AMD limited CPU and GPU sales in the second half of 2022 to prevent unsold inventory.

In the midst of a severe decline in the PC market, AMD informed investors during its Q4-2022 earnings conference call that it “undershipped” chips in the second half of 2022 to maintain pricing (margins) high and save itself from unsold inventories. AMD CEO Dr. Lisa Su told investors, “We undershipped in Q3, we undershipped in Q4. In Q1 [sic], we will undership to a lesser level, she continued.

When opposed to the spike in demand during the COVID 19 pandemic lockdowns, major chipmakers are currently suffering a demand dip that is unparalleled. There is no longer the same level of demand that the PC sector saw in 2021 due to rising energy costs and the ebb in the pandemic that caused a large portion of the white-collar population to return to work. However, low supply artificially keep costs high, with desktop processors and graphics cards still being overpriced in comparison to earlier generations. In order to avoid having a large amount of unsold inventory that it would have to sell at a low profit margin or even at a loss, AMD determined that it would rather make less money on fewer chips shipped. The business outperformed expectations on Tuesday to release positive Q4-2022 earnings, which received a thumbs-up from investors.