AMD has been “undershipping” CPUs and GPUs for the past two quarters

In AMD's Q4 earnings release, Lisa Su admitted that AMD had been “undershipping” CPUs and GPUs to balance supply and demand in the last two fiscal quarters. Initially, some interpreted AMD CEO's words as the company intentionally doing it to keep prices high. Soon after, a representative clarified that the decision to ship less was because of the lower demand.

When the crypto boom happened, AMD and Nvidia shipped out as many GPUs as possible. That has since come to a halt, forcing them to reduce shipments and adapt to the new reality. As noted by PCWorld, this reduction can be seen in AMD’s client PC sales in Q4 2022, which have dropped 51% YoY. Still, the company was able to turn a profit.

If you're asking yourself how that was possible, that's because AMD's decided to “undership” CPUs and GPUs for the last two quarters, reducing the channel and partner inventories. By doing this, stock can be adjusted to the current lower demand that retailers are seeing and prevent product pricing from plummeting too much. The red team has been “undershipping” throughout Q3 and Q4 2022 and will keep doing it, “to a lesser extent,” in Q1 2023.

AMD isn't the only company to “undership” products in the sector. Like AMD, Nvidia admitted to doing the same back in November for gaming-related products, allowing them to correct the excessive amount of inventory out there.

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