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AMD Wraps Up 2019 With Strong 7nm Ryzen, EPYC And Radeon Sales

'We ended 2019 with our highest quarterly client processor unit shipments in more than six years based on strong demand for Ryzen desktop and mobile processors,' AMD CEO Lisa Su says of the chipmaker's surge in the client processor market.

AMD closed 2019 with 50 percent year-over-year revenue growth in the fourth quarter thanks to strong sales of the chipmaker's new 7-nanometer Ryzen, Radeon and EPYC products, even as top rival Intel reported stronger than expected sales on the server side.

The Santa Clara, Calif.-based company reported financial results for fiscal year 2019 and the year's fourth quarter Thursday, attributing much of the growth to the chipmaker's Ryzen processors and Radeon graphics cards for client PCs launched last year that use the company's 7nm Zen 2 architecture.

[Related: Why AMD Thinks Ryzen Pro 4000 CPUs Are Huge For Business Laptops]

Lisa Su, AMD's CEO, said "Ryzen processor adoption accelerated sharply" with significant double digit increases in client processor annual unit shipments, average selling prices and revenue.

"We ended 2019 with our highest quarterly client processor unit shipments in more than six years based on strong demand for Ryzen desktop and mobile processors," she said, later adding that half of the chipmaker's revenue now comes from 7nm products.

This growth contributed to a 69 percent year-over-year increase to $1.66 billion in fourth-quarter revenue for the chipmaker's Computing and Graphics segment, which was also driven by higher averaging selling prices for client and data center GPUs.

However, the company was dragged down by its division that sells custom chips as well as processors for servers and embedded systems — even as AMD's second-generation EPYC Rome processors released last August ramped "significantly faster" than the first generation, according to Su.

The company's stock price was down by as much as 4 percent in after-hours trading.

Analysts had expected fourth-quarter revenue for AMD's Enterprise, Embedded, Semi-Custom segment to grow 49 percent year-over-year to $603.8 million — according to MarketWatch — but instead the division only came out to 7 percent growth to $465 million.

AMD attributed the slower-than-expected growth in the division to waning sales from Microsoft and Sony as their Xbox One and PlayStation 4 reach the end of their respective life cycles ahead of next-generation successors coming out in the second half of 2020. Since the new Xbox and PlayStation systems aren't expected until holiday 2020, AMD expects most of the semi-custom sales to come in the second half of the year.

Strong double-digit growth of AMD's EPYC server processors from the previous quarter helped offset the semi-custom decline. The company declined to break out more specific EPYC sales figures but a spokesperson indicated they were greater than 15 percent sequentially.

Su said AMD is on track to gain double-digit percentage share in the x86 server processor market, which Intel continues to dominate as the only other major provider.

"We are very pleased with how Rome is ramping," she said, adding that she expects sales to be roughly split between cloud service providers and enterprises for 2020.

Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, said while he believes AMD gained unit market share for servers in the fourth quarter, growth was slower than expected because top rival Intel surpassed expectations for sales with cloud service providers.

"It's only slower than expected as Intel has seen so much cloud growth," he said.

The company's fourth-quarter 2019 revenue was $2.13 billion, a new record that marked a 50 percent increase over the same period last year and 18 percent higher than the previous quarter. The figure beat Wall Street's expectations by $20 million while AMD's net earnings of 32 cents per share was 1 cent above the analyst estimate consensus.

For the full-year 2019, revenue came out to $6.73 billion, a 4 percent increase over the previous year. The company projects full-year revenue in 2020 to grow roughly 28-30 percent due to growth across all of the company's businesses, with strong sales for Ryzen, EPYC and Radeon expected in the first quarter.

Before the earnings call, AMD spokesperson Drew Prairie attempted to tamp down any speculation that Su's appointment to the Cisco Systems' board of directors on Monday will lead to a deeper engagement between the two companies. He said there's a distinction to make between Su's responsibilities as AMD's CEO and as a board director for Cisco.

"It's a bridge too far to assume there's something in the works on the business side," Prairie said, beyond the current work the companies are doing together on the platform side.

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