AMD to prioritise flagship CPUs over lower end offerings

[CAT-THE-FIFTH]

https://www.techspot.com/news/89822-chip-shortage-forcing-amd-prioritize-flagship-cpus-over.html

TL;DR: The global semiconductor shortage looks to have claimed another victim: AMD's lower-end CPU offerings. Company CEO Lisa Su said the situation is forcing team red to prioritize its higher-end commercial and gaming processors, which are more in demand.

At an investor event earlier this week (via PC Mag), Su was asked whether AMD would be shipping more CPUs if it had extra chip manufacturing capacity. "There is some compute that we're leaving underserviced," she replied. "So, I would say particularly, if you look at some of the segments in the PC market, sort of the lower end of the PC market. We have prioritized some of the higher-end commercial SKUs and gaming SKUs and those kinds of things."

The desirable Ryzen 5000 line has been one of the more difficult PC components to find at retail since they launched last November. They're also relatively expensive, with the cheapest Ryzen 5 5600X starting at $299.

"Probably the fact that the inventories are very lean throughout the supply chain, and so people are really now focused on, 'Hey, we're not ordering stuff to put it on the shelf, right? We're ordering stuff that end customers want,' and that's how we think about prioritization. Prioritizing sort of the end customer needs as we go forward," Su added.

AMD could be pushing out more CPUs sooner rather than later. The company last week confirmed that it is gradually transitioning the AMD Ryzen 5000 series desktop processors to a 'B2' revision over the next six months. These won't offer any noticeable changes compared to the current chips on the B0 stepping—it was initially thought they could be an XT refresh—but they might feature slight adjustments that improve yields, helping increase supply. Su said AMD hopes to add more manufacturing capacity over the “next couple of months.”

So what does that mean for the under £200~£250 market?? It might explain why the cheapest Zen3 CPUs are £250+ and why only old models are still available under this. Its a tad concerning because as AMD moves over more Zen2 wafers to Zen3,what are they are going to sell in these price points??

The AMD APUs use more 7NM sillicon too(150mm2~180mm2 vs 70mm2~80mm2),so I can't see them turning up anytime soon!

Also its going to be quite weird if Intel becomes the value champion and AMD becomes the expensive enthusiast choice.

 

[Destination]

Aye if all their wafers are making good quality 6 and 8 core chip let's, and they're selling well, why on earth would you botch some of them tomake poor quality offerings.

 

[MissChief]

Aye if all their wafers are making good quality 6 and 8 core chip let's, and they're selling well, why on earth would you botch some of them tomake poor quality offerings.

And there’s still plentiful stock of 3000 chips available too. Seems like a smart move.

 

[MagicBoy]

Aye if all their wafers are making good quality 6 and 8 core chip let's, and they're selling well, why on earth would you botch some of them tomake poor quality offerings.

Yep, good business sense. If the 3xxx series with good stock can fill the low end, then it makes sense to use 7nm for Zen3 and GPUs.

 

[CAT-THE-FIFTH]

The issue is what happens when AMD moves the wafers they already allocated to Zen2 for Zen3. There is literally only a 10MM2 difference in the size of the chiplets. That pretty much infers AMD is giving up on the whole market under £200~£250.

 

[MagicBoy]

Giving up? That's a bit strong. They make better profits on higher end parts.

 

[CAT-THE-FIFTH]

Giving up? That's a bit strong. They make better profits on higher end parts.

It's an engineered shortage for AMD. IIRC,AMD has pushed most of its 7NM wafers to consoles which are lower margin:
https://www.hardwaretimes.com/amd-u...yzenradeon-chips-in-the-last-6-months-approx/

Out of 110000 7NM wafers,90000 went to consoles. AMD was also given extra capacity from TSMC when Huawei was booted off TSMC. They didn't expect this windfall in wafer allocations!

So basically they knew very well even in 2019/2020 that there wouldn't be enough capacity. This is why Zen3 cost more,because AMD wants to offset its console margins with higher margin products.

Its happening also with the 12NM/14NM GPUs/CPUs which don't have the same level of supply constraints as GF still has a WSA with AMD,which gives them priority. They are hard to find.

They literally said they will prioritise more expensive CPUs. ATM,they would have had contracts in place for TSMC to make Zen2 chiplets,but production will be wound down in favour of Zen3. So what is replacing the 3200G/3400G,Ryzen 5 3600,etc? You can't even get 12NM/14NM APUs easily anymore and those are made using GF. The 7NM APUs are over twice the 7NM die area of a 7NM chiplet,so will be lower margin.

So if they are prioritising higher value CPUs,then what exactly are they going to have in the £50~£250 market?? If you look on Steam,for example its that price range which has the most CPUs in.

That literally means they are handing that space over to Intel. AMD have actually lost marketshare in CPUs over the last 6 months. This is despite plentiful 7NM supply.

Its the same with their GPUs - they have prioritised higher end GPUs over mainstream ones. Again,they have lost sales marketshare in GPUs to Nvidia.

Yes,they are making more money,and better margins but they are copying what Apple did. So higher margin but lower volume. The issue is Nvidia/Intel will quite happily take that market. Its not really good longterm as it means their competitors still will hold the majority of the market.

I really don't understand why they have allocated 80% of their 7NM wafer supply to consoles.

 

[MagicBoy]

What do the contracts with Sony and Microsoft say?

(Rhetorical question ... not seriously expecting an answer.)

 

[CAT-THE-FIFTH]

What do the contracts with Sony and Microsoft say?

(Rhetorical question ... not seriously expecting an answer.)

I don't know OFC,but it seems utterly stupid,after getting more capacity from TSMC,then to use 80% for consoles! Then to launch Zen3 and RDNA2 at the same time.

Say if it was "only" 50% of their capacity,that would mean 2.5X more capacity for their CPUs and GPUs.

I don't think they even added more 12NM/14NM wafers so they could at least have extra capacity for Polaris,etc(or at least not enough to compensate for the 7NM shortage).

 

[KompuKare]

Yes, the whole "we are chasing margins because Wall Street loves that" line would be a whole lot more convincing if 80% of "their" TSMC 7nm wafers weren't going to their lowest margin product: consoles.
Maybe those wafers aren't theirs as such and are really Sony's and Microsoft's but then it is AMD's super cautious approach to ordering wafers which is at fault and AMD's statements are just trying to distract from that. When they were almost bankrupt, they did have to write off a lot of stock, but being too cautious can be costly too.
Those products they could make at GF are a total mystery. Wanting to be a premium brand is crazy enough; throwing away lots of potential sales to rivals because they don't want to be associated with cheaper stuff? Totally crazy.
Maybe the should launch newly named division called not-AMD-value-brand?

 

[KompuKare]

Oh, and in case the current console and their high volume but low margins goes against all of AMD's talk of high margins, add this to the mix:
https://videocardz.com/newz/valve-steampal-handheld-gaming-console-rumored-to-feature-amd-apu

AMD Van Gogh/Aerith is to feature a quad-core CPU with SMT. It is rumored to feature 8 Compute Units (512 Stream Processors) based on RDNA2 architecture, so architecture-wise it is similar to current consoles such as Xbox Series S|X and PlayStation 5.

Sounds very high margin to me.

 

[Grim5]

Oh, and in case the current console and their high volume but low margins goes against all of AMD's talk of high margins, add this to the mix:
https://videocardz.com/newz/valve-steampal-handheld-gaming-console-rumored-to-feature-amd-apu

Sounds very high margin to me.

if that's the SOC that powers the SteamPal then it will blow the nintendo switch clean out of the water for graphics - it's still DOA for me though because I bought the switch to play Nintendo games, not PC steam games

 

[Radox-0]

I don't know OFC,but it seems utterly stupid,after getting more capacity from TSMC,then to use 80% for consoles! Then to launch Zen3 and RDNA2 at the same time.

Say if it was "only" 50% of their capacity,that would mean 2.5X more capacity for their CPUs and GPUs.

I don't think they even added more 12NM/14NM wafers so they could at least have extra capacity for Polaris,etc(or at least not enough to compensate for the 7NM shortage).

Likely the the console contracts been in place years. Very likely both MS and Sony ponied R&D funds also, the console chips are prior gen Ryzen so contacts for them likely in place around the time zen+ launched when AMD was not quiet as dominant. No doubt from there perspective the constant flow of money, even though not high margins the consoles offered at the time was attractive.

 

[jigger]

Demand for AMD silicon at this moment is mental. Intel’s entry into the graphics card market probably isn’t helping right now.

 

[Donnie Fisher]

Whilst its hard to argue against the top line AMD CPU's being a premium flagship product, I don't believe that those products alone can shoulder carrying the whole AMD brand as being a premium label. Its not like Apple, where the whole brand manages to carry off a consistent premium feel across its whole product family and allows people to enter the premium brand umbrella at a fairly low level, yet still get a premium feeling product, and from that a sense of brand allegiance to invest into more.

I don't think you can say that with the lower end of AMD's product family. Buy a low-mid AMD CPU ... do you feel part of an AMD premium label? not really. So you're not going to draw new people into the umbrella on flagship alone.

With consoles, I dont see it as an AMD label either. I just dont see you're average person buying a console based on the AMD product within, or that AMD has a premium product CPU. To them, its either a PS5 or an Xbox...end of.

- - - - - - - - -

All that said, re-reading the OP. I kind of agree with the comment from AMD. They are making what they are being asked for most, at the expense of what they are being asked for least.

 

[CAT-THE-FIFTH]

Yes, the whole "we are chasing margins because Wall Street loves that" line would be a whole lot more convincing if 80% of "their" TSMC 7nm wafers weren't going to their lowest margin product: consoles.
Maybe those wafers aren't theirs as such and are really Sony's and Microsoft's but then it is AMD's super cautious approach to ordering wafers which is at fault and AMD's statements are just trying to distract from that. When they were almost bankrupt, they did have to write off a lot of stock, but being too cautious can be costly too.
Those products they could make at GF are a total mystery. Wanting to be a premium brand is crazy enough; throwing away lots of potential sales to rivals because they don't want to be associated with cheaper stuff? Totally crazy.
Maybe the should launch newly named division called not-AMD-value-brand?

Its complacency - they think Intel is finished for the immediate future,and think because they caught up with Nvidia,they can relax. However,Nvidia still made sure its "lower margin" 14NM/12NM products are in sufficient volume to equip most prebuild desktops/laptops with entry level GPUs. They have enough Ampere volume to sell RTX3060 GPUs in sub £1000 systems.

So Nvidia seems to have kept its eye on the ball,but AMD because its tasted success,has done another Athlon 64 and decided they won the premium brand battle. However,the premium brands like Nvidia have made sure they can supply OEM systems to the extent,you can't even find a 12NM/14NM AMD GPU anywhere in a prebuilt system.

Nvidia is laughing at both ends of the market. Plus you have at least a chance of getting an Ampere GPU at RRP. AMD can't even do that.

Likely the the console contracts been in place years. Very likely both MS and Sony ponied R&D funds also, the console chips are prior gen Ryzen so contacts for them likely in place around the time zen+ launched when AMD was not quiet as dominant. No doubt from there perspective the constant flow of money, even though not high margins the consoles offered at the time was attractive.

Nobody forced AMD to launch 3 consoles,Zen3 and RDNA2 at the same time.

AMD has pushed over 200000 wafers towards consoles if these reports are correct:
https://translate.google.com/translate?sl=auto&tl=en&u=https://ctee.com.tw/news/tech/375133.html
https://www.hardwareheaven.com/amd-80-of-production-reserved-for-consoles/
https://www.reddit.com/r/AMD_Stock/comments/iwxuhe/amd_placed_further_console_soc_order_at_tsmc/

They got extra capacity from Huawei being booted off TSMC too.Only a relatively small fraction of that went for othe products. They even increased wafer allocations to consoles late last year. Yields were apparently at under 60% so it makes me think they overpromised Sony/MS and had to push more wafers towards consoles to get the numbers expected. So this came at the expense of their consumer products,which they then jacked up in price.

Once you take away Epyc,etc out of the equation no wonder so many Zen3 chips took months to be easily available.

Just imagine if they had allocated half the number of wafers to consoles?? They would actually have had a full 7NM CPU/GPU stack and put Intel and Nvidia into serious problems.

 

[MissChief]

I really cannot see how AMD can have a high Margin on Console chips given the pricing of them. I'd be surprised if margin per console is in double digit $ or if it is, it's single digit margin per CPU and the same for GPU. Either that or Sony and MS are losing hundreds of dollars per console for every one sold which I would be very surprised to hear. That's a lot of games to sell even if each game has a $10 licence fee. Are gamers going to pick up 10 games or more in the first year to 18 months? Possibly, but if they're £60+ then it's highly unlikely.

 

[CAT-THE-FIFTH]

Either way we the DIY PC builder are going to have to catch some of the tab for them. That is what AMD is telling us. Its why our hobby is increasingly paying for things like consoles,and why the entry level/mainstream CPU/GPU is slowly ebbing away. Its quite clear OEMs can get the same parts for far less from Intel/AMD/Nvidia.

Its funny how AMD has "not enough capacity" to make a Ryzen 5 5600 for between £150~£200, and "has" to concentrate on highend CPUs,but can find spare capacity to make the SOC for a $399 handheld Valve console.

So I wonder how long before,we go back to £300+ 6C CPUs,and the "entry level" being a £200 quad core!

It looks like we need to rely on Intel and Nvidia to push prices down.

 

[MissChief]

It looks like we need to rely on Intel and Nvidia to push prices down.

And when have they ever done that in the past? Intel doesn't even lower prices in years old CPU's and NVidia have been complicit in Mining and scalping for a year or more.

 

[CAT-THE-FIFTH]

And when have they ever done that in the past? Intel doesn't even lower prices in years old CPU's and NVidia have been complicit in Mining and scalping for a year or more.

I was being ironic. As Yazz said: "The Only Way Is Up!"