AMD, which is in trouble again, puts hope on the shoulders of the new CFO

After a lapse of nine years, an Asian woman has been added to the top ranks of the American chipmaker AMD.

In AMD’s just-released financial report for the fourth quarter of fiscal year 2022, Jean Hu, who attended the financial report meeting for the first time, attracted more attention from the outside world. According to reports, Hu Jin University graduated from Beijing University of Chemical Technology and has a doctorate in economics from Claremont University. On January 23, Hu Jin became the new CFO of AMD, succeeding the retiring CFO Devinder Kumar.

Hu Jin thus became the first female CFO in the history of AMD. In 2014, AMD ushered in the first Asian female CEO in history, Su Zifeng, who still serves as the company’s chairman and CEO.

According to DiversIQ, a provider of diversity, equity and inclusion data, AMD is the only company in the S&P 500 with an Asian-American woman holding the two important positions of CEO and CFO.

“It is a great pleasure to welcome Jean (Hu Jin) to AMD. Given her extensive experience in the semiconductor industry and her proven track record in financial leadership, she is an excellent addition to our leadership team.” recognition.

Before joining AMD, Hu Jin served as CFO of semiconductor company Conexant, network server and storage network company QLogic, and semiconductor manufacturer Marvell Technology, and served as interim CEO of QLogic twice.

Jean Hu Source: Marvell official website

The introduction of Hu Jin, who has extensive experience in the semiconductor industry, may be to some extent also an attempt by Su Zifeng to deal with the current predicament of AMD.

Although AMD has become a giant in the chip industry, with a market value of 100 billion US dollars, and recently surpassed Intel again, AMD is also facing new challenges, that is, it is facing a crisis of slowing demand for personal computers.

In AMD’s just-released fourth-quarter financial report, not only did its net profit plummet by 98% year-on-year, but its gross profit margin also fell by 7 percentage points . From a full-year perspective, under GAAP rules, AMD’s net profit in 2022 will drop by 58% year-on-year. The previous third-quarter financial report also showed that net profit plummeted by 93% year-on-year. In addition, in 2022, AMD’s stock price will fall by 55%.

As the former CFO of Marvell Technology Corporation, Hu Jin spent six years leading Marvell’s substantial transformation. After the news of Hu Jin’s departure, Marvell’s stock price fell 2% after hours. In the financial report meeting, Su Zifeng also said that she will work closely with Hu Jin in AMD’s continued transformation and business expansion.

The arrival of Su Zifeng and Hu Jin, two female managers, both coincided with a relatively turbulent period for AMD. When AMD was on the verge of bankruptcy, Su Zifeng turned the tide and led AMD to become the world’s second largest CPU manufacturer after Intel. mom”.

Although the predicament that AMD is facing at this time is not as severe as it was nine years ago, for Hu Jin, who has just taken up his post, it is an urgent time to prove his ability.

A

In Hu Jin’s career, there is no lack of experience in leading companies through crises.

In 2011, Hu Jin worked at QLogic Corporation, a network server and storage network company, as senior vice president and CFO. At that time, Hu Jin reported directly to the then president and CEO Simon Biddiscombe.

However, during Biddiscombe’s two years as CEO, QLogic experienced two years of losses, which also led to Biddiscombe’s sudden departure in May 2013. In addition, at that time, QLogic had not yet formulated a succession plan, so the board of directors decided to appoint Hu Jin as the interim CEO.

Hu Jin, who became the interim CEO, is very concerned about cutting costs and making QLogic’s revenue all the way up. In the third fiscal quarter of 2015, QLogic’s revenue and profit were much higher than the previous quarter, and the revenue growth was even higher than expected. At that time, Hu Jin was full of confidence, “Looking forward to the future, we firmly believe that we will continue to usher in new and sustained growth opportunities in the field of enterprise and cloud data centers through our strong IO product portfolio and leadership.”

QLogic once found a new CEO, but failed to help QLogic return to the track of business growth. Within a year, the new CEO was kicked out in a board coup. Since then, Hu Jin was appointed interim CEO again until June 2016, when QLogic was announced to be acquired by semiconductor manufacturer Cavium.

A year later, the semiconductor company Marvell acquired Cavium for another US$6 billion, and the CFO of Marvell in charge of this acquisition was Hu Jin, who joined Marvell in August 2016.

When Hu Jin joined Marvell, it was a time of turmoil for Marvell. This year, the company’s turnover fell sharply. The two founders of Marvell—CEO Xiuwen Zhou and President Dai Weili—both resigned and stepped down.

At that time, Marvell had removed the senior management and the entire board of directors. It was also at this time that Hu Jin joined Marvell and focused on the transformation and reorganization of Marvell. Through a series of asset divestitures and industry mergers and acquisitions, Marvell is back on track.

In 2019, Hu Jin and the CEO of Marvell won the third annual C-Suite Award from the Silicon Valley Business Magazine. At the award ceremony, Hu Jin said, “I have spent three incredible years at Marvell. , and I am excited to be working with the team as we continue to scale and become a leading supplier of semiconductor infrastructure.”

B

Su Zifeng and Hu Jin, two Asian women successively took up AMD executive positions, which is inseparable from their respective profound experience in the semiconductor industry.

Su Zifeng, who is 54 years old, has nearly 30 years of experience in the semiconductor industry. Before joining AMD, Su Zifeng worked in the R&D department of International Business Machines Corporation (IBM), and later served as the head of IBM’s R&D department and special assistant to the CEO. Wait. In 2007, Su Zifeng was hired as the chief technology officer of Freescale Semiconductor; in 2012, AMD spent a lot of money to poach corners.

In the first two years of joining AMD, Su Zifeng successively served as the chief operating officer, senior vice president and general manager of global business. In October 2014, she was officially appointed as the president and CEO of AMD.

Su Zifeng

When Su Zifeng took over as CEO, Claflin, then chairman of AMD, said that Su Zifeng’s experience in the semiconductor industry was the reason why she became the leader of AMD. When Hu Jin was announced as AMD’s CFO, one of the reasons given by Su Zifeng was also that she had profound experience in the semiconductor industry.

In addition to rich industry experience, both of them also have the ability and courage to deal with crises in the company’s emergency.

In 2014, the market value of AMD at that time fell from the highest point of 75 billion US dollars to less than 3 billion US dollars. The replacement of 4 CEOs still cannot recover the decline. Its main server chip business has dropped from the original 26% market share to less than 1%. , The outside world began to spread news that AMD was only one step away from bankruptcy.

At this time, Su Zifeng, who had been poached by AMD for two years, was very optimistic about AMD’s future, and became the first female CEO in AMD’s history during the reorganization.

“Now we should think of AMD as a different AMD, because in addition to technology, we also focus on trends and business.” In early 2014, Su Zifeng began to publicize AMD’s transformation plan in her speeches. In her view, AMD has the leverage to define the next generation of CPUs and GPUs despite its poor condition.

In an interview with the American media, Su Zifeng said bluntly, “I came to AMD to do something that is really important to the industry.” Taking over as CEO is a once-in-a-lifetime opportunity in her life. After taking office, Su Zifeng carried out drastic reforms. On the one hand, she laid off staff and saved expenses; on the other hand, she focused on product research and development. Four years later, AMD has not only successfully turned losses into profits, but has also grown into a rival of the same array as Intel and Nvidia.

In 2017, under the leadership of Su Zifeng, AMD released the Ryzen processor based on the new “Zen” architecture that shocked the world. The emergence of the ZEN architecture broke Intel’s monopoly position and took advantage of this to win most of the Chinese market.

In February 2022, Su Lifeng also handled the largest merger and acquisition in the history of global semiconductors. AMD completed the acquisition of Xilinx. According to Reuters, the final value of the transaction was as high as 49.8 billion US dollars. This transaction makes AMD a manufacturer with both “CPU+GPU+FPGA” and has obtained the golden key to enter the data center market. Also in this year, Su Zifeng became the chairman of AMD’s board of directors.

Although AMD has been inferior to Intel for more than 40 years, AMD’s market value has surpassed Intel several times in recent years, and Intel is also aggressively pursuing mergers and acquisitions and research and development to block AMD. In addition, corresponding to Su Zifeng as the CEO of AMD, Intel has frequently changed its CEO in recent years.

C

Entering 2023, AMD has ushered in some new problems: In the down cycle of weakening demand for personal computers, AMD’s stock price has fallen by 55% in the past year. At this time, the inauguration of the new CFO Hu Jin is more or less “fire fighting”.

Although AMD’s revenue continued to grow, revenue in the fourth quarter of 2022 increased by 16% year-on-year, and revenue in fiscal year 2022 also exceeded expectations with a year-on-year increase of 44%. However, some problems are also hidden in the financial report. From the perspective of AMD’s various business segments, the gaming division’s revenue fell 7% year-on-year, and operating profit fell 23%.

The client department (mainly PC Ryzen processors), which has always been AMD’s star business, saw its revenue cut in half, down 51% year-on-year to $903 million; resulting in an operating loss of $152 million, compared with an operating profit of $530 million in the same period last year . Hu Jin said in the financial report conference that the decrease in processor shipments was mainly due to the weak PC market and the substantial adjustment of inventory in the entire PC supply chain.

The revenue of the embedded product department increased by 1868% year-on-year to US$1.4 billion, mainly due to the acquisition of Xilinx products, resulting in a 10-fold increase in profit to US$699 million, compared with US$18 million in the same period last year. Data Center Division revenue increased 42% year-over-year to $1.7 billion.

The weakness of personal computers has extended to the first quarter of 2023. Su Zifeng said in the conference call that the first quarter is the bottom of the personal computer market. And said, “We will see a certain amount of growth in the second quarter, and then there will be seasonal growth in the second half of the year.” Based on this, AMD expects revenue to decline by 10% year-on-year in the first quarter of fiscal 2023, and customers and games will continue to grow. Business revenue will decline.

AMD is not the only one troubled by the weak market. The chip industry as a whole is in a downturn and is in a downward cycle. According to a report by market research firm Gartner, PC shipments will drop by 28.5% in the fourth quarter of 2022, the largest drop since the company began tracking the market in the 1990s.

After experiencing the market changes of chips from crazy rush to gradually normalization, as the industry capacity gradually catches up, chips have entered the stage of destocking, and at the same time caught up with the inflection point of the decline in actual demand. “I think AMD is showing that no one is immune from the post-pandemic PC recession, and those inventory corrections are affecting the company as well,” said Anshel Sag, chip analyst at Moor Insights & Strategy.

In addition, some analysts said that under the management of former AMD CFO Devinder Kumar, AMD has expanded its market share in the PC field by launching new products, and now that it has changed to a new CFO, there may be risks in execution. When faced with questions from analysts in the conference call, Su Zifeng said: “We will not change our strategy on PCs and will continue to focus on commercial PCs.”

How to dispel external doubts and lead AMD out of the weak cycle will be the challenges that the new CFO Hu Jin will face after taking office.

References:

“Chinese female doctor is AMD’s top financial hand! Succeeded chip giant over 38 years of meritorious CFO ” financial circles

“QLogic and Emulex Earnings Analysis: Struggling to Get Out of Fiber Channel Dilemma” GeekNet

“Two Chinese are Subverting Intel” Business World

“Marvell Back on Track” Semiconductor Industry Observation

“QLogic is in dire straits: Is there too much wine left?” Not much more》Zhiding.com

“Su Zifeng: Redefining AMD” Caijing Tianxia Weekly

《Advanced Micro Devices, Inc. (AMD) Q4 2022 Earnings Call Transcript》SA Transcripts

This article is from the WeChat public account “Alphabet List” (ID: wujicaijing) , author: Xue Yaping, 36 Krypton is authorized to publish.

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