Dr. Lisa Su
Thank you, Laura, and good afternoon to all those listening in today.
Our business performed exceptionally well in the second quarter. A strong execution in growing customer preference for our high performance product generated significant market and financial momentum. We saw a very strong demand across all of our businesses, which resulted in second quarter revenue growing 99% year-over-year to 3.85 billion. We expanded our gross margins by 4 percentage points, doubled operating margin, and more than tripled profitability year-over-year.
We also delivered record revenue for the fourth straight quarter and generated record free cash flow in the quarter.
Turning to our computing and graphics segment, second quarter revenue increased 65% year-over-year to 2.25 billion driven by significant growth in both Ryzen and Radeon processor sale. In client computing, we had another record quarter of processor revenue. Both desktop and notebook revenue increased by a strong double-digit percentage year-over-year, and we believe we gained revenue share for the fifth straight quarter. In desktop, robust demand for our highest-end Ryzen processors drove a richer mix in the quarter as Ryzen 9 processor unit shipments more than doubled year-over-year. In notebooks, unit shipments and ASP increased sequentially and year-over-year. We delivered our seventh straight quarter of record mobile CPU revenue led by the steep ramp of our latest generation Ryzen 5000 Mobile Processors. In the enterprise, Ryzen pro mobile processor unit shipments nearly doubled year-over-year as we won multiple high volume deployments in the quarter with Fortune 500 financial services, automotive, and pharmaceutical companies. In graphics, revenue doubled year-over-year led by demand for Radeon 6000 series, desktop, graphics cards in the channel, an adoption of our data center GPUs. RDNA 2 GPU shipments grew by a double-digit percentage sequentially as the first notebooks powered by our Radeon RX 6000 M series GPUs launched, including the first AMD advantage notebooks that combine high performance Ryzen CPUs, Radeon GPUs, and AMD software with premium design features to deliver best-in-class gaming experiences.
Asus, HP, MSI, and Lenovo announced plans to bring AMD advantage notebooks to market over the coming months as we further expand our presence in the gaming notebook market. Data center graphics revenue more than doubled year-over-year driven by new deployment of our AMD instinct accelerators, including initial shipments of our next generation data center GPUs featuring our CDNA 2 architecture. CDNA 2 represents a major step forward in our multi-year data center GPU strategy, delivering more than twice the performance of our current generation and significantly higher performance than competitive offerings in HPC workloads.
We expect data center GPU revenue to grow in the second half of the year as we ramp production of our next generation AMD instinct accelerators, an open sourced ROCm software to support multiple leading edge supercomputer wins, including Frontier, LUMI, [and Pozzi].
Turning to our Enterprise and Embedded and Semi-custom segment, revenue increased 183% year-over-year to 1.6 billion, driven by strong growth in both semi custom and epic processor sales. Semi-custom revenue grew sequentially and year-over-year and we expect game console demand to remain strong throughout the year. We announced a new Semi-custom win earlier this month as valve chose AMD to power their steam deck handheld game console planned to launch this December. In embedded, we're making good progress expanding our presence across key verticals, including automotive, networking, and storage. We ramped production shipments in the quarter of AMD Ryzen embedded CPUs and Radian RDNA 2 GPUs to power the in-dash infotainment systems in Tesla's latest Model S and Model X vehicles.
Now, turning to server, we delivered our fifth straight quarter of record server processor revenue. Sales grew by a significant double-digit percentage sequentially driven by higher unit shipments and ASP.
We are seeing very strong demand across our full server portfolio with second gen EPYC processor revenue growing sequentially, and third gen EPYC processor sales more than doubling quarter-over-quarter.
Third gen EPYC processor revenue is ramping faster than the prior generation as customers and multiple third-party reviewers recognize the absolute performance and price performance leadership of our latest server processors. Cloud demand further accelerated in the quarter, led by growing internal workload adoption and nearly 50 new AMD powered instances by AWS, Microsoft Azure, Google, Tencent, and Alibaba. Google announced it chose AMD EPYC processors to exclusively power the first offering in its new Tau VM family that delivers industry leading performance and value for scale out workloads versus other competitive x86 and ARM offerings. In enterprise, we see demand accelerating as more than 100 third gen EPYC processor platforms are now in production from Dell, HPE, Lenovo, Supermicro, Cisco, and others.
In addition, we are seeing a rapid expansion in the number of AMD powered solutions and appliances from our OEM and ecosystem partners targeting hyper converged and virtual desktop infrastructures, as well as workloads demanding the highest per core performance, such as EDA and computational fluid dynamics. We secured multiple HPC wins in the quarter, including newly announced deployments by the National Supercomputing Center in Singapore and the French Atomic Energy Commission.
Our substantial momentum in HPC was highlighted by the fact that the number of AMD based systems on the latest Top 500 list of the world's fastest supercomputers increased by almost 5x in the last year, and that EPYC processors power half of the 58 newly listed systems.
Looking at our overall data center business, revenue nearly doubled year-over-year and increased sequentially from a high-teens percentage of overall revenue in the first quarter to greater than 20% in the second quarter.
We expect data center revenue to continue growing faster than overall revenue based on the strength of our EPYC processors and instinct accelerators, and the significantly expanded engagements we have built with the leading OEMs and largest MDCs.
Turning towards Xilinx acquisition, we passed additional milestones in the quarter and received unconditional regulatory approval in multiple jurisdictions, including in the EU and the United Kingdom. We remain on track to close this strategic transaction by the end of the year and are excited about the opportunities ahead. In closing, I'm extremely pleased with our execution as our business accelerated considerably in the first half of the year. Based on growing customer preference for our products and strong supply chain execution, we now expect annual revenue to grow by approximately 60% year-over-year, up from approximately 37% growth we guided at the beginning of the year.
Our engineering teams are aggressively driving our product and technology roadmaps to continue setting the pace of innovation for high performance computing. We remain on track to launch next generation products in 2022, including our Zen 4 processors built with industry leading 5 nanometer process technology and our RDNA 3 GPUs.
We also recently demonstrated the next major advance in our triplet strategy with our differentiated 3D dissecting technology that enables significantly denser and more efficient connections between stack chips. Based on the strength of our long-term roadmap and the deep partnerships we have established, we expect to continue growing significantly faster than the market. In summary, we're making great progress towards our ambitious goal of establishing AMD as a high performance computing leader and the best-in-class growth franchise.
Now, I'd like to turn the call over to Devinder to provide some additional color on our second quarter financial performance. Devinder?