‘AMD India’s business more than doubled in two years’

How big a role does India play in AMD’s data center business and how has it grown?

India plays a large role in AMD’s development resources company-wide and for data centers. We have over 6,000 engineers in India, and they touch every aspect of AMD’s data center business. It’s headed by Jaya Jagdish, and they do a lot of server chip design work locally. We also have new teams from Xilinx and Pensando working on network equipment development.

India is the second largest market in APAC after China, and we expect India to challenge the size of the Chinese market over time, as capacity builds, as digitization and network proliferation continues.

We have seen our business doubling in the last two years. Our India market share in data center hardware was 11.4% in CY20, which increased to 20.1% in CY21. As of September quarter of CY22, our market share stood at 23.6%, and we expect it to grow further.

Does India’s Semiconductor Production Stimulus Benefit AMD?

With the huge engineering talent pool here, getting chip design done here is absolutely vital.

This is not only a strategic asset for us, but can be an important factor for India’s semiconductor industry.

We primarily use TSMC as our chip fabricator. So, we don’t directly influence where the manufacturing is done, so that’s something that we’re going to generally look at for leading manufacturing standards.

It’s helpful to have some geographic diversity, so we’ll continue to work with our partners to encourage that, but our impact on this is secondary.

How has the decline in consumer demand affected AMD’s overall revenue growth?

In 2017, when we re-entered the data center market, our revenue from data center hardware was less than 2% of our total revenue. In 2022, it was above 25%, and we were the largest business segment in the December quarter. We see that the importance of data centers is increasing. More importantly, five years ago, more than 90% of our revenue was from direct consumer-related businesses. Today, we have data centers, embedded networking products, game consoles and PCs, which contribute about a quarter of our total revenue.

Today, such distribution gives us greater flexibility from market changes. You should continue to see us equally focused on all of these segments. In India, our employee base is evenly divided and distributed in terms of their areas of focus.

Have data localization laws also affected how data center revenue was able to grow?

It is too early to say. You could argue that from a purely engineering perspective, the most efficient operating model is to have one large data center in each region. This can reduce data transit time, etc. But, it would still be completely wrong. Concerns about data sovereignty, latency and response times, and cyber security and privacy concerns with people eyeing their core assets more closely will not subside.

With or without legislation, we will continue to see a push from governments and companies to not put all their eggs in one basket and have a distributed data center model. In terms of demand, it is good for the industry.

What is your take on the current spree of layoffs in the tech industry, and does it affect India’s workforce in any way?

We are monitoring the situation closely, but we have not announced any layoffs. We are still looking to grow our business. In India, we expect to increase our workforce in the future. That being said, we are also being cautious in the market right now in terms of our overall hiring. As the overall vigilance subsides, we will definitely focus on developing our Indian team.

What impact can other new technologies like digitization, 5G and AI have on data center businesses?

Increasing digitization is going to continue, and I don’t see it slowing down. The demand we are in now is largely driven by the strong growth momentum of the past years due to the COVID-19 pandemic.

Now, with the growing macroeconomic chatter, we see that huge demand has come down, and there has been a change in perspective on the list of what companies and people expect or anticipate. This is probably what we are seeing now, and this is not a factor in the disappearance of demand from the market. The long-term trend towards development based on digitization is still there. On top of this, we expect a tsunami in the tech market driven by AI.

AI is fast becoming a tool that can fundamentally transform businesses, and one that can cause massive disruption and increase the investment required. This demand is relevant, as it will create additional demand on the server side, and thus expand the opportunities we have. The GPU business, in particular, will be a huge demand generator for data center hardware businesses.

Another aspect is networking. The advent of high-performance computing (HPC) and AI means that hundreds of thousands of embedded systems will need to be networked together to produce the desired results, and networking technology is critical to doing so.

The promise that 5G has brought has not yet been fulfilled. For example, latency sensitive applications at the edge of the network perimeter, and connecting to local data centers have not yet been built to enable such applications. This is one of the key narratives expected to drive the infrastructure needs for 5G beyond radio.