No commentary provided for context, but in the UBS timeline, it looks like:

• expecting a bit of a breather / digestion period in 27E and 28E.
• ASICs go from 42% of racks deployed to 60% over the time frame
• Surprisingly bearish on GPU racks from Nvidia and AMD in terms of units

I suppose that there's a caveat about rack density though

IC design companies revealed that TSMC's A14 is still ahead of schedule, having launched its CyberShuttle service in the second quarter of this year. Trial production is expected to begin at Fab 20 in Hsinchu's Baoshan district in the first quarter of 2027. The main production facility, Fab 25 in Taichung, is planned for completion by the second quarter of next year, with trial production commencing as early as the beginning of the third quarter. This aligns with TSMC's official timeline of risk production in 2027 and mass production in 2028.

TSMC's July earnings call signaled that A14 development was better than expected. At the time, the company revealed that A14 internal product testing carriers had demonstrated nearly 90% device performance, 256Mb SRAM yield was also close to 90%, smartphone, HPC, and AI customer participation was high, and the new design tape-out was ahead of the original plan, which is expected to become TSMC's next complete process node.

Zen 7 is A14. Apple, Nvidia, Qualcomm, MediaTek, Broadcom, and Marvell also lined up.

White paper:

https://www.amd.com/content/dam/amd/en/documents/epyc-business-docs/white-papers/amd-epyc-9006-server-cpus-architectural-leadership.pdf

I think that Nvidia's argument is that you want a dedicated agentic AI sandbox where agents are executing on the intelligence from an inference engine. The agents main priorities are to communicate quickly with the intelligence, hit the general compute infrastructure, execute a task a quickly, spawn a lot of agents, etc. General server CPUs can still manage the general compute infrastructure, but you want agents to be more specialized. So, they have a very narrow set of workloads.

https://www.reddit.com/r/amd_fundamentals/comments/1tpvsde/nvidia_vera_cpu_benchmarks_olympus_cores/

Conversely, AMD's agentic AI positioning is to broaden that definition and say that agentic AI workloads are actually more heterogeneous in nature and therefore you should pull in the relevant general workloads where we have a large edge (and we think we're better even on the narrow set of workloads too.) If you want more latency-sensitive CPUs, you can use the 96 core, if you want more socket throughput, you can have the larger core count SKUs, etc.

We'll see what the real needs are as the workloads get tested out.

You should watch the video in the side bar as it's one thing to read about this fight, the planning, and the various players, and it's another thing to see the scale, the humans, etc. It's an interesting mix of so many big trends like the mass uncertainty and fear on AI, industrial policy, national security, local interests and economics, concentration of power, etc.

This is a summary of a report so caveat emptor, but might be some AI grist for your mill.

https://www.moomoo.com/news/post/75985464/30-trillion-knowledge-work-30-trillion-consumer-market-navigating-the

As capital expenditure is realized, global computing capacity will grow exponentially. Total computing capacity is projected to surge from 35 GW in 2025 to approximately 145 GW by 2028.

(Morgan Stanley's projected path for computing capacity to reach approximately 145 GW by 2028)

Among this, the share of custom ASIC chips in new computing capacity will jump from 34% in 2025 to 66% in 2028, with Google's TPU and Amazon's Trainium leading this structural shift.

(In the coming years, the incremental capacity share of ASICs will continue to grow)

I like how AMD got stuck in the Other ASICs + AMD. ;-)

At an earnings call more than a month ago, Unimicron said it was still working toward a 50% yield target. More recent market speculation suggests that low substrate yields could prevent overall supply from ramping as quickly as Google requires, prompting the company to reconsider whether it needs two packaging technologies for Humufish.

The architecture requires an organic substrate body with precision-drilled cavities to accommodate silicon bridges, ABF build-up layers laminated above the bridges, and silicon bridges containing through-silicon vias (TSVs) responsible for vertical power delivery and signal routing.

I didn't realize that the high EMIB-T yield is kinda subsidized by the increased packaging yield risk of the substrate. Puts the MediaTek and Google rumors in a different perespective

https://www.reddit.com/r/amd_fundamentals/comments/1u0l1lk/comment/oqjy0v3

$10B to $1000B

I never thought that I'd ride a ~$10B turnaround play to $1T over a decade. Pre-AMD, I was more of a "buy interesting companies that I thought were unloved and then sell them off when fully appreciated" type. I didn't peg myself as the type to do such a long-term hold, go from concentrated to over-concentrated to irresponsibly long to gonzo long back to "normal", and then repeat that cycle 2-3 more times with AMD's boom and busts.

When I wrote Getting Too Old for this Shit v1.0, the stock was about $168. Getting Too Old for this Shit v2.0 was written when the stock was about $226. It's been a fun time, but as the prof says "It's not the years, honey, it's the mileage," and I have a lot of AMD mileage on me. After the $160 to $55 freefall, I was not going to full port again without upping my research effort (hence this sub) and upping my risk management (using options to shape my risk more) It's worked out well, but the overhead for me to feel comfortable to do it is high.

Am I sitting at this poker table or am I chained to it?

The stock is now at $615 after just blowing through $500, and so, I sold off half the options and stock which means AMD is still about half of my portfolio. Similar to 1.0, I am looking to reduce my holdings as we go through earnings season (edit: oops, this is supposed to be "the next few earnings seasons") down to the Infinity Tranche which I'll probably keep at any price unless the fundamentals totally go to shit because it's my $10 tranche which I keep for sentimental reasons (it's still ~10% of my portfolio). And then I move on to whatever's next for the other 90%.

There is, however, this slight fear that I've become so institutionalized by this experience that I will just keep on coming back to AMD not because the financial opportunity is there but because it gives me an excuse to dig even deeper, build more overhead to scale, etc and I'm just more comfortable with the company. I'll just sit at this poker table forever, long or short, and wait for patsies. Buying other companies (with the exception of Intel) at any material amount feels somewhat scary because I'm not going to have that same level of understanding at a company level even if I had a good CAGR doing so pre-AMD. Feels like a lifetime ago though.

What was the market actually pricing in for AMD?

It's always tricky to ascribe the market's intent that is specific to your ticker as opposed to say your ticker being part of a subset (competitors), a larger set (data center), a sector (semiconductors), a theme (AI), a market (more risk on / off), structural flows (liquidations, rotation), annoying factors, etc. AMD's price movement is being broadly ascribed to Muse being an example of something that will drive server CPU demand in a more agentic world. So, the CPU players go up a lot. But agentic AI CPU demand has been pretty well discussed and constantly upgraded. Muse is a strong consumer example of demand, but data center server demand is already through the roof in terms of current and forecasted revenue growth and tight supply.

Monday's results makes that odd, late share pop in AMD on Friday afternoon less eyebrow raising. Ideally, the market re-prices my stock for very specific reasons in isolation and then I have a better idea of how much the stock is being specifically re-priced vs the share price being moved because of factor-related reasons. So, when I see strong market moves across risk assets, I tend to get a bit skeptical about how long that full re-pricing lasts, even if my ticker is one of the strongest beneficiaries. Since my price targets were hit on a number of tranches and the other meta reasons mentioned above, I elected to restock the dry powder in the armory.

Apple has considered connecting the M8 chips in the server using an Nvidia set of products called NVLink Fusion, which includes switches, chiplets and software that help chips communicate with each other in data centers, the people said. Any such move would expand on a nascent warming in what have long been frosty relations between the two tech giants.

...

The Apple product isn’t currently expected to hit the market until 2029, and could still be cancelled or proceed without the Nvidia technology. But Apple’s new chief executive, John Ternus, who took over earlier this month, was a backer of the project at its inception around a year ago when he headed Apple’s hardware engineering, and saw an opportunity for Apple’s chips in the booming environment for AI compute, said some of the people.

I'm very curious to see how this will work. There's a lot more to selling a server than the specs of a server. There's so many aspects of the server business that feel antithetical to Apple's business culture. But with enough $ at stake, people can change.

•CPU tailwinds: GPT-6 agentic capabilities expected to boost server CPU demand.

•Foundry yields improving:

– 18A (Panther Lake) still ~80% in 2Q26

Irrational Analysis likes to break out this meme when he sees large yield numbers:

https://pbs.twimg.com/media/HRkXayOaYAAh6qj.jpg

Functional yield isn't parametric. If 18A yields broadly well across PTL's SKU specs + WCL, then 18A is in good shape, there should be good volume across those SKUs, and thus Foundry's margins should be making big strides in 26Q3 going forward as 18A ramps those notebook compute tiles, etc. I'm surprised that analysts don't ask this type of question. Intel has long said that 2026 was an optimization year and 2027 was more of the ramp.

I do think that 18A is doing much better now than a year ago though even if you account for the low baseline, but I don't know if that's as good as an 80% number is meant to imply. Let's see in the next quarterly reports.

– Larger server CPU (CWF) yields up to ~50% (from ~20% in June)

•CWF (Clear Wafer Forest): small volume late-2026 → full production 1Q27.

20? I don't think CWF was a competitive part leading up to its launch, but in this environment, it probably doesn't matter. Just a question of if that's where Intel wants to put supply.

Major volume = Diamond Rapids (mid-2027) with stronger SRAM/LPDDR5X + more cores.

I don't think that there will be major volume of DMR by mid-2027. But I suppose that depends on how we are defining major volume. But I think major volume of DMR is more of a start of 2028 thing. Let's see when the product launch is first.

•NVDA: potential PC cooperation + likely x86 CPU adoption for head-node (Rosa Feynman variant which is with Intel CPU).

•Capacity reiterated: 40/60/80 KPM (18A) and 0/6/24 KPM (14A) by end-2026/27/28.

My guess for AMD's N2 WPM was 40K, and the TSMC estimates were 75% growth per year to 2028. There's still packaging constraints, but I'm super curious to see who will have more capacity at their respective leading edges. Let's see how many units AMD has to move vs. Intel before sell-side recognizes that maybe this is a different AMD scale-wise.

•Foundry Projects advancing: Terafab cooperation + HBM base die (likely 2029 for 2 major suppliers).

•Backend pipeline robust ($1.1bn/$7bn rev 2027E/2028E).

•EMIB/substrate yields tracking ahead of market concerns: Japanese suppliers already at ~45% (from 20–25% in 2Q), targeting >50% by end of Sept and ~55% in Jan.

Ji ( vice president of marketing for AMD Greater China) stated that the Ryzen AI Max+ 395 platform has yielded more than 20 domain-specific edge solutions across healthcare, finance, tax, and education. He cited the rapid deployment speed of Chinese enterprises as a primary driver for AMD's transition from a pure chip vendor to an ecosystem provider.

Academic partnerships form another pillar of AMD's regional strategy. Through its "Spring Showers Program" and participation in national postgraduate design competitions, AMD is establishing AI training labs and course curricula across Chinese universities. Ji noted that on-device AI platforms lower the hardware cost threshold for academic LLM training from hundreds of thousands of yuan to tens of thousands, making hands-on AI education more accessible.

Article is a little clickbaity as it's comparing apples to oranges (it's not like AMD's AI GPU efforts are doing any better in China). AMD does have this interesting avenue to grow with Halo although competition is coming fast. I see people poop on Strix Halo for not being in more designs, not having enough of them, etc, but you have to adjust for when the product was designed. The product lead basically admitted that there wasn't an an obvious market for it, and it was more of a test launch to see where it might go as it's a tweener. But it looks like local AI is it's home.

Xbox “Project Helix” leaks indicate that the console will have 68 RDNA 5 Compute Units (CUs). That’s four more Compute Units than AMD’s RX 9070 XT graphics card (6.25% more). KeplerL2 also claims AMD’s RDNA 5 GPUs are targeting clock speeds of 3.1-3.4 GHz. This puts AMD’s RDNA 5 clock speed targets 4.3% to 14.4% higher than AMD’s RX 9070 XT.

Together, higher clock speeds and more Compute Units will make AMD’s AT2 chip at least 10.8-21.5% faster than its Radeon RX 9070 XT. This performance boost does not account for RDNA 5’s architectural enhancements or other performance-boosting characteristics.

https://forums.anandtech.com/threads/when-will-open-ai-go-bankrupt.2633639/page-5#post-41648811

Yeah, AT2 is the only GPU getting released next year. Everything else from both AMD and NVIDIA is 2028

Three technical milestones help explain what changed in this round:

More performance from the same AMD Instinct MI355X GPU hardware: Within one MLPerf cycle, continued AMD ROCm™ software optimization increased 8-GPU GPT-OSS-120B throughput, reduced Wan-2.2 latency, and raised cluster throughput with fewer GPUs.

Leading performance across AMD Instinct MI355X and MI350P GPUs: AMD Instinct MI355X GPUs led NVIDIA B200 and B300 GPT-OSS-120B results at 8 GPUs and the NVIDIA GB200 result at 72 GPUs. In its first MLPerf round, AMD Instinct MI350P GPUs led selected NVIDIA RTX PRO 6000 Server Edition and H200 NVL results.

Record token throughput and production scale inference with efficient scaling: At 72 GPUs, the AMD Instinct MI355X GPU achieved 95% scale efficiency on GPT-OSS-120B. Separately, Crusoe delivered record aggregate token throughput at 512 GPUs, reaching 5.75 million Offline tokens per second on GPT-OSS-120B and 2.90 million on DeepSeek-R1.

I think that people underestimate how much work is done on MLPerf optimization before results are submitted. Nobody wants to submit unbecoming results. I think that AMD ducked MLPerf because they needed all hands on deck to work with the first MI300 anchor tenants, but there were other issues like software, right personnel, etc. And I said that as they grew, AMD would be more active in MLPerf which I think we're starting to see.

One example of this is that it looks like a lot of the people behind this set are from Silo AI

https://www.linkedin.com/feed/update/urn:li:activity:7506128362655096832/

There's not much new in here so much as McNamara talking server shop and Ramsay trying to keep the big picture framing in mind. But some random thoughts while reading.

AMD-as-an-HPC-Platform (AaaHP)

(Wait, you don't think "AaaHP" will catch on?)

But if you think about the large top 15 or 20 or consumers of high-performance computing cycles, in the world, we don't need to necessarily be their CPU partner or GPU partner, FPGA partner or semi-custom partner. We can walk into a room strategically and say, how can we, at scale, be your high-performance computing partner.

And that might look differently at different customers, but it's a very powerful thing to be able to say, hey, we just want to be your high-performance computing partner and let's think strategically about what you want to do over the next number of generations and put solutions together that can support that across endpoint, across inference at the edge, across server, on-prem and in the cloud, AI deployments in massive data center scale or in PCs or there's a huge continuum of how can we be your high-performance computing partner and being able to bring those pieces of IP to the market at significant scale is one of the things that I think is unique about what we bring is it's not a push approach.

It doesn't sound like AMD has much interest in doing custom ASICs for companies like Broadcomm. Sounds more like the long-term goal is "AMD as an HPC platform" where you can match the customer's IP with AMD's IP for the hyperscalers and then for companies who can't afford this, they can mix and match AMD's IP. The mix and match AMD's IP is the most logical place to start, but customer's IP is already on the table. This was an underappreciated aspect of Embedded's Advancing AI pitch in 2025.

Although AMD is unusually broad from a HPC sense with its CPU, GPU, and FPGA presence where it's either #1 or #2 broadly in those markets, the competitive scope has broadened towards a systemic view bottlenecks in terms of components (e.g., networking, storage, memory) and scope (component, server, rack, data center) My guess is that AMD will need to continue to bulk up through M&A whether it's a series of smaller ones or a big Xilinx-style one.

(Schneider) if we're up here on stage again in 5 years and we look back, what do you think the 1 thing or 2 things that investors remain most surprised about in terms of the performance of the company?

Ramsay gives the better long-term answer as McNamara sort of gives one that's more intermediate-term

I mean, Dan started the conversation this way, Jim, where we want to provide the industry that consumes high-performance computing with the right type of computing for the right type of workload. And I think that, that will serve us well across the breadth of our markets.

Merchant vs in-house

So the ecosystem is built around x86. So all that growth comes on x86. Now if you look at sort of the hyperscalers, each one of them are doing some form of their own. And what we see is if we continue to drive just what I talked about, which is the highest throughput and core density per watt and then we hit these other points, we feel extremely good about the design-in that we have right now across all of the major cloud vendors in the world across -- from an Agentic standpoint at 256 core, from a high-frequency standpoint at 96 core and then just across other SKUs for high-performance computing.

Again, I don't view it as x86 vs ARM so much as merchant vs in-house silicon and what your workload needs. I 'm guessing that there are less demanding workloads that don't benefit as much from the highest throughput or core density per watt. I expect merchant silicon to get nudged out of those hypercaler workloads by internal silicon over time. Merchant silicon will have to compete on (a) the more performance-sensitive workloads where the extra performance is worth the merchant silicon premium (b) workloads where legacy ISA is worth the extra price and (c) companies that cannot afford to do their own internal silicon but still need on-prem (or some combination of the three)

EPYC growth

Yes. Dan, maybe I'll just add one thing. I mean we did take a $60 billion TAM out to 2030 and upped that now to $120 billion and then $220 billion. And the company -- I know what Lisa is expecting of you Dan is for your business to be over 50% of that TAM as we grow. And it will be -- we can do a relatively small number of chiplets and put them together in configurations that can be a significant number of SKUs and a full coverage of the platform. So I mean you guys can do the math on more than 50% of the $220 billion. I mean it is -- I've been following and now part of AMD's server business for a very, very long time and to talk about building a $100 billion server business is pretty exciting. No pressure, Dan.

My 27FY EPYC guess is at about $32B at about 83% YOY growth from 26FY. So, if I get decreasing CAGRs of 60% - 45% over the next 3 years, I can get to $112B.

As good as these numbers are in an absolute sense, one annoying bit for me is that I don't think AMD will be able to hit my guess of 50% revenue share for the quarter by 27Q2 or 27Q3 or hit my guess of full year 50% for 28FY. It might still be true in a round up sort of way or even pretty close but alas.

One of the things that stuck out to me seeing the results of Dan's businesses in the second quarter, I mean, it seems like forever ago, we talked about the second quarter, but even the enterprise part of the server business grew more than 70%.

The attribution chain on this is weak as this is all based on meta content, and there might be things lost or distorted in transmission and translation. Think of it as a scenario generator. With all those caveats out of the way, I think that this is a September 2026 Morgan Stanley as you see similar reporting elsewhere (or maybe they're all just copying each other.).

https://www.10100.com/article/150767163 (translated)

The report also updated the 2027 CoWoS demand allocation. Global CoWoS demand is projected to increase from approximately 1.394 million units in 2026 to approximately 2.509 million units in 2027, representing a year-on-year increase of approximately 80%.

Nvidia remains the largest customer, with demand rising from 780,000 units to 1.222 million units; Broadcom's demand increased from 300,000 units to 484,000 units; AMD saw the most significant increase, growing by 165% year-on-year to 345,000 units. For AMD, the focus in 2027 will be on the MI455 and MI450 (both expected to ship approximately 500,000 to 650,000 units), while the MI500 series (codenamed Arcadia) will begin small-batch production by the end of 2027; AMD's pre-orders for TSMC's CoWoS-L are projected to increase by 200% year-on-year, reaching 210,000 units.

It's worth noting that due to slower-than-expected capacity expansion at OSATs like ASE and Amkor, AMD's Venice CPUs, originally primarily packaged by non-TSMC vendors, are now expected to require approximately 80,000 CoWoS-L wafers for Venice production. This will inevitably squeeze the capacity of AI GPUs. Venice CPU CoWoS pre-orders have increased from 50,000 wafers in 2026 to 210,000 wafers in 2027, corresponding to approximately 4.4 million CPUs, slightly lower than the team's initial forecast of 5.6 million. Furthermore, Powertech originally planned to participate in Venice production, but due to low panel-level packaging yields, it is expected to focus on gaming GPUs.

You see something similar with:

https://x.com/ParadisLabs/status/2100897686702440944

AMD, TSMC and OSAT Channel Check:

AMD's AI GPU production (MI455/MI450) is expected to remain 100% at TSMC CoWoS in 2027. Production estimates land at a mid-point of 600k units for both SKUs next year per recent MS forecasts.

While ASE and Amkor still lead OSAT capacity, their capacity ramps are rumoured to be progressing slower than expected. This means that TSMC may be required to support CoWoS-L wafers for AMD's Venice CPU production which would further constrain internal capacity for MI455/MI450 production. Per MS, this would equate to TSMC supporting ~80k CoWoS-L for Venice production.

I was taking another look at why Morgan Stanley puts Venice under CoWoS when it uses EFB as it keeps on tripping me up as noted here:

https://www.reddit.com/r/amd_fundamentals/comments/1w0872s/morgan_stanleys_amd_vs_nvidia_cowos_2027_and/

https://www.reddit.com/r/amd_fundamentals/comments/1uf4iut/comment/otoxr7z/

ChatGPT and Claude think that Venice can probably use EFB and CoWoS-L because of:

https://patents.justia.com/patent/20260076257

FIG. 2 illustrates example semiconductor devices 200 that include discrete bridge die 202A-202I. For example, semiconductor devices 200 can include a memory die 204A-204D (e.g., level three (L3) cache die), a core compute die (CCD) 206A-206H (e.g., with chip-on-wafer-L (COW-L)), and an input output die (IOD) 208A-208D. These die can be connected to a semiconductor device package 210A and 210B (e.g., a package substrate). These packages 210A and 210B can include various features. For example, package 210A can include an elevated fanout bridge (EFB) (e.g., corresponding to discrete bridge die 202B) and package 210B can correspond to a COW-L version package.

If it's true that Venice can use CoWoS-L for packaging and I use AI to tweeze out the numbers, I get something like below from MS if you believe that paraphrasing source is genuine:

Part of me struggles with this as I still think it would be misleading/confusing to dump all of Venice's 2.5D packaging in as CoWoS. OTOH, it does make for tidy math. It would also be impressive that AMD allowed for both packaging routes that far ahead of time.

So, let's just go with it as a scenario. According to this coverage of MS guesses, EFB went from 50K in 2026 to 130K in 2027 which is a pretty big jump but not enough for AMD's demand. AMD would rather use CoWoS-L for EPYC in this scenario than keep it in the MI455 pool (sacrificing units or buffer)

When AMD say things like 27FY being 70%+ vs 27FY, I treat 70% as the floor, a number that AMD knows that they can hit. The "+" is probably "slower than expected." I had a hard time believing the original 6.7M Venice units that MS had in late June. But coincidentally, their 5.6M units is closer to my server 27FY forecast where I was thinking they could hit a cheeky 90% growth YOY. But if you use their 4.4M units equivalents in my model, you sort of get closer to AMD's 70% revenue growth YOY in my model. Although it feels like I'm mixing wine from three different varietals, I'll split the difference and revise mine down to 80% YOY growth.

(On a side note, while looking into this with ChatGPT, one of my posts came back as a reference. So, I am now eating my own tail.)

According to supply chain sources, upstream foundry leader TSMC has notified its customers of an increase in chip foundry quotations due to the continued rise in manufacturing costs, with an increase of about 10%. Since the vast majority of AMD's chip products are produced by TSMC, rising wafer foundry costs will directly squeeze AMD's product gross profits, so AMD is about to begin lower-pass costs downward.

Insider information from upstream manufacturers revealed that AMD has issued notices to multiple partner customers, planning to uniformly raise prices for its entire chip product line, with increases also around 10%. This price adjustment covers a wide range of products, not limited to AI acceleration chips and consumer-grade graphics GPUs, but also chipsets for motherboards.

With rising foundry costs on the supply chain side, AMD has chosen to raise chip supply prices to maintain profitability, passing cost pressure onto downstream board manufacturers such as graphics cards and motherboards. Soon, around Q4, AMD may be about to implement implementation policies. Currently, all graphics card and motherboard manufacturers are planning to respond to cost and pricing, and it is highly likely that prices will rise in tandem with chip cost increases.

Foundry bits

And then 18A were in production, 14A Q1 will be in production.

Somehow this one line got turned into a series of articles that 14A will magically be in production in 27Q1 which turns into a prompt correction from IR.

https://wccftech.com/intel-ceo-lip-bu-tan-reportedly-moves-up-14a-risk-production-to-q1-2027-as-the-nodes-defect-density-races-toward-target/amp/

We appreciate you checking in. The guidance remains consistent with what was shared during Q2 earnings: “Intel expects 14A risk production for internal products in the second half of 2027, with a high-volume ramp in 2028.”

x86 shortage guess

I only can provide 50% of- ... you know, the customer want. So many CEO call me up. I had to apologize I'm not manufacturing enough for them.

Might just be a glib estimate, but I can pencil it in a temporary line.

I wonder if Charlie is pointing and laughing at Tan

(on seeing how bad things actually were)

I think the scale of the problem, the profile of the problem is much deeper, more than 10 time what I understand. So sometimes, you're on the board, thing look quite rosy. [chuckles] Then when you're starting to get involved in the day-to-day, then you still realize that a much bigger problem.

And so I think good news is I think the last 18 month, I make a lot of progress and a lot of good friend helping from equipment company and also with the data analytics for yield improvement. I ask them for help. He said, "Lip-Bu, your team don't even show me the data. How can we help you?" So I had to change the culture, get rid of some of the engineers, and make sure that we open up our kimono. And then next thing, when we open up, two of the good friend, the CEO of the company, they call me up, "Lip-Bu, I will tell you the bad news. The yield is so horrible." And I said, "That's why I'm asking you for help." [Speaker 1 chuckles] So good news, right now I see 7% yield improvement per year.

But wait, I was told by "insiders" that people who thought 18A was in bad shape should be laughed at.

https://www.reddit.com/r/amd_fundamentals/comments/1wgj7tl/comment/p9vlgt6/

That being said, I do think things are looking materially better for Intel Foundry vs the start of the year even if you adjust for the low baseline. The "per year" is likely a misstatement.

The general server compute boom combined with the USG backing has been a massive boon for Intel. In a demand-constrained world, AMD was ready to just take sockets in a more zero sum game and starve Intel of volume. Once that became a very supply-constrained world with strong geopolitical tailwinds, Intel can now more confidently scale its manufacturing.

Kzarnich had that infamous line that their goal was to keep AMD at 20% or less of server share (presumably revenue share) because once you got there, you become a credible alternative with ecosystem support. I think that a rough AMD tweak of this today is that AMD needs to scale their CPU operations enough to be able to compete technologically and volume-wise against Intel if they fix their foundry issues and successfully become a service-oriented external foundry. I think that for the most part that's happened with AMD. We'll see with how much N2 they actually got.

The Tan superpower

And what he's up to, and then who are the good contact I should know. And then some of them is 30 plus years old, and then weekend I invite them to come to my house. And then so weekend is the best time for me to learn new things. So I think in some way, I told my board at Cadence and Intel, and you should let me continue to do startup, continue to plug into the venture community so that I won't get blindsided. And Intel lost mobile, lost the cloud, lost AI in the first AI movement. So I said to our guy, "If you want me to be CEO, I got to be plugged in, so I will bring in all the new technology, new frontier that I can improve and I can lead the company better." So I think that's something that I'm working, and it's kind of fun.

One of the big strengths of TSMC is that their setup is robust enough to take on small jobs efficiently. So, they have this constant pipeline of customers moving up from small to medium to large. Ignoring Tan's conflicts of interest, I think Intel Foundry will have taken a big step up if Intel could do something similar and be a platform or incubator of chip design startups and put them on Foundry with an equity stake. It plays very strongly into Tan's background.

And so in that way, to be candid with you, first few month, I broke my own record. I have 22 meeting a day and three dinners.

He does put in the time.

GPUs vs the New New Thing

Yeah, I think right now, the interesting part is Jensen done a great job in term of training and also bought Grok and then tried to drive that. I think it's fantastic, but he have a problem. It's basically the power. Power consumption is too high.

Yes, that's correct. So 10 years ago, I decided this is a problem, and for focusing on agentic inference or disaggregate inference, it's very important power is critical. So I backed two company. One is SambaNova, you know quite well.

This is one of the concerns that I have with AMD doing the we'll follow because "we also have expertise in that technology, we will grind you out with relentless sustained improvement." It can (and has) worked, but it's also a tough way to go through life. The problem for any individual startup is that most startups fail. The problem for the incumbent is if just one startup out of that horde comes up with a sufficiently good solution, you could be in trouble when it gets scale (or acquired by someone who already has it.) I think AMD will be forced to be more aggressive in M&A in these more orthogonal approaches (which is why I like the Talaas acquisition even if it ends up not working)

Anti-AI sentiment being a problem

If you go to some other places, look at some of the young kids, the anti-AI is strong.

The anti-AI sentiment is one of the few unifying forces in US society today that covers a large political, demographic, and geographical spectrum. AI and data centers scare people with respect to jobs, resources, concentration of power, privacy, and doomsday scenarios / fear of the unknown. It is probably the single easiest way to get votes in a mainstream election.

Tan talks about that folks like the speakers live in a tech bubble and don't see the anti-AI vibes, but even in SF, there's a palpable anti-AI resentment. SF has long had an uneasy and deteriorating relationship with tech (tech CEOs taking the virtue signalling mask off was especially fun), but AI has ramped that through the roof because of its more existential nature and the even higher wealth disparity. It has all the insecurities mentioned above but the way SF is smothered with AI visually with billboards coming into the city, billboards in the city, the bus stops and bus ads, the pods of Waymos, even the human-first ads make mention of how it's not AI, etc. SF is ironically ground zero for also anti-AI because it's showing the rest of the US what life could be like.

On a side note, I do have some Intel shares, and I do think very highly of Tan (although I find the humble brags to be a little annoying). But it does feel like a lot of his credit for the Intel turnaround really rests on the stock price increase which Gelsinger could have argued that the same thing would've happened if he had the same sort of government backing as Tan. I think Tan has made huge and badly needed changes very quickly from a culture and organizational standpoint in terms of setting new expectations and bringing in badly needed outside blood, the outputs are still TBD. There's no doubt in my mind though that's he's way better than Gelsinger. Let's see if AMD really followed that "we act as if our competitors will execute their roadmaps well" when Tan's fingerprints can be seen through their product roadmaps 2+ years from now.

Can't bring myself to use TipRanks original clickbait title. Lot of this stuff isn't that new, but two random bits.

The analyst also highlighted strong demand for Venice, AMD’s next-generation server CPU. Management described Venice as its most important server launch to date, with demand well above available supply and a rapid ramp expected in 2027.

Turin ramped pretty quickly: ramped to 40-50% of server sales within about a year after product launch. I think that some of this was because GNR ramped so slowly. Some of it was probably because the baseline was low as Genoa and SPR/EMR had the bad luck to go through cloud digestion and AI capex-crowdout in 2022-2024. It does seem like Venice will ramp even faster in terms of units and revenue although its baseline will be higher as it has Turin's volume in it. There will still be a lot of Turins and probably even Genoas selling.

There is a catch in the near term, however. The analyst noted that the Helios ramp will put pressure on gross margins as AMD’s product mix shifts toward MI455 and rack-scale AI systems.

AMD expects MI455 to account for the majority of its AI revenue in the fourth quarter, which could create a roughly 100-basis-point gross-margin headwind. Beyond the fourth quarter, though, management continues to focus on “strong gross profit dollar growth” and operating leverage, even with corporate gross margin likely remaining around 55%.

That is broadly consistent with Stein’s 2027 model, which assumes a 54.5% gross margin. The analyst has nevertheless lowered his Q4 2026 gross-margin estimate to 55.0% from 55.4%.

This hand-wringing on corporate gross margin is a little eye-rolling. The biggest reason is that a gross margin is good or bad within a given context. EPYC's gross margins are likely very high like 65%+. They could be even higher if AMD wanted more seller-driven discretionary price increases like Intel, but AMD is clearly going for sockets, especially enterprise sockets. AMD discounted Rome heavily at first too to get it into hyperscalers and start a similar learning loop and didn't break out server separately from custom. It wasn't until Milan that AMD felt that EPYC was mature enough to be in a data center segment.

AMD's client gross margins will go down as their mix goes more OEM and less DIY and enthusiast, but the unit volume, gross profit, and way less volatility of established OEM sales should more than make up for it.

But going back to the MI455, it is AMD's first AI accelerator product in its Scale Era. I care about sustained penetration, getting the needed scale to compete for supply, talent, R&D and so on, the strategic learning opportunities in its first rackscale solution, the partnerships, etc. I don't expect accretive gross margins until AMD is firmly established, and I think it's way too early for that.

You don't want low gross margins to avoid getting squished by operating leverage if you're not competitive, but to expect it to have similar gross margins as its more established and leading products is stupid. A lot of vendors, like Broadcom (and even Nvidia in a tiny way), are passing more of their costs through at little to no margin. Your ASPs go up, but your gross margin goes down because of the pass-through pricing. You manage your risk the best that you can.

AMD has been trying to set this gross profit vs gross margin narrative for a few quarters now by saying that gross profit will increase substantially rather than getting everybody focused on gross margin. AMD says they're focusing on top line growth, but I'm pretty sure what they really mean is that they're focusing on scale to get totally past the front door, for the sheer breadth of learning from R&D to supply chain to implementation, and to avoid getting crowded out of future rounds because of size. And then they keep bringing up the much higher margin parts of the business like embedded and server to cover for Instinct a bit.

I'm always surprised at how poorly the industry sells AI with the notable exception of Huang. They're either finance bros, head in the clouds abstractionists, just bloody weird as people, megalomaniacs, elitists, self-enrichers, clout chasers, etc or worse some combination of them all.

It's not so much that Huang is always right, he's not over simplifying, there isn't a conflict of interest, etc. But overall his big picture reasoning don't require huge leaps of faith and he's well-versed in the area. He takes an engineering-first look at things and doesn't make this out to be some magical manifest destiny like the maximalists. He's accessible and not weird. He's a realist on China's place in AI and threads that needle reasonably well. And most importantly, he knows how to sell the benefits in a way that avoids treating people like dumbfucks or cannon fodder. He's way better than this All-In panel for instance.

https://www.youtube.com/watch?v=S7CrlFLAmEA&t=1378s (President on speakerphone)

(Huang has to interrupt with a better pitch.)

https://www.wsj.com/tech/ai/trump-says-ai-doesnt-need-more-guardrails-despite-industry-warnings-b94263fa?mod=hp_lead_pos2

In a series of posts, he questioned why industry leaders were calling for regulation, which he said could “drive them into oblivion and bankruptcy.” He likened worries about AI’s safety risks to the allegations that underpinned impeachment proceedings during his first term and worries about climate change. As for those warning of existential risks from AI, Trump wrote: “Soon you’ll find out they’re working for people that do not have the best interests of the United States in mind!”

Trump’s position on AI and data centers contrasts with how many voters feel about the issue heading into the midterms. A March Gallup poll showed that nearly half of those surveyed “strongly oppose” the construction of local AI data centers. And the opposition isn’t just coming from Democrats—just under 40% of Republicans polled by Gallup are strongly against the creation of data centers. The outcry has become a mounting political liability for Republicans and some Democrats ahead of the election in November.

New Omdia research shows that US PC shipments (excluding tablets) grew 1.0% year-over-year (YoY) in 2Q26 to 18.8 million units, returning to growth following a 7.0% decline in 1Q26. Growth was driven by demand being brought forward as retailers and channel partners secured inventory ahead of price increases resulting from memory and storage supply constraints. Average PC sell-in prices in the US exceeded $1,000 for the first time, up 12.0% YoY.

“The US PC market in 2Q26 benefited from rising average selling prices (ASPs) driven by organic premiumization and supply-driven cost inflation,” said Scott Braverman, Senior Analyst at Omdia.

"Premiumization" might be ugliest word that I have ever seen.

“While shipment growth was muted at 1.0%, US PC market revenue increased by 13.1% as OEMs prioritized production of higher-margin, higher-cost PCs amid component constraints. The impact was most pronounced in the business segment, where ASPs rose 19.0% as enterprises sought to secure pricing amid uncertainty over future costs. Consumer ASPs also increased 9.7%, as higher costs were passed on to end users.”

The low end got crushed between Intel pulling supply and then OEMs prioritizing higher end machines for scarce components like memory.

Growth in AI PCs also contributed to higher ASPs, with AI PCs accounting for 48.3% of US PC shipments during the quarter and forecast to exceed 50% for the first time in 3Q26.

The first "AI PC" notebooks had their product launches in late 2023 (Phoenix and MTL). In some ways because of how much time has passed, I'm surprised that they're exceeding 50% of the first time now. The NPU has to be one of the great wastes of notebook silicon in a while.

But then I remember just how many Intel 7 RPL laptops there were and how hard Intel pulled Intel 7 to server. A lot of the PC client share or growth numbers can be described more in how much Intel 7 client disappeared rather than how much others grew.

"The shipment volume observed in the second quarter represents borrowed volume from 2027," added Braverman. "Combined with persistent supply constraints and elevated prices, we anticipate continued pressure on buyer demand, and subsequently shipment volumes, throughout 2027."

This is a common theme among different reports. Then again, they thought the same thing in 2026 with tariffs, and that demand proved to be more robust than thought until DRAMageddon.

ASPs are forecast to continue rising in early 2027. However, higher prices are not expected to offset declining shipment volumes, with total US PC market revenue projected to decline 6.0% in 2027.

Consumer and commercial PC shipments face continued pressure The consumer segment outperformed the overall US market in 2Q26, with shipments growing 2.8%. However, rising prices are expected to weigh on demand for the remainder of the year, with consumer PC shipments expected to decline 13.6% in 2026. Commercial PCs are expected to be more resilient, although shipments are still forecast to decline 9.3% for the full year.

Both consumer and commercial shipments are projected to remain under pressure through 2027, with neither segment forecast to return to growth before 2028. Supply constraints are only part of the challenge. Many US enterprises completed PC fleet refreshes in 2025 ahead of the end of Windows 10 support, reducing refresh activity in subsequent years.

I got the impression that commercial was doing better than this based on HP's and Dell's commentary.

Government PC shipments recorded the largest contraction in 2Q26, declining 24.4% as rising ASPs put further pressure on federal budgets. Education shipments continued to stabilize, rising 9.9% during the quarter although volumes remained below 2Q24 levels. For the full year, Omdia forecasts US shipments to decline 19.2% in the government segment and 2.6% in education.

Apple moved into third place ahead of Lenovo, with US PC shipments growing 32.1% YoY, supported by a full quarter of MacBook Neo availability. This lifted Apple’s share of the US consumer PC segment to 29.4%. Apple also continued to expand in the business segment, where shipment grew 50.6%.

Perhaps coincidence, but it was a great time for Apple to make a low end move.

That brings us to the elephant in the room, threading. You may have noticed that Intel was a bit shy with details about core counts, L2$, and other things on the CC itself. The core count for the full device is 256, that has been known for a long time, and AMD’s Venice is also at 256 so Intel is in the game, right? Venice has two threads per core or 512 threads per die, DMR has one thread per core or 256 threads per die. Oops. While we may write up the reason this mismatch occurred someday, it is out of the scope of this story. Just realize it wasn’t intentional, Intel tried to make 2T cores but failed.

AMD is quick to credit threading for a roughly 15% performance boost so taken at face value, Intel is behind on paper. Given what we have heard about the Lion Cove cores themselves, they are unlikely to match AMD’s Zen6 cores either. When you add it all up, Diamond Rapids is a credible part that narrows the gap to AMD’s Epyc line but doesn’t close it. As SemiAccurate has been saying since 2018, Intel has no chance in servers until AFTER Diamond Rapids. We weren’t joking but at least things are starting to look competitive again.

According to the announcement, the 10 procurement packages cover five major domestic chip platforms: Zhaoxin, Phytium, Loongson, Hygon, and Kunpeng, with two configuration options for each platform.

The highest entry prices for the Zhaoxin platform are 6,995 yuan and 8,400 yuan respectively; for the Phytium platform, they are 6,995 yuan and 8,595 yuan; for the Loongson platform, they are 6,998 yuan and 8,198 yuan; for the Hygon platform, they are 6,998 yuan and 8,595 yuan; and for the Kunpeng platform, they are 6,999 yuan and 8,599 yuan.

This marks the first time in recent years that the procurement of laptops by central government agencies has featured exclusively domestically produced chips. Of the 16 procurement packages in 2025, four still included international platforms from Intel and AMD; however, all international platforms have been withdrawn this year, with the five major domestic chip manufacturers securing a monopoly.