AMD Merges Client, Gaming Segments After 59% Drop In Gaming Revenue, Aims To Align Reporting With Business Focus

AMD, the semiconductor giant, has announced plans to merge its client and gaming segments into a single reportable segment, effective with its first quarter 2025 financial statements. This move comes in response to a steep 59% year-over-year decline in gaming revenue to $563 million in the fourth quarter of 2024. The gaming segment's sharp decline was primarily attributed to lower semi-custom chip sales as key customers Microsoft and Sony focused on reducing channel inventory. However, AMD noted a significant milestone with cumulative gaming console shipments surpassing 100 million units in the fourth quarter.

The reorganization aims to align AMD's reporting structure with how the business is managed, resulting in three segments: data center, client with gaming, and embedded. This move is expected to help AMD better leverage its resources and expertise to drive innovation and growth in its data center and client businesses, which have shown strong growth and performance. By combining these segments, AMD can better manage its inventory and supply chain, as the client and gaming segments share many common components and technologies.

AMD's gaming segment remains profitable, but it has become the smallest segment of the company's portfolio. The losses in the gaming segment are attributed to a decrease in semi-custom revenue, which lines up with slowing Xbox and console sales for the current generation of hardware. However, current-gen sales have surpassed 100 million units across PlayStation 5 and Xbox Series consoles in Q4 2024. AMD expects channel inventories to have now normalized, and semi-custom sales will return to more historical patterns in 2025.

To address the significant decline in gaming revenue, AMD plans to launch the Radeon RX 9070 series, powered by the RDNA 4 architecture, later in the first quarter of 2025. This new product line is expected to deliver significantly higher ray-tracing performance and new AI-powered upscaling with FSR 4. This move could help AMD regain market share and boost gaming segment revenue.



AMD's gaming segment decline has several potential implications for the company's overall financial performance and market position. The decline in gaming revenue and profitability contributed to a reduction in AMD's overall revenue and profitability. The shift in product mix may lead to a change in AMD's product development priorities, potentially impacting the company's ability to maintain its competitive edge in the gaming market. The decline in gaming revenue may also impact AMD's stock price and investor confidence, as well as its market position and reputation. However, AMD's strong performance in its data center and client businesses, as well as its strategic focus on these segments, may help mitigate the impact of the gaming segment's decline.



In conclusion, AMD's merger of the client and gaming segments aims to align its reporting structure with its business focus and better leverage its resources to drive growth in its data center and client businesses. The gaming segment's decline, while significant, is not expected to have a lasting impact on AMD's overall financial performance and market position, given the company's strong performance in other segments and its strategic focus on these areas. AMD's upcoming launch of the Radeon RX 9070 series is expected to help the company regain market share and boost gaming segment revenue.