AMD’s gaming revenue experienced a dramatic 48% year-over-year drop in the first quarter of 2024, driven by declining sales of Radeon graphics cards and a reduction in orders for console processors. The downturn is set to continue throughout 2024, with recovery not expected until 2025, signaling turbulent times ahead for the company.

The steep decline has led to questions about AMD’s plans for new product releases, especially in the discrete GPU market. With the gaming segment’s revenue continuing to fall, AMD may delay the launch of its next-generation RDNA 4 GPUs, possibly pushing back the introduction of the Radeon RX 8000-series to 2025.

A combination of fewer console sales and lower demand for discrete graphics cards has caused the sharp downturn. AMD’s gaming business earned $922 million in Q1 2024, a drop from $1.757 billion in Q1 2023 and $1.368 billion in Q4 2023. The gaming unit’s operating income dropped from $314 million to $151 million year-over-year.

“First quarter semi-custom SoC sales declined in line with our projections as we are now in the fifth year of the console cycle,” said AMD CFO Jean Hu. “In gaming graphics, revenue declined year-over-year and sequentially. We expanded our Radeon 7000-series family with the global launch of our Radeon RX 7900 GRE and also introduced our driver-based AMD Fluid Motion Frames technology that can provide large performance increases in thousands of games.”

The lack of interest in RDNA 3, along with reduced console sales, has significantly impacted AMD’s revenue. Sony’s PlayStation 5 and Microsoft’s Xbox Series X|S are entering their fifth year, leading to a natural decline in demand. This has resulted in fewer orders for AMD’s custom SoCs.

The company also struggled in the discrete GPU market. Sales of Radeon add-in-boards fell in Q1 2024, following a seasonal trend but also indicating reduced market interest. AMD did not secure significant design wins with its Radeon RX 7000M GPUs for laptops, further impacting its gaming revenue.

AMD’s outlook suggests that its gaming segment will continue to decline in 2024. The company’s forecast indicates that the gaming revenue is expected to drop by around 30% in the first half of 2024 and even more in the second half. This outlook could point to AMD’s expectation that neither Microsoft nor Sony will refresh their current console lineup this year. If this holds, AMD will likely struggle to recover in the gaming market until new product lines or console cycles emerge.

For more detailed insights into AMD’s financial results and gaming revenue predictions, check out the full report on Tom’s Hardware.