In 2020,AMD$138 million was lost on consoles. As we all know, AMD is Sony’s PS5, PS4 andMicrosoftofXbox”Semi-custom” chips are available. Within a year, AMD turned a profit, increasing operating income by more than $1 billion to $934 million in 2021.
On its most recent earnings call, AMD CEO Lisa Su said the company is on track for record “semi-custom” annual revenue in 2022. This is in stark contrast to console makers, who typically don’t make money selling their consoles, and in fact sometimes sell consoles at a loss, especially in the early stages of a console launch. Sony, for example, only started turning a profit on the PS5 in late 2021. Microsoft is also not profitable on the Xbox, relying more on XGP for profit and a cut of game sales.
Gaming has become AMD’s second-largest business, but the company’s main revenue still comes from its customer business, which supplies CPUs for desktops and laptops. But its gaming business is growing, up 32% year over year in the quarter. This is the first time AMD has revealed the size of its gaming business, which turns out to be $5 billion a year.
While we don’t know why it turned a profit so quickly, in essence it could be due to increased demand for “semi-custom” console chips =, graphics cards and gaming laptops, as well as improved profit margins. Traditionally, host chips have become cheaper to produce as manufacturing costs have decreased. In either case, AMD’s gaming business is growing.