Chipmaker AMD quietly revealed on Tuesday that it had passed a mind-boggling gaming milestone, but the announcement came amid less-rosy numbers about its overall gaming business.
The Santa Clara-based company released its fiscal year earnings report for 2024, revealing the company surpassed 100 million shipped units during the quarter that ended in December. Those units are semi-custom processors that power most of the gaming consoles on the planet.
AMD makes custom chips for the Sony Playstation 4 and PlayStation 5, the latest Xbox consoles, the Asus ROG Ally, the Lenovo Legion Go, the Acer Nitro Blaze, and the Steam Deck.
The milestone may be overshadowed by the news that AMD gaming revenue was down 59% year over year in the fourth quarter.
During the three months ending December 2024, AMD's gaming segment earned $563 million, compared to $1.4 billion in the same period in 2023.
Even though the gaming revenue beat estimates of $498 million for the quarter, that's still a massive drop.
AMD CEO Lisa Su said that in the months ahead, she expects gaming revenue to be down from the previous quarter but less down than other parts of AMD's business.
"We would expect gaming business will be down a little less [than the corporate average]," Su told investment analysts during a Q&A session following the release of earnings.
"That's a little atypical from a seasonality standpoint, but we’re coming off of a year when there was a lot of, let’s call it, inventory normalization, and now that inventory is normalized, we would expect [gaming revenue in Q1] would be down a little bit less than the corporate average."
(Inventory normalization can be understood as a reduction in the production of chips, perhaps because of lower demand).
Is the gaming console market cooling off?
So, is the gaming console market cooling off? Let's look at Sony.
In November, Sony executives told analysts during an earnings call that they were forecasting selling 18 million PS5s during the 2024 fiscal year, despite questions about the price of the PS5 Pro. (Sony's 2024 fiscal year ends on March 31, 2025.) In the 2023 fiscal year, Sony sold 20.8 million PS5s.
The PlayStation 2, the top-selling console of all time at 160 million units sold, was equally as successful as Sony says the PS5 will be in 2024: Sony shipped 18.07 million PS2s for the fiscal year ending in 2001.
Essentially, the numbers show that demand remained largely the same regarding PS2 in 2001 as it does the PS5 in 2024.
And in business, if you're not growing, you're cooling. Su and AMD's forecast for gaming revenue in Q1 — that it will be down slightly from the previous quarter — may be the latest signal that the console cooldown continues.
The upshot of this news is the flurry of new handheld gaming PCs — many of which use semi-custom AMD processors — that are coming onto the market. Almost the power of a gaming laptop in a handheld form factor could usher in a new era of gaming that relies less on the console and is more about the handheld.
And if you're feeling the console cooldown, you could always try Laptop Mag's preferred device, the gaming laptop.
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