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AMD Revenue Hit by Weak Demand in China

April 21, 2016, 8:26 PM UTC
General Views Inside Computex 2014
Visitors walk past the Advanced Micro Devices Inc. (AMD) booth at the Computex Taipei 2014 expo at the Taipei Nangang Exhibition Center in Taipei, Taiwan, on Tuesday, June 3, 2014. Computex runs through to June 7. Photographer: Chris Stowers/Bloomberg via Getty Images
Photograph by Chris Stowers — Bloomberg/Getty Images

Advanced Micro Devices’s quarterly revenue handsomely beat Wall Street estimates, and the chipmaker said it signed a $293 million licensing agreement with a Chinese investment group.

Shares of the company surged 23% after hours.

AMD said it signed an agreement licensing its processor technology to a joint venture it has formed with Tianjin Haiguang Advanced Technology Investment Co. (THATIC), an investment unit of Chinese Academy of Sciences.

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The venture will develop processors tailored for the Chinese server market, AMD said.

The company has been struggling with weak demand from China, its biggest market, as well as stiff competition from Intel and Nvidia.

AMD’s first-quarter revenue fell 19.2% to $832 million, but beat average analysts’ estimate of $818.2 million, according to Thomson Reuters.

Net loss narrowed to $109 million, or 14 cents per share, in the first quarter ended March 26, from $180 million, or 23 cents per share, a year earlier.

Excluding items, AMD posted a loss of 12 cents per share, compared with analysts’ estimate of a 13 cents per share loss.