As this earnings season hits a fever pitch, there's no shortage of valuable insights getting unpacked via the earnings reports and calls being delivered by tech companies. That includes insights that could be relevant to a firm's rivals, suppliers and/or customers.
1. AMD's Zen CPU core architecture is living up to its hype.
Fourteen months after the first chips based on Zen hit the market, AMD is clearly making good on its promise that the architecture will help it regain long-lost PC and server CPU share.
The company's strong Q1 beat has much to do with the strong performance of its Computing and Graphics (C&G) segment, which just saw revenue rise 23% sequentially in a seasonally weak quarter. And though solid GPU sales played some role here, the largest driver appears to be a major pickup in shipments of AMD's Zen-based Ryzen PC CPUs, which went from accounting for a "low-40s" percentage of AMD's PC processor sales in Q4 to 60% of sales in Q1. AMD's just-launched second-gen Ryzen desktop CPUs should help it add to its share gains in Q2.
And though it's still early, the Zen-based Epyc server CPU line -- its sales are recorded within AMD's Enterprise, Embedded & Semi-Custom segment, which also covers game console processors -- is gaining steam. CEO Lisa Su suggested on the earnings call that Epyc now accounts for a "strong double-digit" percentage of AMD's revenue, and reiterated a goal of achieving a mid-single digit server CPU share by year's end.
Interestingly, this validation of Zen comes just as Intel (INTC) announces it has hired Jim Keller, the renowned engineer who spearheaded Zen's development and subsequently worked for Tesla (TSLA) , to lead its "system-on-chip development and integration" work. Intel's Q1 results arrive after Thursday's close; its Q4 desktop CPU sales were pressured by AMD's share gains.
2. Graphics card inventories are growing as crypto mining demand slows.
Though AMD expects its Ryzen and Epyc sales to rise sequentially in Q2 as well, it expects GPU sales to record a modest decline "due to blockchain." In addition, when asked about graphics card channel inventories, which were very low going into Q1, Su said they're now "good."
AMD's comments come amid growing concerns that a slowdown in cryptocurrency mining activity (following a slump in crypto prices) could lead disillusioned miners to flood the market with used graphics cards. Last week, top chip foundry Taiwan Semiconductor (TSM) , which counts AMD, Nvidia (NVDA) and leading crypto mining ASIC developer Bitmain as clients, cautioned that there's "uncertainty" surrounding second-half crypto demand. AMD believes miners accounted for about 10% of its Q1 sales.
3. Qualcomm is rethinking its licensing policies.
Before the Trump Administration shot down its hostile bid for Qualcomm, Broadcom (AVGO) said it saw an opportunity to "restructure" Qualcomm's highly profitable mobile patent-licensing business and thereby appease angry phone OEMs. It looks like Qualcomm, whose licensing revenue remains pressured by ongoing disputes with Apple (AAPL) and Huawei, is comfortable doing some restructuring on its own.
In November, the company announced it's willing to license its standards-essential 3G/4G/5G patents at a relatively low royalty rate of 3.25% of a phone's selling price, subject to a $500 price cap. On Wednesday's earnings call, Qualcomm disclosed it has lowered its price cap to $400 "for all licensees."
And though it's forecasting relatively healthy chip demand -- improving Chinese sales and strong non-mobile chip growth are offsetting high-end smartphone weakness -- Qualcomm also guided for its licensing revenue to be down 10% to 27% annually in the June quarter. Notably, Qualcomm didn't just blame smartphone weakness and the licensing disputes for its outlook; it also blamed a revised deal with Samsung announced 3 months ago and the fact that some OEMs are opting to only license Qualcomm's standards-essential patents (SEPs) rather than its full patent portfolio, which tends to carry a royalty rate of 5%.
As Apple insists it should pay a royalty of just $4 per device for access to Qualcomm's giant patent portfolio, it increasingly feels as if Qualcomm is trying to meet Apple and other disgruntled licensees halfway.
4. PayPal's Venmo continues to grow like a weed.
In its market-pleasing Q1 report, PayPal disclosed its mobile-centric Venmo payments platform saw total payment volume (TPV) rise 80% annually to $12.3 billion. That follows an 86% increase in Q4, and helped PayPal's mobile payment volume rise 52% to $49 billion (37% of the company's entire TPV).
On the earnings call, CEO Dan Schulman added that Venmo added more net active accounts in Q1 than in any prior quarter, and that the Pay With Venmo service is now supported by over 2 million U.S. merchants. He also noted adoption of Venmo's Instant Transfer service, which lets consumers immediately transfer funds to their debit cards for $0.25, is growing rapidly.
Though a large portion of Venmo's TPV still involves P2P payments that aren't monetized, the service is proving a very useful way for PayPal to protect its flank as adoption of Apple Pay and other mobile-friendly payment alternatives continues growing. Especially among younger consumers.
5. What's true for Apple and Micron is also true for Samsung.
While its mobile device sales rose 23% annually in Q1 thanks to the timing of its Galaxy S9 launch -- it launched a few weeks earlier than the Galaxy S8 did in 2017 -- Samsung also forecast its mobile profits will decline in Q2 due to "stagnant sales of flagship models amid weak demand and an increase in marketing expenses to address the situation." Likewise, the company stated its OLED panel sales, which depend heavily on the iPhone X and Samsung's own high-end phones, have been soft in 2018.
Clearly, high-end smartphone demand in general is under pressure. A slew of other iPhone suppliers have issued soft guidance ahead of Apple's March quarter report, which arrives on Tuesday.
Things look much better for Samsung's giant memory chip business: Its sales rose 43% in Q1, as strong server DRAM and solid-state drive (SSD) demand offset weak mobile NAND flash memory sales. The company is also fairly upbeat about Q2: Server and mobile DRAM demand is expected to remain strong, and demand for high-density (3D NAND) flash chips will help offset NAND price pressures. Samsung also forecasts second-half memory sales will benefit from "an increase in content per box across all applications."And on its call, Samsung more or less reiterated the outlook it gave in January for 2018 DRAM and NAND industry supply growth: DRAM bit shipments are expected to rise about 20%, and NAND shipments are expected to rise about 40%. That's not far removed from the outlook rival SK Hynix gave earlier this week, and (together with Samsung's demand outlook) is likely a big reason why Micron's ( MU) shares rose about 5% on Thursday.