 months. And so for planning purposes, that's what we're using. But our view is there's lots of opportunity for AMD to continue to gain share, even in a flattish type of market. And hey, if it's up, that's great. Even if it's a little bit down, that's OK. I think the key is to continue to push the envelope on what we can deliver for our customers and partners.

BRIAN SOZZI: Lisa, is it more of a supply issue than a demand issue?

LISA SU: I would say end user demand in the PC market is quite high. There are some what we call match set issues, so not necessarily processor supply constraints but perhaps some of the other auxiliary chips that are needed. I believe this will be worked through, Brian. This is one of those things that just takes a couple of quarters to work through.

But from our overall view, I think the PC market is a great market. Data center market is also doing extremely well. And we're looking forward to the coming year.

BRIAN SOZZI: It feels as though I'm running a live blog with you on the chip supply shortage. Is this the day that you have a date for me, Brian, the chip shortage will end on this date? Do you have that date yet?

LISA SU: Well, Brian, I don't know if I'm going to be the person to give you that date. What I'll tell you is there's a tremendous amount of energy going in the entire industry to bring more capacity online. We've actually been able to bring a lot of capacity online as we've gone through 2021. And that's one of the reasons we were able to improve our full-year guidance here in our last earnings call.

We look into 2022, and we see it as a significant growth year for the semiconductor industry and then for AMD within that semiconductor industry. And we're working closely with our suppliers to put a tremendous amount of capacity online across PCs, gaming, as well as data center.

BRIAN SOZZI: Is it frustrating that we still don't have the CHIPS Act yet passed?

LISA SU: Well, look, I think there's a growing desire in the industry to have public-private partnerships around improving and enhancing the semiconductor ecosystem in the United States. And that's both manufacturing as well as research and development. So we're working with our peers in the Semiconductor Industry Association.

I think we see good support across the board. And we're going to continue to work on advancing the agenda of the national semiconductor discussion.

BRIAN SOZZI: Lastly, any update on the deal closure for Xilinx?

LISA SU: Well, we're very excited about Xilinx and having that deal closed. Our view is that we're on track to close by the end of this year. And we continue to believe that.

BRIAN SOZZI: So here's why AMD shares are surging. Of course, I think the market likes the deal with Meta. But number two, a lot of new chips out from this company. They already were performing at a very high level. But the read here, I think, is that AMD is prepared to gain even more market share from rivals, probably Intel, next year.

KARINA CONTRERAS: All right, thank you so much, Brian Sozzi. I love that you tried to find out when the chip shortage was going to end.

BRIAN SOZZI: I do my best.

KARINA CONTRERAS: [CHUCKLES]