AMD positions Navi GPU as entry-level product, departing from traditional high-end GPU market positioning.
AMD executives revealed during the company's first-quarter earnings call that the upcoming "Navi" GPU architecture will be priced below the Radeon VII. AMD reported net income of $16 million, down 80 percent year-over-year, on revenue of $1.27 billion, down 23 percent, with the company missing profit estimates while surpassing analysts' revenue forecasts. This positioning announcement was unexpected, as AMD's previous outlook was perceived as relatively rosy and straightforward.
AMD's graphics business has proven to be its Achilles heel, with revenue in the Computing and Graphics segment declining 26 percent primarily due to lower sales of graphics cards based on AMD's GPUs, partially attributable to the cryptocurrency market's decline. Yet this weakness makes AMD's decision particularly puzzling, given that AMD stated in January that the Radeon VII is simply the consumer version of the 7nm variant of Vega with 60 compute units, putting it between the Radeon Vega 56 and Vega 64 with 25 percent more performance at the same power. When asked about Navi's positioning, CEO Lisa Su stated: "It is 7nm Navi, but it will be positioned below… [where] our Radeon VII is positioned today from a price-point standpoint." Navi will launch during the third quarter, and Su declined to comment when asked if Navi would include ray-tracing capabilities like Nvidia's RTX chips.
AMD's strategy appears to upend the conventional chip launch cycle, where new processors or GPUs typically ship as premium products at high prices to recoup investment before cheaper revisions emerge. It remains unclear whether AMD is unwilling to bet heavily on the new architecture, is protecting its Radeon VII investment, or is refining its 7nm process with plans for a higher-performance Navi version in the future—discussions of both "big" and "little" Navi implementations have occurred, but details remain unknown.
On the CPU front, Su confirmed that CPU shortages have largely alleviated, with only "pockets at the lower end of the market" remaining. Su expects more than a dozen notebooks to be launched this quarter with mobile Ryzen chips from Asus, HP, Lenovo, and others, with the third generation of Ryzen chips preparing to launch later this year. The Enterprise, Embedded and Semi-Custom segment reported revenue of $441 million, down 17 percent year over year, with strength from Epyc server processors offset by declining console sales. However, Su believes this will change in 2020, as AMD captured the contract for Sony's PlayStation 5 and she expects semi-custom to return to a growth business then.