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In the first quarter of 2024, AMD's revenue from gaming solutions decreased by 48% compared to the same period a year ago due to lower demand for discrete Radeon video cards and reduced sales of chips for PlayStation and Microsoft consoles. The company expects its gaming revenue to decline further in 2024 before having a chance to recover in 2025.
AMD earned $922 million from video cards for games — This is almost half less than $1.757 billion in Q1 last year, and 33% less than last quarter ($1.368 billion). AMD's gaming segment still posted operating income of $151 million, but that was a significant decline from $314 million a year ago. Gaming solutions revenue accounted for 16% of this in the first quarter of 2024 and 18% of this in the first quarter of 2023.
“Sales of semi-custom SoCs declined in line with our guidance in the first quarter as we are now in year five of the console cycle. In the gaming graphics industry, revenues have declined year over year sequentially. We expanded the Radeon 7000 series family with the worldwide release of our Radeon RX 7900 GRE, and also introduced our driver-based AMD Fluid Motion Frames technology, which can deliver high-performance performance in thousands of games,” said AMD CFO Jean Hu during the call. conferences with analysts and investors, according to SeekingAlpha.
Chips for Microsoft's Xbox Series X|S and Sony's PlayStation 5 are believed to make up the lion's share of AMD's gaming business. These consoles have been on the market for five years now, so demand for them is falling. The situation with discrete video cards is more complicated. Sales of desktop components decline seasonally in the first quarter of each year. Even though AMD gained market share in the fourth quarter of 2023, controlling 19% of the market according to Jon Peddie Research, the company sold significantly fewer graphics cards in the following quarter. Notebook solutions have the same impact as desktop solutions, as they sell in roughly the same quantities.
Although the Radeon RX 7900 GRE is a successful graphics card, it is not enough to make the entire line significantly more competitive. That's why AMD expects gaming sales to fall about 30% year-over-year in the first half of 2024, and expects even worse results in the second half of the year.
AMD's forecasts indicate that neither Microsoft nor Sony plan to update their Xbox Series X|S or PlayStation 5 consoles this year, as AMD would otherwise expect gaming revenue to grow. The expectations may well mean that the company also does not have high expectations for discrete graphics card sales, and it is unlikely that laptop makers will opt for Radeon RX 7000M series products this late in their lifecycle.
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It is not clear whether Radeon RX 8000 video cards with RDNA 4 architecture will be released this year. If this happens, it is unknown whether they will sell in sufficient quantities to make a significant impact on sales. There are rumors that AMD may not even try to make a top-end RDNA 4 chip and is choosing exclusively the budget segment.
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