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AMD CEO on chip shortage: things will improve

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Yahoo Finance’s Brian Sozzi speaks with AMD CEO, Dr. Lisa Su, about the company’s latest quarter, chip demand, the U.S. labor shortage, and company outlook.

Video Transcript

BRIAN SOZZI: The growth juggernaut that is chip giant AMD continues to roll right along, powered by market share gains and leading chip technology that is securing higher prices. AMD saw second quarter sales surge 99% from a year ago. Operating profits skyrocketed 380% from last year. The company also hiked its full-year sales and gross margin outlooks.

Joining me for more now on the company's AMD CEO Dr. Lisa Su. Lisa, always good to speak with you here. So you said in the earnings release your company is growing faster than the market. Break that down. Why is that happening?

LISA SU: Yeah, absolutely. Brian, great to see you. Good to be with you guys this morning. And you know, we had a very strong second quarter. I think what we're seeing is just very strong customer demand overall in the market across our computing segments, whether that be PCs, gaming, and data center.

And on top of that, we're seeing a strong customer preference for AMD products. So we're excited about that. I mean, we had a very strong second quarter with significant growth. And we were able to also guide up for the full year. So, you know, we were quite pleased with that.

BRIAN SOZZI: Can these types of growth rates for an AMD continue?

LISA SU: Well, you know, I will say that when we started the year, we thought we were going to grow significantly. So when we started the year, we thought we would grow 37%, which I thought was a good number. But what we found is as we've gone through the year a couple of things.

One is, as I said, the demand for computing is just exploding everywhere. I think, you know, whether it's in PCs where you're working from home, schooling from home, or now returning to office, people want better devices or particularly in the data center where there's just this incredible need for more capability, all of the collaboration that we're doing, and all of the business intelligence. So I think that's strong underlying demand.

And then on top of that, we continue with great products. And in this market, it really is about the products, and that's what we've been focused on. So we're very pleased with the growth. We were happy that we could upgrade our growth estimates as we've gone through the year, and that says a lot about the portfolio.

BRIAN SOZZI: There have been some concerns about PC demand slowing, I would suppose, as we all go back to the office and go back to our pre-pandemic lives. But it doesn't sound like you're seeing that.

LISA SU: Well, you know, I would first say, you know, last year was a very strong year for PCs in terms of growth. This year is also a very strong year in terms of PCs for growth. Now, there are some supply chain issues that the entire market is working through.

I think we have navigated through those well, and we continue to work with all of our customers, OEM partners, as well as the supply chain to do that. But we are seeing very strong end user demand. And at the end of the day, that's what you want to do, right, provide new devices to people who are really wanting more capability.

BRIAN SOZZI: Lisa, you really had the comment of the earning season, at least so far for me. You said on the conference call you are fighting for every socket. How competitive is it right now in the chip space?

LISA SU: Well, I think computing is just a very, very competitive market. I mean we are all about pushing the bleeding edge of performance. We make these decisions on what we're going to put in our products, you know, really like three to five years in advance. And so yeah, it's extremely competitive.

That being the case, it's always been competitive. I don't think it's any different today than it was before. It's always been competitive. It's all about putting a strong roadmap together. And we've been making these investments for a number of years.

And we're very excited not just about the products that were our market this year, because, you know, we have some great products in market this year, but we're also very excited about what we have in the future and how we're taking advantage of latest generation process technology and new architectures. You know, our big CPU product launch next year will be Zen 4, which is in 5 nanometer technology. So yeah, this is all about pushing the bleeding edge. And you know, that's what we do at AMD.

BRIAN SOZZI: Take us through that product roadmap for 2022. How will the chips next year that you're coming out with, how will they be different versus this year in terms of performance? And will they be sold at higher prices?

LISA SU: Well, you know, this year our products are primarily on 7 nanometer technology. And we have our CPUs, our Ryzen CPUs, our EPYC server CPUs, as well as our new graphics and gaming cards, and those are all in 7 nanometer technology. As we go into next year, we're going to launch our next set of products, which are upgraded in architecture, upgraded in design.

And we will also be upgrading our CPU line up into 5 nanometer technology, particularly in the data center. And the data center is all about performance. It's all about performance. It's about total cost of ownership.

It's being able to do more in the same footprint. And so we're excited about what that means for us. Obviously, there's a-- it is a very competitive market. But we believe that we're at leadership today, and we intend to keep that leadership going forward.

BRIAN SOZZI: Give us some good news here, Lisa. We've been talking about it all morning long, the chip shortage, it continues. Is there any light at the end of the tunnel that this will, in fact, end sometime in our lifetimes?

LISA SU: Well, Brian, what I can say for sure is that the entire semiconductor industry has been working hard over the last couple of quarters to ramp up production. I mean, the demand has been through the roof. We've been putting a lot of capacity. We've been working with our primary partners to really optimize that capacity.

We have seen improvements in the supply chain. That's one of the reasons we were able to exceed our second quarter results, as well as guide up for the full year. I think it's still tight as we go through this year.

But I think, as you've heard, there are improvements. You know, we're improving every quarter. We're shipping more product every quarter. And as we go through the end of this year and certainly into next year, I think things will improve.

BRIAN SOZZI: One company you are shipping product to is Tesla. So you have struck a partnership. You're working with them. You're putting chips inside their infotainment systems. Elon Musk said this week on his earnings call he can't get enough chips. Is there an opportunity for AMD to gain more share of Tesla's business?

LISA SU: Well, we're super excited about the partnership with Tesla. I think it's an example of where we have leading-edge technology. And there's a need for some of this consumer technology to really cross over into other markets.

So the idea that you can do Triple-A gaming on the road, I think, is very exciting. So we're very pleased to be in the updated Model S and Model X. And we do believe this is a growth driver for us, you know, as we go forward. So it's an exciting area for us.

BRIAN SOZZI: Lisa, perhaps you can give us a 20,000-foot view here. We're focusing a lot on jobs in America right now and how they might come back or, in some industries, why they may not come back. Are you having difficulty hiring the tech-experienced folks that you need to service the demand, really, that is off the charts for your company?

LISA SU: Yeah, that's a great question. I mean, at the end of the day, you know, we're all about our people. And our engineers are really the foundation of how we build on those next-generation products. I will say that I'm extremely pleased with how we're able to recruit. We've been hiring thousands of people each year as we ramp up our R&D capability.

And you know, it's-- you know, it's always a competitive market for labor as well. But I do believe we have a lot of great engineers, and people want to be part of an exciting story. And so, you know, what we say is, you know, we have a ton to do and a ton to learn at AMD. And so we have been able to recruit just great people.

BRIAN SOZZI: Is there a difference between hiring in the US as opposed to overseas?

LISA SU: Well, I think we have a global company, so we hire across the globe. But hiring in the US is very important. We do a lot of our key architecture and designs here. And so, yes, I think the focus here is on making sure that we have a skilled labor force, and we hire both new college grads, as well as experienced employees that want to be in the computing field.

BRIAN SOZZI: All right, leave it there. AMD's CEO Dr. Lisa Su, good to see you. Fighting for every socket. We'll talk to you soon.