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A report out of Taiwan's biggest publication DigiTimes, citing its own industry sources, claims that AMD is going to be seeing an absolutely robust 2020. Considering AMD's processors have been gaining popularity and Intel's lineup is struggling to justify its high ASP. While most of AMD's momentum has been driven by the price drops after the introduction of Zen 2, analysts expect that the introduction of Zen 3 will be the cherry on top of the cake in 2020.
AMD's Zen 3 to take the company to new highs in 2020
AMD has had an absolutely phenomenal 2019, but from the look of things, 2020 is going to be even better. While the company reached its all-time high in 2019, beating out a record almost two decades old. While the actual article is hidden behind a paywall, DigiTimes research indicates that OEMs and vendors are going to be readily adopting AMD CPUs as Intel is unable to meet demand. And this is while we are talking only about existing Intel parts vs Zen 2 based offerings from AMD. When you start to consider the launches AMD has planned for 2020 and how the supply situation looks like with respect to Intel, the story becomes even clearer.
Intel has yet to fully eased its processor shortages, which is sending notebook vendors adopting more of its competitions from AMD in 2020. AMD's new Zen 3 architecture is expected to have a record-high development projects commenced by PC makers for AMD processors.
For NAND flash chips, home gaming consoles will be a major growth driver in 2020. Vendors are expected to increase their demand for NAND flash chips to support their new-generation devices featuring SSDs in the second half of 2020.
AMD CPU gaining popularity among PCs: The shortage of Intel's PC processors has already prompted OEMs and brand vendors to increasingly adopt AMD's CPUs in their products since 2019, and the trend will likely persist this year, according to industry sources. -DigiTimes
With the launch of Zen 3 expected in 2020, AMD will have processors that are even more powerful and competitive than the existing Zen 2 lineup and this is something that is going to eat away at Intel market share. Intel is limited in supply because its 10nm ramp hasn't completed successfully and it has to be entirely reliant on 14nm based parts that are completely sold out. Meanwhile, AMD's supply situation is just going to get better in 2020 as you are going to read later on in this article which means an even stronger trajectory than the entirety of 2019. We fully expect AMD to find a new all-time high in 2020.
Some more pointers:
A very reliable report out of Taiwan just a few days ago confirmed what we had already suspected: that AMD was operating on a fairly limited supply of 7nm as TSMC had to cater to Apple being its primary customer. So if this is how much AMD is worth with a limited supply of 7nm, just how much is it worth when it has access to all the 7nm wafers it wants? That is the golden question.
While I am not going to attempt to arrive at a valuation at this time, it does indicate that if the supply issues clear up, AMD's sales (and therefore profitability and value) should go up. According to this report, AMD plans to double its 7nm orders and will jump from being the fourth largest 7nm customer right now to being the largest 7nm customer for TSMC as Apple moves to 5nm and frees up even more space. The company has reportedly already put in an order of a further 30,000 7nm wafers. If the company is expecting its sales to double by 2H 2020, then it spells great news for investors of the company.
Secondly, Intel's 10nm (which is equivalent to TSMC's 7nm process) has yet to ship on the desktop side of things and the earliest volume appearance is expected by 2H 2020. Keep in mind, as is natural for any ramp, even if Intel manages to meet this deadline, they will not be able to match AMD's supply until at least the end of 2020.
In other words, AMD is going to have a free run throughout 2020 as Intel attempts to get its 10nm process through the door.
It gets even better for investors of AMD: TSMC will start shipping 5nm for Apple in 2020 and AMD should be able to get a piece of the cake by late 2020/early 2021. TSMC's 5nm, if things go as they always have, should be roughly equivalent to Intel's 7nm, which isn't slated to arrive till late 2021 at the earliest.
So we expect AMD to not only have a free run in 2021 but keep its process lead over Intel for at least another year after that.
Now let's talk about the GPU side of things. We already know that the industry is approaching the upgrade portion of the console cycle and AMD is powering the processors in both the next-generation Play Station and Xbox, and this is something that is probably already priced in. Here is the thing however, the company's RTG side has been on cruise control mode for the better part of 3 years and its Navi GPUs are just competitive in very specific price points.
Should the company roll out a truly competitive architecture, and we expect this to happen by late 2020/early 2021, then the company's revenue will increase quite significantly.
GPUs used to be the company's bread and butter at one point, not too long ago (anyone remember the Hawaii launch?), and a comeback in the desktop GPU side is sure to be in the pipeline. Early on, and as I mentioned in my exclusive regarding ' the cost of Zen', AMD did not have the resources to put in both Zen and the GPU side - but now they do.
They will surely be working on a comeback on the GPU side of things and while NVIDIA is in a much better position to take them on as compared to Intel, AMD's historical competence in the GPU department will surely work wonders. We are expecting Big Navi to be teased in 2020, and might even launch by late 2021, and when that happens, you can expect AMD's stock to go up even further. So in light of these two things, you can see why I feel that the company still has quite a ways to go before it is truly "maxed out".