AMD sees another six months of video game chip shortages

Demand has outstripped AMD’s ability to deliver new Radeon graphics chips and cards and the industry overall is also in short-supply.

The world's hunger for graphics chips for PCs and gaming consoles means there will be short supply in many markets through the first half of this year, according to chip titan Advanced Micro Devices.

"We did have some supply constraints as we ended the year," said CEO Lisa Su on a conference call with analysts Tuesday evening following the company's report of stronger-than-expected Q4 results. 

Shortages of supply "were primarily, I would say, in the PC market, the low end of the PC market and in the gaming markets," said Su. 

"That being said, I think we're getting great support from our manufacturing partners. The industry does need to increase the overall capacity levels. And so we do see some tightness through the first half of the year."

amd-radeon-rx-6900-xt-graphics-card.png

AMD's Radeon RX 6900 XT graphics card, introduced last quarter. AMD says demand for its 6000-series graphics chips is three times any previous demand for the company's high-end gaming chips.

AMD

During a follow-up call with press, AMD's head of corporate communications, Drew Prairie, added some detail to the supply shortage discussion.

"We expect the pockets of tightness to remain in the low end of the PC market and in that broader category of gaming thorough the first half of the year." 

"There will continue to be some pockets of tightness though the first half of the year as more supply comes on line," added Prairie.

Also: AMD Q4 revenue, profit beat expectations, forecast much higher

AMD is facing something of a perfect storm of supply and demand. Along with competitors, the company faces shortages in wafer supply and processing from chip manufacturing partners like Taiwan Semiconductor Manufacturing. At the same time, demand for newer gaming GPUs, such as the Radeon 6000, introduced last quarter, has been higher than the company expected. 

The Radeon 6000 chips "are our fastest-selling high-end GPUs ever," said Su on the call, "with launch-quarter shipments three times larger than any prior AMD gaming GPU priced above $549." 

AMD's sales in its client computing division, including gaming GPUs, rose by 18%, year over year, to $1.96 billion, making up 60% of the company's revenue for the quarter. 

The higher-than-expected growth led to full-year revenue growth of 45%. AMD has forecast 37% revenue growth this year, and it's clear that some of the supply constraints may be holding back that total level of growth, depending on how fast AMD can ramp production with its manufacturing partners.