AMD’s gaming revenue dropped a staggering 48% year-over-year in the first quarter of 2024, a dramatic fall driven by declining console sales and reduced demand for Radeon discrete graphics cards. The company predicts further declines in the second quarter, with no recovery expected until 2025, raising questions about the future of its RDNA 3-based GPUs and console business.
The 48% YoY drop represents a significant blow for AMD, indicating broader challenges in the gaming sector. In Q1 2024, AMD’s gaming business earned $922 million, down from $1.757 billion in the same quarter last year. Operating income fell to $151 million, down from $314 million a year earlier. The trend is not isolated to the gaming sector; it’s reflective of a broader contraction in the market for both GPUs and console components.
Console Cycle Nearing Endgame
Jean Hu, AMD’s CFO, attributed the fall in console-related revenue to the ongoing fifth-year cycle for consoles like the PlayStation 5 and Xbox Series X|S, both of which use AMD processors. Hu suggested that AMD is now past the peak demand for these products, indicating fewer sales of system-on-chips (SoCs) for consoles. This trend is not expected to reverse anytime soon.
In the discrete GPU market, AMD’s challenges are multi-faceted. The company typically experiences seasonal drops in sales in the first quarter, but the lack of design wins for the Radeon RX 7000M GPUs in laptops added to the decline. While AMD’s Radeon RX 7900 GRE is a strong performer, it hasn’t boosted the whole lineup sufficiently to compete against NVIDIA’s high-end offerings. The company’s guidance for 2024 points to a revenue decline of around 30% in the first half of the year, with even worse outcomes predicted for the latter half.
The Uncertain Future of RDNA 4
With AMD’s current trajectory, the prospect of launching new RDNA 4-based GPUs this year seems slim. Speculation suggests that the company might focus on the mainstream and budget segments instead of high-end products, allowing NVIDIA to dominate the premium market. This approach could further impact AMD’s competitive position, as gamers and PC enthusiasts gravitate towards NVIDIA’s more powerful offerings.
Given these challenges, it’s unclear whether AMD will find a successful path forward in the gaming market this year. For more insights and detailed analysis, check out the full report from Tom’s Hardware.