Visibility into customer demand is “really important” owing to tight wafer supply, AMD CEO Lisa Su emphasised on an earnings call late Tuesday, as the semiconductor company reported fiscal 2019 revenues of $6.73 billion.
The comments came as AMD reported net income for Q4 of $170 million, up 447 percent year-on-year. AMD predicts 30 percent revenue growth in 2020, “driven by strength across all businesses”, after major product launches in 2019.
Pushed by analysts on how wafer supply looked apropos the company’s bullish projections, Su said: “[Taiwanese fabrication company] PSMC has supported us very well through the first couple of quarters of our 7-nanometer ramp.
“I think as we go into 2020, there will certainly be a significant growth for us in 7-nanometer. Our current visibility supports the revenue guide that we gave you. It is fair to say that wafer supply is tight and so it’s really important for us to be planning with our customers and that’s what we are working on.”
Wafer Supply: No Longer a Buyer’s Market?
The silicon wafer industry is dominated by five companies — Shin-Etsu, SUMCO, Siltronic, Globalwafers, and SK Siltron — and is a highly cyclical one that demands heavy capital investments, meaning a “feast to famine” dynamic can emerge. Unexpectedly robust demand for semiconductors, Chinese fabs coming on line, and a lack of investment in capacity by silicon wafer manufacturers over the past few years have all contributed to market tightness, analysts say.
As industry body SEMI noted in late 2019: “Wafer companies have remained hesitant to expand silicon manufacturing facilities without first securing commitments by chipmakers to fund additional silicon capacity, a reluctance that has caused wafer inventory levels to fall short of chipmakers’ expectations.
“Overall, the wafer market favors buyers, with wafer manufacturers unable to enforce long-term contracts because of oversupply. As a result, wafer companies have opted to reduce contract volumes this year to maintain contract prices.”
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