AMD today announced revenue for the third quarter of 2019 of $1.80 billion, up 9 percent year-over-year and 18 percent quarter-over-quarter.

The company also reported operating income of $186 million, net income of $120 million and diluted earnings per share of $0.11. Gross margin, or the percentage of sales remaining after deducting the cost of production, expanded to 43 percent, up 3 percentage points year-over-year.

“Our first full quarter of 7nm Ryzen, Radeon and EPYC processor sales drove our highest quarterly revenue since 2005, our highest quarterly gross margin since 2012 and a significant increase in net income year-over-year,” said Dr. Lisa Su, AMD president and CEO. “I am extremely pleased with our progress as we have the strongest product portfolio in our history, significant customer momentum and a leadership product roadmap for 2020 and beyond.”

The increased revenue for Q3 was due to higher revenue in the company's Computing and Graphics segment, partially offset by lower revenue in the Enterprise, Embedded and Semi-Custom segment.

AMD has been trying to get back into the business of server chips. While there are far fewer of those machines sold than laptops and desktops, server chips command much higher prices. AMD has about 3% of this market. Demand for those processors slumped, dragging down the division’s sales by 27% from a year earlier.

Gross margin was 43 percent, up 3 percentage points year-over-year and 2 percentage points quarter-over-quarter, primarily driven by increased Ryzen and EPYC processor sales.

Quarterly Financial Segment Summary

• Computing and Graphics segment revenue was $1.28 billion, up 36 percent year-over-year and sequentially. Higher revenue was primarily driven by increased Ryzen client processor sales.
• Client processor average selling price (ASP) increased year-over-year primarily driven by Ryzen desktop processor sales and increased quarter-over-quarter driven by both Ryzen desktop and mobile processor sales.
• GPU ASP increased year-over-year driven by higher channel sales and decreased quarter-over-quarter due to a higher proportion of mobile sales.
  
• Operating income was $179 million compared to $100 million a year ago and $22 million in the prior quarter. The year-over-year and quarter-over-quarter increase was primarily due to higher revenue.
• Enterprise, Embedded and Semi-Custom segment revenue was $525 million, down 27 percent year-over-year and 11 percent sequentially. The year-over-year and quarter-over-quarter decreases were primarily due to lower semi-custom product revenue, partially offset by higher EPYC processor sales.
• Operating income was $61 million, compared to $86 million a year ago and $89 million in the prior quarter. The year-over-year and quarter-over-quarter decreases were due to lower revenue and higher operating expenses.
• million in the prior quarter.

AMD is trying to exploit Intel’s delays in shifting production to more advanced technology. AMD now outsources manufacturing of its best chips to Taiwan Semiconductor Manufacturing Co., which is more than a year ahead of Intel in implementing new processes.

For the fourth quarter of 2019, AMD expects revenue to be approximately $2.1 billion, plus or minus $50 million, an increase of approximately 48 percent year-over-year and approximately 17 percent sequentially. The year-over-year and sequential increases are expected to be driven by an increase in Ryzen, EPYC and Radeon product sales. AMD expects non-GAAP gross margin to be approximately 44 percent in the fourth quarter of 2019.