Why did AMD's Gaming revenue decline sharply in 2024?

AMD's gaming revenue declined sharply in 2024 due to a combination of factors:

1. **Decline in Semi-Custom Sales**: AMD's gaming revenue is significantly impacted by the sales of semi-custom chips, which are used in major game consoles. As the current generation of consoles enters their mature phase, demand for these chips naturally declines. This is evident in the decline of AMD's gaming revenue, which fell 59% year-over-year to $563 million.
2. **Competitive Pressure in GPU Market**: AMD faces strong competition in the GPU market, particularly from Nvidia. While AMD has made gains in the PC CPU market and established a multi-billion-dollar Data Center AI franchise, it still lags behind Nvidia in the gaming GPU market. The company partially blamed the decline in gaming GPU sales on the upcoming launch of its next-generation graphics cards, but Nvidia managed to grow its gaming revenue despite preparing new products. The competitive pressure and the need to invest in R&D to catch up with Nvidia poses a challenge to AMD's gaming segment profitability.
3. **Aging Game Consoles**: The gaming revenue decline is also due to the aging game consoles. The PS5 and Xbox Series X/S, which use AMD's semi-custom chips, have sold nearly 80 million units since their launch in 2020. As these consoles mature, the demand for new chips decreases, impacting AMD's revenue.

In summary, AMD's gaming revenue decline in 2024 is primarily due to the decline in semi-custom sales, competitive pressure in the GPU market, and the aging game consoles. These factors combined led to a significant drop in revenue for AMD's gaming segment.