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AMD Partners With ECARX to Launch In-Vehicle Computing Platform

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Advanced Micro Devices (AMD - Free Report) recently announced that it has formed a strategic collaboration with ECARX, a global mobility tech company, to develop an in-vehicle computing platform for next-generation electric vehicles (EVs).

The ECARX digital cockpit is the very first in-vehicle platform to be integrated with AMD Ryzen Embedded V2000 processors and AMD Radeon RX 6000 Series GPUs along with ECARX hardware and software. The digital cockpit will feature high-end features including driver information mode, heads-up display and rear seat entertainment, multiple-displays, multi-zone voice recognition, high-end gaming and a full 3D user experience.

The ECARX digital cockpit is expected to be in mass production for global rollout in late 2023, which will mark AMD’s entry into the high growth EV industry.

Per International Data Corporation (“IDC”), PC sales were down 15.3% year over year to 71.3 million units during the June quarter, which was higher than the first-quarter's decline rate of 5.1% and is the worst drop in many years.

In the second quarter, AMD’s Client segment which includes desktop and notebook PC processors surged 24.5% year over year to $2.15 billion and accounted for 32.9% of total revenues. While the company experienced rising revenues, the company is expecting slowing growth in the coming third and fourth quarters due to falling demand for PCs.

To counter this issue, AMD has been diversifying its product portfolio to cater to trending high growth markets like cloud, gaming, data center and EV.

The company has constantly been improving the performance of its Ryzen processors to help address the increasing proliferation of AI and Machine Learning (ML) in industries like cloud, gaming and data center.

This has impacted AMD's second-quarter 2022 gross margin positively, which expanded 600 basis points (bps) year over year to 54%.

AMD Forays Into High Growth Markets to Boost Share Prices

AMD's shares which currently carries a Zacks Rank #3 (Hold) have slumped 28.9% compared with the Zacks Computer and Technology sector's decline of 22.3% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fall in AMD’s share price was due to the rising geo-political tensions between the United States and China, the global supply chain challenges that have adversely impacted the semiconductor industry, the ongoing Russia-Ukraine war, rising inflation and interest rate hike by the U.S. Federal Reserve, which has led to the recent fall in PC demand as the market slips into recession.

Stiff competition from peers like NVIDIA (NVDA - Free Report) also remains a concern as AMD is looking to gain market share in one of its most beneficial markets, AI.

NVIDIA has been benefiting from the rapid proliferation of AI. The company has been expanding its base in untapped markets like climate science, energy research, space exploration and digital biology.
Nvidia recently teamed up with Hewlett Packard Enterprise to bring AI software services to the cloud. NVIDIA AI enterprise is now available in Hewlett Packard Greenlake in select countries.

However, AMD has been gaining from its plans to form strategic partnerships with different companies to address new-high growth markets, accelerate data center growth, and enter the AI and AR spaces with its launch of various new products.

AMD recently collaborated with Dell Technologies (DELL - Free Report) to launch the most powerful 17” AMD Advantage laptop — Alienware m17 r5 Gaming Laptop.

The recent collaboration with Dell will help AMD benefit from the rising gaming industry that will attain $545.98 billion by 2028, witnessing a CAGR of 13.20% between 2021 and 2028, according to Fortune Business Insights.

AMD has also collaborated with Meta Platforms (META - Free Report) to enter the Metaverse.

AMD has become Meta’s ecosystem partner, and AMD’s radio chip, Xilinx Zynq UltraScale RFSoC, will be utilized to develop a metaverse-ready radio access unit.

AMD’s recent partnership with ECARX will help the company address the growing EV demand. Per AMD, which quoted Strategy Analytics, EV adoption is an important factor for growth in the automotive semiconductor market and the associated semiconductor demand is expected to see a CAAGR of 31% over 2021-2026.