A few days ago, AMD presented its annual report for the fourth quarter of 2022. And as usual, that was followed up by a conference call, during which investors could put questions to CEO Lisa Su. At the same time, Dr. Su that AMD is currently deliberately delivering fewer CPUs and graphics cards than possible – and that made the rounds.
The accusation is: AMD is keeping the prices high
The first thing that caught PCGamer's attention was the statement that can be found in the transcript of the conference. Specifically, Lisa Su was asked how AMD assesses the PC market in the first quarter of 2023. The manufacturer assumes that the market (TAM) will be 10 percent smaller for the current year, with analysts assuming up to 50 percent fewer CPU and GPU solutions will be delivered. Lisa Su explained the discrepancy by saying that AMD would have delivered fewer products to retailers in the second half of 2022 than there was demand from end customers – and this will still be the case to a limited extent in the first quarter of 2023.
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So we have been under shipping sort of the sell-through or consumption for the last two quarters in an attempt to renormalize that as soon as possible. […] We undershipped in Q3 [2022], we undershipped in Q4 [2022]. We will undership, to a lesser extent, in Q1 [2023].
Lisa Su, CEO at AMD
The conclusion that made its way across the web is obvious: AMD is creating an artificial shortage to keep prices high when demand is low. It is sometimes assumed that the aim is to be able to maintain the price level of 2021, although the immense demand caused by the pandemic and crypto mining gave way to a significantly shrunken market. Similar procedures are known, for example, from the storage market, which is currently also in a downward spiral.
The manufacturer refers to the distributors
AMD, in turn, has now taken the floor and explained to PCWorld that AMD is indeed delivering below the level of demand, but this is happening at the request of the wholesalers. Due to the decline in sales, they had simply built up too large an inventory of CPUs and graphics cards in the past few months, but wanted to reduce stocks in view of the current market situation.
We are shipping below consumption because there is too much inventory in the channel and that partners want to carry lower levels of inventory based on the demand they are seeing and their expectations for their business. The idea we are doing this to keep prices “elevated” isn't accurate. Our client ASP [Average Selling Price] was flat year over year, and that is due to mix of CPUs shipped.
Drew Prairie, Vice President of Communications at AMD
In fact, AMD admits that the average retail price for end-user CPUs has remained stable over the course of the year. However, this is not due to artificially increased prices, but is due to the dynamic mix of processors sold.
In fact, prices are falling almost everywhere
The statement is to be understood as a pointer to Ryzen 7000 (test): The new Zen 4 CPUs released in September 2022 cost more than the previous models, but nevertheless – or precisely because of this – the average price of a processor sold remained unchanged. And the massive price reductions in the months that followed contradict the theory of artificially high prices: Even the Ryzen 7000 models that are only a few months old are now significantly cheaper.
Basis/Turbo L3 TDP iGPU Cheapest price in price comparison RRP 11/11/2022 11/20/2022 12/20/2022 02/03/2023 AMD Ryzen 9 7950X 16/32 4.5/5.7 GHz 64 MB 170 W ✓ 849 euros from 780 euros from 640 EUR from 604 euros from 612 euros AMD Ryzen 9 7900X 12/24 4.7/5.6 GHz 64 MB 170 W ✓ 669 euros from 590 euros from 510 euros from 495 euros from 455 euros AMD Ryzen 7 7700X 8/16 4, 5/5.4 GHz 32 MB 105 W ✓ 479 euros from 429 euros from 380 euros from 365 euros from 355 euros AMD Ryzen 5 7600X 6/12 4.7/5.3 GHz 32 MB 105 W ✓ 359 euros from 330 euros from 270 euros from 267 euros from 244 euros
In addition, older products, such as the popular gaming specialist Ryzen 7 5800X3D (test), continue to fall significantly in price. The situation is similar with the graphics cards, the price of the new Radeon RX 7900 XT (test) has already fallen by more than 100 euros in the first six weeks after the market launch. And the price drop is sometimes particularly great for Radeon RX 6000: The price of a Radeon RX 6700 XT (test), for example, has fallen by more than 50 percent over the past 12 months; the model is now available from 400 euros.