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.

 

[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.

 

[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.

 

[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).

 

[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.

 

[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.

 

[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!"

 

[CAT-THE-FIFTH]

Nvidia actually said even with the additional funds consoles were lower margin. If you look at when AMD separated out it's financial metrics better - consoles were always lower. Zen R and D wasn't paid for by Sony or MS - it was paid for by AMD.

Also Intel had no consoles to subsidise it's CPU r and d and the billions it's lost on developing new nodes. New node development costs tens of billions of USD. Yet Intel client still makes a ton of money and decent margins. Nvidia makes decent machine yet you can find RTX3060 GPUs in £900 laptops,GTX1660 GPUs in loads of products. It seems both Intel and Nvidia spend more than AMD in R and D yet can supply both ends of the market.
AMD also has found $4 billion to buy back stocks. This is what Intel did and their new CEO said Intel wasted money on stock buybacks.

That is $4 billion they could have used for R and D or something else.

The reality is that Nvidia/Intel have increased marketshare over the last year. Nvidia makes more money than AMD does,and you can get entry level GPUs in prebuilt systems easily. Intel still makes more sales than AMD and you can find more them at all levels of the market. It's fake news to say mainstream products are loss making as Nvidia and Intel sell loads of OEM mainstream products and out revenue AMD. DIY buyers will always pay more than an OEM.

Jonny Public are still buying mostly Nvidia/Intel products and make more money than AMD does. This is because AMD has massive holes in its lineups and can't supply OEMs with enough volume.

80% of your 7nm wafer supply for the last 6 months towards consoles,when there is such massive demands for GPUs and CPUs,means AMD might have left billions on the table in terms of revenue. That is billions that Nvidia and Intel got in return.

 

[CAT-THE-FIFTH]

While it is unlikely we'll ever know unless a reliable leaker shows up, my assumption is still that most of that 60% figure is from Sony.
And that Sony panicked once they found out the spec MS had gone for and raised clocks way past what the SOC was designed for - whether by themselves or after asking AMD what was possible.
The contracts are of course top secret, but it would be a monumentally bad contract if AMD were liable for Sony changing their minds. That is if they only get paid for functional dies at the new spec.
My speculation since hearing about Sony yields and the last minute push to clocks has always been that Sony must by now have millions of perfectly good, functional dies which cannot be binned to meet the PS5 specs.
Of course, even if AMD are being paid for the dies Sony cannot use, the consequence of all this more wafers going to console.
So in either case AMD are paying for it: either directly because Sony's contract is very one-sided and Sony don't pay for the wastage, or because AMD are not able to use those extra wafers for more profitable things (and let's be honest, even a Zen2 die cut down to 4C Athlon would probably be profitable than console margins).
As for Sony & MS underwriting AMD's R&D budget: well I think a lot of RNDA2 was paid for by them but since the console volumes prevent AMD from having any wafers to throw at RDNA2 cards it is all rather academic.

It's terrible planning from AMD. They got more allocations because of Huawei and used a lot of it for consoles. 200k wafers for consoles and a fraction of that for everything else.

All the people here laughed at Nvidia using an immature and worse Samsung 8nm node. Yet despite having larger GPUs which needed more power and cooling,JHH again succeeded somehow.

At least half their $5 billion last quarter was consumer graphics. AMD made $3.45 billion last quarter in total. Nvidia GPU client probably made more than all of AMD's CPU/GPU client business. Of that semi-custom made only $1.35 billion,and that included both server and console. So over 70% of AMD's 7NM wafer supply,derived less revenue than client with a fraction of the 7NM wafers.

That is how much money AMD has left on the table last year - it wouldn't surprise me one bit of they had more client supply,they would have probably matched or beaten Nvidia revenue.

Yet they've given no deadline, or indeed commitment, only saying up to $4B, which for AMD is a sensible move. They aren't as big as Intel as during the troublesome years the stock was heavily diluted in order to fund the R&D for Zen and to keep the company operating with pretty large debts. So they haven't 'found' $4B they've stated that is how much they will spend as a maximum, over no certain timescale, it could be 1 year or 5 years.

Saying something is a bad idea unless you fully understand the reason for doing it, well that is a bad idea, it raises investor confidence and shows confidence in your increasing margins, and market share and increase value to the investors who helped them when they were on the ropes.

I understand it fully as Intel did the same and their new CEO admitted it was a waste of money,which they could have spent on other areas of the company. Its more nonsense short termism which won't help them at all longterm. Many here defended Intel's buybacks as they made a tidy sum out of it,but in the end its a short term bandaid. Longterm the same investors would have simply made more money if Intel had invested more in its products.

Many people can't see AMD isn't out of the doldrums yet. Intel despite having so many problems massively outsells AMD,and Nvidia massively outsells AMD too. They did the same stuff during the Athlon 64 era by wasting precious funds,and then had no answer when their competitors woke up.

They should be using that money to secure more 5NM wafers,etc. I think you don't appreciate Intel is trying to buy as many TSMC wafers for 5NM/6NM as they can. So is Nvidia. They can easily outbid AMD. They realised what the big weakness of AMD is now.

AMD got very lucky with TSMC 7NM. Huawei was booted off TSMC due to the sanctions,so AMD got much more supply than they expected. Nvidia decided to experiment with Samsung. Whether this will play out with TSMC 5NM/6NM is another question.AMD is going to find it much more harder than with 7NM.

AMD can't expand revenue if they can't get enough supply.

Then investors will show less confidence in the company. Buy backs only work short term. They have literally told their investors their revenue growth is going to be limited by supply. That is not a good thing at all. Longterm investors care more about that.


Both Intel and Nvidia know this - if they can't beat them in technology they will use dirty tricks. The "new" Intel CEO was the same guy who was in when Intel did all its dirty tricks last time - he was one of the senior guys in their client and server computing section! This is because Intel could leverage better supply over the OEMs. AMD hit the same supply issues during the Athlon64 era.

 

[CAT-THE-FIFTH]

Can you prove how many wafers they have used, and what their allocation is, because it looks to me like you are just making up a random number.

Look in the thread - lots of links from Taiwanese industry sources covering TSMC. During the last quarter of 2020,AMD had an allocation of 150K 7NM wafers from TSMC,and used 120K for consoles.
This year they used 90K wafers for consoles. Its all there. So no unfortunately it's not a random number - its been linked by people such as KompuKare here before over the last year.

Surprised you missed it all.

Plus I think you have also not realised how big the console SOCs were. They are between 300MM2~360MM2 and will yield lower than any CPU. Even looking at the millions of consoles sold and back calculating stuff its still a huge number of 7NM wafers.

The semi-custom numbers are also inflated by the server side of the business which is very high margin. So that is still a ton of 7NM wafers for a relatively low revenue part of the business.

AMD has enough 7NM supply,but the consoles have made certain they are supply limited.

You keep saying this like it's a casual choice by AMD.

The agreements for consoles go back a lot further than the current shortages and I don't recall you with a crystal ball back then saying don't get into the console contracts.

AMD never expected so much 7NM allocations. Some of you have entirely forgotten what happened with Huawei. They were the 2nd largest 7NM partner with TSMC.

Taiwanese sources showed AMD had increased wafer allocations last year to consoles,and again you have forgotten Huawei was suddenly booted off TSMC too. Last year,AMD increased wafer allocations to consoles according to sources in Taiwan

 

[CAT-THE-FIFTH]

I have this feeling that AMD is not in a position to tell the console agreements to **** off so they can produce more profitable hardware at the current time.

But they are in a position to not launch 3 different consoles,two new CPU lines and a new GPU line in one go,and then apparently wind down their older 12NM/14NM products at the same time. They really needed to have a backup plan of some sort - its quite clear Nvidia kept its 12NM/14NM GPU production lines in place,hence why you can find them everywhere in OEM prebuilt systems.

So the answer was no, you can't prove it. It's random numbers in random articles with no actual evidence as TSMC doesn't break down how many wafers they supply to each customer.

So I didn't miss it, as it's all just made up.

The issue is those sources have tended to be correct. The problem even if you are skeptical and ignore them,just look at how big console SOCs are,and back calculate the number of wafers required which some have tried. Then look at some of the market research companies which have good estimates of AMD CPU and GPU sales,and AMD/Nvidia/Intel uses these companies figures during investor meetings. This is the issue here - its quite clear semi-custom is much lower revenue overall,and that is inflated by the hugely profitable server CPUs.

They have allocated a huge amount of supply,even as a percentage of what TSMC does make each month. So far at least 14 million PS5 and XBox Series X consoles over two quarters IIRC,plus the XBox Series S. So 14 million 300~360MM2 SOCs. These are the size of something like a Navi10 GPU,or close to that of the one in the RTX3070. Or around 4X to 5X the size of a single Zen2/Zen3 CPU chiplet.

To put it in context,AMD sold 1.9 million GPUs in Q4 2020,and Nvidia just under 10 million(JPR and AMD/Nvidia use their figures). When it comes to Zen3 sales,apparently AMD sold close to 1 million Zen3 CPUs during Q4 2020(Mercury Research which again AMD uses).

Considering both Nvidia and Intel still massively outsell AMD,and AMD technologically wise is as good or better than its competitors,they have huge potential to take share from them. But not if they can't allocate enough volume because they have trapped themselves in overpromising too many consoles.

Nvidia/Intel have marketshare to lose.

The other issue is also pandemic spending. The last year has seen many people pull purchases forward,so how long is this sudden boom going to last? Then OFC you have mining too.

Edit!!

When the first AMD consoles all the news at the time was saying AMD supplied the finished chips to MS/Sony at an agreed price and had to eat any yield issues. This is why Nvidia had issues with MS over the original XBox. So is AMD moving to a licensing model then? Because I have not seen any indications so far.

So AMD has to pre- purchase wafer allocations and Sony/MS will pay for the finished products if that is that case. So the console contracts do affect what AMD can pre-purchase for their own products, because it reduces any remaining volume for everything else.

Just to highlight something, why would you pay scalped prices from TSMC which might increase your supply, but reduces your margins to the point where you may be making zero profit on the wafers once converted into chips and sold? Just so their EoQ results look worse as they've lowered EPS, and gross margins, that isn't smart and will negatively impact the business, even if they added a point or two to the MS for that quarter, or half.

Also type your whole response then post it, don't go back and add in like four paragraphs after, it's really hard to follow since when you go pretty much most of what you have written has been altered, and if you must do it, put it at the bottom and highlight it with "EDIT:" or just make another post.

The issue of AMD falling behind on nodes,is what eventually made Intel and Nvidia screw them over the last time,after AMD/ATI had managed to beat their competitors.

The issue here is what happens if AMD gets less 5NM/6NM supply relative to 7NM supply today?? At least AMD can target higher margin products like server CPUs,commercial GPUs,etc if they have supply and it costs more.This will at least relax constraints for the lagging nodes which can be used for volume products,where they can target more areas. If not you are back to square one,with everything needing one node and hence affecting supply.

If they don't,it not only means their competitors have more supply,they also have more supply of a better node.

AMD found every penny it could muster to get in early as possible on 7NM. They really need to make sure Nvidia/Intel don't sneak in. It was Nvidia sneaking in which eventually screwed AMD RTG/ATI over. ATI being consistently one node ahead of Nvidia helped a lot,but once they didn't have the lead,Nvidia took them to the cleaners.

Companies like Intel did contrarevenue and gave billions of USD away in bribes to deny AMD sales. The issue here is Intel/Nvidia most likely are going to try and do the same,if they know they can screw AMD over.

 

[CAT-THE-FIFTH]

CPUs are apparently not a low margin businesses - Intel who makes ridiculous amounts of money despite spend billions of USD on their fabs,and various billions on weird purchases,etc. Intel still has higher margins than AMD despite having to sell their 14NM+++++++++++++++++++++++ CPUs for less and less money.

Its most likely even a £250 CPU is higher margin than people think. For one thing its only 70MM2 of 7NM silicon with very high yields. They are also salvaged parts,ie,lower clocking chiplets with defective cores. Then consider that the same chiplets will be found in Epyc/Threadripper so the parts which filter down to that level are really "poor quality" in comparison. The 7NM APUs are 150MM2~180MM2 and are found in £350~£400 desktops and £400~£500 laptops. The consoles are somewhat different - the parts have some redundancy built in,but anything with sufficient defects is unusuable. With GPUs,there is loads of salvage SKUs to take up faulty parts. With consoles that doesn't really exist.To put it in context,the console APUs are around 300MM2~360MM2 in size. These are around the same size as a GPU in the RX6700XT or RTX3070TI. AMD due to shortages has lost dGPU sales relative to Nvidia!

Spoiler

Now look at their last financials. AMD made $485M on $2100M of computing and graphics sales(23%). They made $277M on $1345M(20%) of semi-custom and enterprise sales. Yet AMD in 9 months has almost doubled its enterprise sales. So if you take enterprise sales out of it,which are very high margins,its quite clear even with a huge increase in semi-custom consoles sales/licensing its lower margin than their client side of the business.

Spoiler

Plus Intel makes a ton of money from OEM sales. Nvidia made around $5 billion. Half of that was from "gaming" GPUs,and they still ship significant volumes of older 12NM/14NM parts. At least 14 million consoles have sold over two quarters(in Q4 2019 they sold only 2 million GPUs). Yet despite this computing and graphics has made $4 billion in revenue with $1.05 billion in income,yet semi-custom and enterprise made $2.6 billion and $520 million in income. There is a reason why AMD lumped in enterprise and semi-custom into one segment,because it hides the relatively low margins console contracts make relative to enterprise,and client CPU/GPU sales.Its why Nvidia and MS fell out,as MS pushed hard on Nvidia WRT to costs.

AMD needs to balance the different parts of the business,,they have potentially left a ton of revenue on the side,if now they have to leave whole profitable market segments,especially during a pandemic which drove forward a lot of PC purchases. If they didn't need to abandon parts of their business,then it wouldn't be an issue. I really hope AMD finds a way to get more supply to its PC business. Sadly its giving Intel and Nvidia more of respite than they deserve,to come back later when they are stronger.

 

[CAT-THE-FIFTH]

The point isn't that a <£250 CPU is 'low margin', but that's it's 'lower margin' than a more expensive processor...

If AMD were to compete with the 11400 for example they'd need to sell a 6-core chip for ~£150, and not like they could use some crummy 'bad' core that barely manages 4GHz as it wouldn't compete. So you're basically saying they should sell a 5600X capable die for £100 less...

They haven't even released Threadripper '5000' yet, again that same 6-core die (or several of them) could be put into an even higher margin product.

Yes they need to balance the different parts of the business, and in an ideal world they'll have plenty of RDNA2 GPUs, lower SKUs for Zen3, Threadripper 5000 out there, massively increased CPU volume to target OEMs and service the console market. But there is very limited supply and very high demand so where to focus. Consoles may be low margin but they're good solid revenue in a long term market that helps fund R&D, it's really not the terrible option you seem to think it is.

AMD can easily sell a cache disabled lower clocked part for closer to £200,which is still £50 more than a Ryzen 5 3600. A Ryzen 5 5600G for example still easily beats a Ryzen 5 3600 despite half the L3 cache. The Ryzen 5 5600X is still a decent amount faster overall than a Core i5 11400,and all AMD needs to do is get something which is faster than a Ryzen 5 3600.To put it in context,the size difference between a Zen3 and Zen2 CPU is only 10MM2. Yet AMD has to sell a far better quality Zen2 chiplet in a Ryzen 5 3600 for less money. The reason they can't do that is because they have no supply to be able to transition over. The Zen2 parts are going to be lower margin.

You mention no Zen3 Threadripper - again that means they have not enough supply for Epyc too,because they use the same chiplets. So its affecting all ends of the market now.

However,AMD already sell 150MM2~180MM2 7NM APUs in £350~£450 systems.I seriously doubt an OEM is paying £250 for a CPU. OEMs sell whole Ryzen 7 laptops for around £500 with a perfect 150MM2 7NM SOC,and Ryzen 5 based laptops for less.

OEM sales make up the bulk of their client side.Yet despite apparent "lower margin" OEM sales,AMD is making more revenue,and a higher rate of return on this than semi-custom and enterprise bundled together.

Longterm this is going to be a big problem. AMD can attempt to transition more parts to higher margin SKUs,but again they are limited in what they can do.

OEMs are going to buy the parts for far less than a retailer can sell them for,so AMD/Intel/Nvidia already are making decent margins on all their parts before sales to OEMs,let alone end consumer sales which are much higher margin.

If mainstream/entry level sales were relatively low margins,Intel and Nvidia would be having worse margins than AMD. In terms of pure revenue,they not only sell far more CPUs and GPUs,they also are exposed far more to the entry level and mainstream markets. Look on Steam for example - some of the top GPUs are entry level/mainstream models. Yet Nvidia has some of the best margins selling these kinds of GPUs. The same goes with Intel.

The bigger issue is MS/Sony have a history of pushing down costs,so they can price the consoles cheaper. So what happens if demand is lower and they want to push AMD down on the costs,to enable cheaper models to maintain sales. This is why Nvidia and MS fell out! It was great when AMD was barely surviving and had crap products,but its now becoming an issue when they have decent products. How is this going to work out for 5NM/6NM??

Both Intel and Nvidia have decided to also move on 5NM/6NM. So if Sony/MS also push their consoles,how it is going to impact the rest of AMD's business?? I am concerned where this is going to lead! Its no point having the best products,if most retailers then end up selling Intel/Nvidia instead because supply is easier to find.

 

[CAT-THE-FIFTH]

So you're arguing that mainstream/entry level sales aren't rubbish margins? Which isn't what my post was saying at all?

If you have one die, and you can sell that either for £100 or £200 profit/margin which makes more sense?

Now sure, if you have a gazillion of those dies then selling some, or even lots, at £100 margin and still having plenty for the markets willing to pay £200 then great, but that's not the situation they're in.

It's only in the last ~2 months that 5600X's have been readily available all over the world, so now maybe they've got some 'spare' dies, or wafer space, to expand on what market they target, but again, do you go low margin or high margin if both are viable targets? Surely high margin is a no-brainer for as long as you don't end up with stock sitting unsold.

Are all those parts are going to be decent enough quality to sell as "better parts". Are the dies in a Ryzen 5 5600X good enough to be binned for a Ryzen 9?? Look at the TDP rating and power consumption of the Ryzen 9 5900X?? The six core chiplets in the Ryzen 9 5900X are a better quality bin. Look at the quality of the 8 core chiplets in the Ryzen 9 5950X against the Ryzen 7 5800X?? Again the same issue.

The reason AMD had so many more Ryzen 5 5600X/Ryzen 7 5800X CPUs than any of the Ryzen 9 CPUs,was because they didn't have enough volume to bin for the better products.This is the problem with giving so much volume to consoles. It not only affects the bottom end of the market,it realistically affects the top end too. More volume means more chance for crapper bins for cheaper parts,and better bins for higher end parts. AFAIK both Epyc and Threadripper use the same quality CPU bins - why its nowhere to be seen is because the higher quality chiplets are being used for Epyc.

Another issue is also the size of the market - the top end consumer market is going to be much smaller than a high end market. Its a market much easier to saturate overtime. Sure many here will buy new toys every year,but I suspect its every few years for most companies/businesses.

But the bigger issue is next year,and the year after when we get to 5NM/6NM. AMD got a bit lucky with Huawei being booted off TSMC,and I am concerned they will get less 5NM/6NM volume. So if you have MS/Sony wanting to push a die shrink to reduce costs,is the rest of the AMD stack going to be stuck on 7NM for a few years?? I really hope AMD hasn't backed themselves into a corner here.

 

[CAT-THE-FIFTH]

It's all just made up though, none of this is fact, it is just literal speculation, can you prove that "The reason AMD had so many more Ryzen 5 5600X/Ryzen 7 5800X CPUs than any of the Ryzen 9 CPUs,was because they didn't have enough volume to bin for the better products." I am all eyes.

So you mean literally every retailer saying they were out of stock of Ryzen 9 CPUs was some grand conspiracy. Or have you missed all the stock alert places,which constantly showed Ryzen 5 and Ryzen 7 CPUs coming into stock,but not Ryzen 9 CPUs. So all the big deals sites showing multiple Ryzen 5/7 deals(but not Ryzen 9 deals) were all conspiring in some big coverup.

The Ryzen 7 5800X had so much stock it dropped in price to as low as £330. It was even easier to get than a Ryzen 5.

Instead you are speculating that all the people waiting months in the UK and US for Ryzen 9 parts was made up. They obviously don't have the detective skills you have.

So all the people I knew who got fedup of waiting for their Ryzen 9 pre-orders not to be delivered,didn't at all downgrade the CPU. Yes,they imagined the months of waiting. They imagined the other CPUs into stock!

You are just a contrarian. Tell others they make things up,but show zero evidence to prove it.Goodness grief I think I have found AMD Dave!

Obviously you are all eyes,because you shut them and fell asleep. Now you woke up,just at the time when stock is fine. Funny how you didn't comment when it was not so fine. Oh well,good timing and all that when you woke from your nap.

 

[CAT-THE-FIFTH]

I'm getting the feeling someone is miffed that AMD CPUs are more expensive these days... I'm sure it will calm down as availability increases. I also think that CPUs are getting ahead of what users need and upgrade cycles may get longer. Any decrease in demand would also lower prices. Hopefully AMD have a fat war chest built up, I can't see Intel staying where they are for too much longer.

I did my upgrade a few months ago so I am good to go until AM5. My concern is what is going to happen another year or so down the line.The issue is AMD has pretty much admitted future availability is the problem here,and yet they have pushed a huge amount of volume towards consoles at the same time. Now its rumoured the £400 Steampal console uses a custom AMD APU,so that is more capacity going that way,and less towards other products.

For example I know many who want to get an AMD GPU over an Nvidia one,but ended up getting Nvidia cards because it was easier to get in retail,or in a prebuilt system. They won't be buying another GPU for 3~4 years after that.

What happens if AMD starts having issues supplying retail CPUs?? Because of what is happening now,lots of new system sales are being pushed forward everywhere. Even university computing clusters,and council computing infrastructure being pushed forward due to work at home,etc. The problem a fair amount of these systems are still Intel from talking to mates,since apparently its hard to get sufficient AMD volume even in that market. But if AMD waits too long to make sure there is enough volume,I can see the market contracting back down again. It just seems really bad timing to push consoles,push new CPUs,push new GPUs,etc all on the same capacity limited node,within a few months of each other.

The volume AMD can't provide is going to Intel/Nvidia.

 

[CAT-THE-FIFTH]

MS/Sony don't book the capacity,AMD does. Unlike Apple,Sony and MS subcontract their custom chips to companies like AMD. AMD actually jumped onto TSMC 7NM relatively early:
https://www.anandtech.com/show/13279/amd-to-fab-7nm-cpus-gpus-at-tsmc

They managed to use the failure of GF 7NM to rewrite their WSA so they could go and use another fab. They certainly beat Nvidia to getting TSMC 7NM allocations.

AMD after taking up Huawei's allocations became of the largest TSMC 7NM customer. The way it worked with the previous console contracts,is AMD had to deliver X number of completed console chips at the agreed price. So unless AMD has moved to a licensing model per chip,I suspect its the same type of contract.

So its AMD which takes the risk - if yields go south its upto AMD to push more of its wafer allocations towards it. That is why they are having to rationalise the rest of their products. In the end AMD agreed the quantities to be delivered - it is entirely on them. If you go back to the original XBox MS and Nvidia had a spat over that(Nvidia had to supply a certain amount of chips at a certain price,but Nvidia accused MS of giving them a lower price).