AMD’s gaming division took a significant hit in the first quarter of 2024, with revenue plummeting by 48% year-over-year. The drop in sales of custom processors for Sony and Microsoft’s gaming consoles, coupled with reduced demand for Radeon discrete graphics cards, contributed to this downturn. AMD expects its gaming revenue to decline further throughout 2024, with signs of recovery potentially in 2025.
The impact on the Radeon lineup and console sales
Given the considerable drop in revenue, many are wondering whether AMD will delay the launch of its highly anticipated Radeon RX 8000-series RDNA 4 GPUs. While there’s no official statement from AMD, it seems likely that a delay could be on the cards. AMD’s Radeon RX 7000-series GPUs, which were expected to boost sales, have not garnered enough interest to offset the downturn.
The company’s gaming revenue for Q1 2024 amounted to $922 million, down from $1.757 billion a year earlier. Despite an operating income of $151 million, this was a significant drop from the $314 million reported for Q1 2023. AMD CFO Jean Hu explained that the decrease in semi-custom SoC sales is linked to the fifth year of the console cycle, with both Microsoft’s Xbox Series X|S and Sony’s PlayStation 5 experiencing a natural decline in demand.
Discrete GPU sales on the decline
The first quarter typically sees a seasonal dip in sales of discrete GPUs for desktops, which further compounded AMD’s revenue loss. Although AMD gained market share in Q4 2023, the company struggled in Q1 2024, with fewer Radeon GPUs sold. The low uptake of Radeon RX 7000M GPUs for laptops also played a role in this decline.
Given these factors, AMD has forecasted a 30% decrease in gaming revenue for the first half of 2024, with even worse results expected in the second half. This grim outlook suggests that there may not be significant sales of new hardware, including any upcoming Radeon RX 8000-series products.
AMD’s prospects hinge on several factors, including a resurgence in gaming console demand and a boost in discrete GPU sales. However, the current trends suggest that 2024 could be a challenging year for AMD’s gaming division.
