230523 AMD J.P. Morgan CC

Question 1 AMD's growth opportunities AMD team's strong focus on developing innovative products and execution Market opportunities related to generative AI, LLM acquisition of Xilinx and Pensando CPU, GPU 외 DPU adaptive compute and adaptive SoC 투자 Question 2 AMD's expectations for the second half of 2023 and Mid-to longer-term strategy and traction server shipment TAM forecasts down about mid-single digits this year (under shipping this dynamic in the first half of the year) Mixed-demand environment: (1) going through inventory correction and optimization, (2) Enterprise is seeing weakness just because of macro uncertainties AMD expects to grow 40%-50% in the second half of the year, compared to the first half approaching 30% market share in server market Question 3 The transition to Genoa and Bergamo and MI300 = a major inflection point for the company Second half of 2023 growth is driven by the following factors: The ramp of AMD's next-generation Genoa and Bergamo platforms Genoa: broader workload adoption Bergamo: tailored for cloud-native application (cloud-optimized high-performance), low power The continued demand for AMD's Milan platform (cost efficiency) The initial revenue ramp of AMD's MI300 accelerator (from a supercomputer side and some of the initial AI workload) AMD has been working closely with especially cloud customers to qualify and deploy its next-generation platforms, which gives the company confidence in its second-half growth outlook These platforms offer significant performance and efficiency improvements over AMD's previous generation products. Customers are already qualifying and deploying these platforms, which gives AMD confidence in its second-half growth outlook. Question 4: AMD's confidence in the PC client business The PC market has been going through one of the worst down cycles undershipping demand for the last three quarters => monitoring sell-through data carefully AMD believes that the PC market has bottomed in the first quarter of 2023 because of inventory digestion is continuing. The company expects to see steady improvement in the second half of the year, due to seasonal factors. Question 5: China market AMD is seeing some stabilization in the China market, but it is not yet seeing a meaningful recovery. AMD's second-half growth assumptions do not depend on a meaningful recovery in China. Question 6 * 6/13 AMD data center and AI event 에서 AI strategy and vision 공유 예정 AI ) engagement and revenue opportunity with cloud and hyperscalers' forecast over 12 to 24 months AMD expects to see strong revenue opportunity for the MI300 GPU platform over the next 12 to 24 months. AMD has a strong portfolio of CPU, GPU, FPGA, and ASIC capabilities to take advantage of the AI market. AMD is focused on the opportunity of transformer-based LLMs with its instinct-based GPUs (MI300) MI250 has been progressing well with Microsoft, in particular, as the sort of publicly announced customer for that product. Question 7 ASIC market ) potentially entering the ASIC market and servicing cloud customers  AMD is open to the possibility of entering the ASIC market. working with customers to develop custom ASICs or to provide its semi-custom solutions. AMD's semi-custom business has a strong track record of success in the gaming market. AMD has the expertise and IP to be successful in this market, and is confident that it can deliver the best TCO for its customers. AMD would need to evaluate the specific needs of its cloud customers before making a decision about entering the ASIC market. Genoa focused on the low-cost telco market Bergamo: cloud native applications, offer better efficiency and performance than some of the ARM Question 8 Technology leadership in data center and server markets AMD's Turin architecture is on track for 2024. The company is confident that its Turin architecture will continue to deliver leadership performance and differentiation in the data center and server markets. AMD is on track to capture 5-7 percentage points of share in 2023. AMD's Technology leadership from architecture, design, IP, packaging technology (working w/ TSMC) TSMC - optimize the process technology and the packaging technology, co-design, co-optimization  Question 9 Software, AI frameworks, and accelerated compute ecosystem development AMD is focused on closing the gap on software, AI frameworks, and accelerated compute ecosystem development. AMD has a strong history of innovation in hardware and also make sure that their in-house software capability is running well on their hardware. AMD is working closely with customers to develop and support the software that they need. related to internal workload, several of the hyperscalers' own software capability, making sure that, that is running well on our hardware.  Question 10 Embedded markets The embedded x86 CPU market is a $6-8 billion per year opportunity but AMD has a small CPU share in Embedded market. AMD is well positioned to capitalize on this growth thanks to their strong market position and aggressively drive higher compute attach rates to Xilinx's products. AMD is confident that they will continue to perform extremely well in the industrial, aerospace, and defense markets. Slight deceleration in the Embedded business in the second half AMD expects the Embedded business to decelerate slightly in the second half of 2023, due to a number of factors, including: Weakness in the global communications market Slowing 5G deployment Headwinds in the consumer market Question 11  ARM-based servers  ARM-based server CPUs make up about 4%, 5% of the total server CPU market.  AMD believes that ARM-based servers are mostly being deployed for specialized workloads, such as machine learning and artificial intelligence. ARM largely being deployed either in customer ASIC or semi-custom programs because customers have a specific workload they really want to optimize (It's all about the TCO in the end.) AMD is open to developing ARM-based servers for broader data center workloads, if there is a strong demand on custom chips or ASICs from customers. Question 12 Gross margin improvement in the second half AMD expects gross margins to improve in the second half of 2023, driven by a number of factors, including: Improved demand in the data center segment Inventory digestion in the downstream supply chain, which will allow AMD to sell its products at a higher price. The addition of Xilinx to the portfolio AMD expects to achieve its long-term financial targets of 20% revenue growth, gross margins of 57% or better, and mid-30s operating margins. Question 13 Longer-term financial targets AMD is confident in its ability to achieve its longer-term financial targets due to its strong product portfolio, which include: 20% revenue growth target Gross margins of 57% or better Mid-30s operating margins Question 14: IP portfolio AMD believes that its technology and IP portfolio is complete and well-positioned to address the needs of its customers. The company is always looking for opportunities to invest in new technologies and IP, in order to stay ahead of the competition.