Graphics card maker AMD announced its “highest profitability in [seven] years” Tuesday, but expects its revenue to drop next quarter due at least in part to falling demand from cryptocurrency miners.
The company brought in $1.42 billion in revenue last quarter, for a 2018 total of $6.48 billion – well above 2017’s total of $5.25 billion, AMD said in its Tuesday earnings release.
That said, AMD still missed its target revenue by some $20 million, and the release suggested that its revenue from the crypto mining space has disappeared entirely.
“For the first quarter of 2019, AMD expects revenue to be approximately $1.25 billion, plus or minus $50 million, a decrease of approximately 12 percent sequentially and 24 percent year-over-year,” AMD stated, going on to explain:
“The sequential decrease is expected to be primarily driven by continued softness in the graphics channel and seasonality across the business. The year-over-year decrease is expected to be primarily driven by lower graphics sales due to excess channel inventory, the absence of blockchain-related GPU revenue and lower memory sales.”
The company has been warning that demand from the mining sector might disappear for more than a year now. CEO Lisa Su said as far back as October 2017 that the company was “predicting that there will be some leveling-off of some of the cryptocurrency demand.”
The company reiterated this prediction in its annual 10-K filing last year when it explained that “the cryptocurrency market is unstable and demand could change quickly.”
The company’s GPU sales might suffer from drops in this demand, AMD said at the time.
AMD’s subsequent earnings reports proved these predictions accurate. While GPU sales to cryptocurrency miners made up 10 percent of the company’s total sales in that area during the first quarter of 2018, the sector’s market share went on to drop over the next several months.
AMD’s revenue from crypto miners was “negligible” in Q3 of 2018, the company announced last October.
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