Why Advanced Micro Devices might be important for service providers

AMD headquarters in Santa Clara, California. (AMD)

Semiconductor company Advanced Micro Devices (AMD) makes chips for data center servers, among various other business lines. AMD’s silicon innovations are important for hyperscale cloud players and other businesses that are updating their data centers. AMD garnered big headlines in 2018 as the best performing stock in the S&P 500, gaining 73%.

This week, Santa Clara, California-based AMD reported revenue for fiscal year 2018 of $6.48 billion. And for the fourth quarter of 2018, the company reported revenue of $1.42 billion. The company’s stock is up more than 15% today since it reported its earnings yesterday.

AMD introduced its Epyc high-performance server processor in 2017. And server manufacturers are now shipping more than 50 Epyc platforms. Customers for Epyc include Amazon Web Services and Microsoft Azure.

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On its fourth-quarter 2018 earnings call, AMD President and CEO Lisa Su said the company reached a milestone in the quarter as its high-margin data center CPUs and GPUs accounted for a mid-teens percentage of overall revenue. “While we expect our data center revenues to be lumpy, the ramp of our data center business is beginning to contribute meaningfully to our financial results,” said Su, according to a Seeking Alpha transcript.

Currently, AMD is working on the next generation of its Epyc processor code-named “Rome,” which is slated to start shipping in mid-2019.

Su said Rome is expected to deliver double the compute performance per socket compared to the current generation of Epyc processors. And the company expects that the adoption rate for Rome will be faster than the adoption rate of previous generations of Epyc. “The reason for that is we are in a socket-compatible infrastructure,” said Su. “And so customers who don't necessarily need the newest features of the platform can actually use the same motherboard and system that they currently have with Naples and drop in Rome.”

AMD expects the early Rome deployments will be targeted by OEMs for hyperscale cloud operators with other types of customers following that: “It’s the breadth of the OEM platforms that gives us good confidence that we’re going to a broader set of workloads and having broader coverage in the market."

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Operators such as AT&T, Sprint, and Comcast are updating their networks with more generic hardware that can run nonproprietary software. For example, these operators are all involved in the Open Networking Foundation’s Central Office Re-Architected as a Data Center initiative. While they’re going through the evolution to transform their operations, they’ll want the best servers they can find in their data centers.

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