Advanced Micro Devices, Inc.

Hello, and welcome to the AMD second quarter 2020 conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ruth Cotter, Senior Vice President, Marketing, Human Resources, and Investor Relations for AMD. Connor, please go ahead.

Thank you, and welcome to AMD's second quarter 2020 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings release and slides. If you've not reviewed these documents, they can be found on the investor relations page of AMD's website, amd.com. Participants on today's conference call are Dr. Lisa Su, our president and chief executive officer, and Devinder Kumar, our Senior Vice President, Chief Financial Officer and Treasurer. This is a live call and will be replayed via webcast on our website. Before we begin today, please note that AMD is scheduled to participate in several Wall Street events during the third quarter. On Tuesday, the 1st of September, Mark Pippermaster, Chief Technology Officer and Executive Vice President, Technology and Engineering, will participate in the Jefferies Virtual Semiconductor IT Hardware and Communications Infrastructure Summit. On Tuesday, September 15th, Forrest Norwood, Senior Vice President and General Manager, Data Center and Embedded Business Solutions Group, will participate virtually in the Deutsche Bank Technology Conference. In addition, our third quarter 2020 quiet time is expected to begin at the close of business on Friday, the 11th of September. Today's discussion contains forward-looking statements based on current beliefs, assumptions, and expectations speak only as of the current date and as such involve risks and uncertainties that could cause actual results to differ materially from our current expectations. Please refer to the cautionary statement in our press release for more information on the risks related to any forward-looking statements that we may make. We will refer primarily to non-GAAP financial metrics during this call. The non-GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measure in today's press release and slides posted on our website, amd.com. Now, with that, I'd like to hand the call over to Lisa. Lisa?

Thank you, Ruth, and good afternoon to all those listening in today. For the last five years, we have built the technical, operational, and financial foundation required to drive our long-term growth strategies. we consistently executed on our product roadmaps, established deep partnerships with an expanded set of customers, ramped multiple products in leading-edge manufacturing technologies, and significantly strengthened our balance sheet. Our strong second quarter results and increased full-year revenue guidance demonstrate how we are successfully scaling our business through our consistent execution. Looking at the second quarter, revenue grew 26% year-over-year to $1.93 billion, driven by strong demand for our leadership server and client processors. We accelerated our server and mobile processor businesses significantly in the quarter, resulting in rising and epic processor revenue more than doubling year over year. Importantly, we met our double-digit server processor market share goal as data center products accounted for more than 20% of our second quarter revenue. Turning to our computing and graphics segment, second quarter revenue increased 45% year-over-year to $1.37 billion as growth in Ryzen processor sales more than offset lower graphics sales. We delivered our highest client processor revenue in more than 12 years. Increased working and schooling from home due to COVID-19 resulted in a strong PC market in the quarter. although we believe our growth was largely driven by our 11th straight quarter of market share gains. Desktop processor sales decreased sequentially as anticipated, while revenue and ASP increased year over year as demand for our higher-end Ryzen processors drove a richer mix. In mobile, we had record quarterly notebook processor unit shipments and revenue. Sales of our latest Ryzen 4000 series processors grew significantly in the quarter, resulting in mobile revenue growing by a strong double-digit percentage sequentially and more than doubling from a year ago as both unit shipments and ASP increased significantly. Multiple third-party reviewers have consistently highlighted that our latest notebook processors deliver superior performance and longer battery life compared to the competition. As a result of this strong performance, I'm pleased to report that Ryzen 4000 processor revenue has ramped faster than any mobile processor in our history. There are now 54 Ryzen 4000-powered notebooks in the market. We expect to continue accelerating our mobile processor business in the second half of the year as HP and Lenovo ramp their first commercial notebooks powered by Ryzen Pro 4000 series processors and a second wave of more than 30 ultra-thin, premium, and gaming consumer notebooks launched from multiple OEMs. In graphics, second quarter revenue declined year over year, as strong double-digit increase in mobile GPU sales was more than offset by lower desktop channel sales. While desktop GPU shipments were lower year over year, channel sellout accelerated in the quarter. Mobile GPU revenue growth was driven by adoption of our RDNA GPUs, highlighted by the launches of new Apple Professional and Dell gaming notebooks featuring our Radeon 5000M series mobile GPUs. Data center GPU revenue decreased year over year. We expect revenue to increase in the second half of the year as additional cloud-based visual computing wins ramp and we launch our new CDNA data center GPU architecture optimized for next generation exascale and machine learning workloads. Turning to our enterprise embedded in semi-custom segment, Revenue of $565 million decreased 4% year-over-year due to lower semi-custom sales. Sequentially, revenue increased 62%, driven by record quarterly server processor sales and increased semi-custom product revenue. In semi-custom, we passed an important milestone in the second quarter, as we began initial production and shipment of our next-generation game console SoCs. We expect strong second-half semi-custom growth as we ramp production to support the holiday launches of the new PlayStation 5 and Xbox Series X consoles. Turning to server, our focus since launching our Epic processors has been on building a solid foundation to drive long-term growth. Our strategy is grounded in driving broad, high-volume adoption with widespread support from industry-leading cloud and hardware providers. We passed a significant milestone in the quarter as we achieved our double-digit server processor unit share goal based on broad adoption across cloud, enterprise, and HPC customers. In cloud, multiple hyperscale customers ramped second-generation EPYC processors into high-volume production in the quarter to power both their internal infrastructure and publicly available instances. Microsoft announced they have added Epic processors to power their office online applications used by more than 200 million monthly users. Tencent ramped up multiple millions of Epic processor powered virtual machines to support enhanced collaboration services. Google announced that Epic processors were being used exclusively to power their unique confidential computing VMs that encrypt data while it is being processed. And AWS launched global availability of new compute-optimized EPIC-based EC2 instances. In enterprise, we have significantly expanded our TAM as the number of AMD platforms has increased by more than 40% so far this year. Recent additions include Dell and HPE introducing multiple hyper-converged infrastructure solutions, Lenovo launching dual-socket servers for financial, retail, and manufacturing, and NVIDIA selecting AMD EPYC processors to power its latest DGX AI platforms. We also secured new HPC wins based on the leadership performance and scalability of second-gen EPYC processors. Public highlights include new wins with leading research institutions including Indiana University, Purdue, and CERN, as well as Amazon, IBM, Microsoft, and Oracle all announcing cloud-based HPC offerings powered by Epic processors. We are pleased with the momentum in our server business and expect to continue gaining share as additional second-gen Epic platforms and cloud deployments ramp to volume in the second half of the year. We remain on track to begin shipping our next-generation Milan server processor featuring Zen 3 late this year. In closing, I want to thank our employees and partners for the strong execution during this unprecedented time as we continue to focus on delivering on our commitments. While there continues to be some macroeconomic uncertainty and pockets of demand softness, our product portfolio is very strong and our markets are resilient. We are on track to deliver strong growth in the second half of the year, driven by our current product portfolio and initial shipments of our next generation Zen 3 CPUs and RDNA 2 GPUs that are on track to launch in late 2020. I am very proud of the progress we have made over the last few years, placing AMD on a long-term growth trajectory. I'm even more excited about the opportunities in front of us as we enter our next phase of growth driven by accelerating our business in multiple markets. We remain focused on consistently gaining share across the $79 billion market for our high performance products. We are investing significantly and have added resources to further extend our leadership IP and go-to-market capabilities as we pursue our ambitious goal to make AMD a best-in-class growth franchise. Now I'd like to turn the call over to Devinder to provide some additional color on our second quarter financial performance. Devinder?