Amd increases R&D spending after third quarter success
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After revealing some great numbers during the third quarter of 2019, AMD is ready to accelerate its R&D investment plans.
AMD increases R&D spending
The acceleration of its R&D plans is great news for the company, which will be able to think long-term about the development of CPUs and GPUs beyond the Zen or Navi architecture.
This comes just after the launch of Ryzen's third generation and EPYC's second generation, which has been a significant turning point for the company and has secured its position as a manufacturer of high-end PC hardware.
AMD has been able to challenge its rivals on a shoestring budget, with Intel often earning 10 times more than AMD while producing products with higher profit margins. When it comes to financial power, AMD shouldn't be able to compete with Intel. This factor makes Ryzen's feat even more relevant, as the R&D investment to create this architecture had to have been significantly less than Intel's for any of its chip architectures.
AMD's primary concern right now is to ensure that its success continues in the coming quarters, which means the company cannot afford to put its R&D efforts behind. AMD's R&D spending has remained largely unchanged since the third quarter of 2018, thanks in particular to limited growth and the company's focus on the launch of Zen 2. Fortunately, AMD's success at 7nm has allowed them to get started to invest more in their research efforts, with an increase of 11.8% in the third quarter of 2019 (year-on-year spending).
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In the fourth quarter of 2019, AMD expects to generate revenue of $ 2.1 billion, representing a $ 300 million increase in revenue from the third quarter. If this is combined with higher gross margins, AMD is likely to spend even more on R&D in the fourth quarter. This will finance the development of future CPU / GPU architectures and other products.
AMD's original Zen architecture released in the first quarter of 2017 had a spend in that period of $ 271 million on R&D. This quarter, AMD spent $ 406 million, representing an increase of almost 50%.
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