AMD turns a profit in Q3 thanks to custom PS4, Xbox One chips

By on October 18, 2013, 11:45 AM
sony, microsoft, amd, xbox, ps4, rory read, playstation 4, profit, q3, xbox one

After more than a year of significant losses, AMD is back in the black. The company reported a profit of $48 million on $1.46 billion in revenue for Q3 2013. By comparison, AMD lost $29 million last quarter and reported losses of nearly $131 million this time last year.

While that all seems well and good, the issue is in the fact that AMD managed to bring in the profit largely due to its work on semi-custom chips for next generation game consoles from Sony and Microsoft. Its Graphics and Visual Solutions business increased significantly, doubling to $671 million in revenue based on the company's work on the Xbox One and PS4. The problem is that this is likely a short term business opportunity, AMD said themselves just a few months ago that game console revenue would likely begin to decline after this holiday season and that royalties on the units will decrease significantly as time goes on.

In its third quarter report, AMD said the CPU industry is continuing to decline at 6% sequentially and 15% year over year. The company's next quarter projections only point at a 5% revenue growth.

Even still, the company appears to be heading in the right direction. It will be focusing on its ARM-based server options and semi-custom chips for game consoles and other non-PC devices, a route the company sees as the future.  "We have several strong semi-custom designs moving through the pipeline," AMD CEO Rory Read said. "Two years ago, 90 to 95 percent of our business centered around PCs," he continued. "We see it as an important business, but times are changing."

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