On Tuesday, AMD shared details about its Epyc server chips, which were first announced on May 16. AMD’s Epyc processor is seen as a direct threat to Intel, which for now holds nearly 100% of the $16.5 billion market for server chips.
AMD is confident in its Epyc server chips
Yesterday, AMD showcased the first four of its nine Epyc chips, which it claims are capable of offering better performance at lower prices than the chips from Intel. With its Epyc line of chips, AMD is trying to make its presence felt in a lucrative segment which so far knows just one name – Intel. Such a monopoly has allowed the chip giant to enjoy a high gross margin, notes The Wall Street Journal.
However, AMD could threaten Intel’s dominance in the sector because the former enjoys the backing of big system makers like HPE and Dell and cloud computing operators such as Microsoft’s Azure unit and China’s Baidu.
AMD will have to execute its plan flawlessly if it wants to attain its goal in the server market, believes Moor Insights & Strategy analyst Patrick Moorhead. On the other hand, the analyst expects that the downside for Intel will be limited because it has expanded into other segments like memory, networking and server storage. Nevertheless, Moorhead believes that the chip maker “will be relentless in clawing back any lost territory.”
It is not just AMD, but other chip makers too are planning to take on Intel in the segment. In March, Qualcomm and Cavium demoed chips powering Microsoft’s Windows Server operating system, which is based on ARM Holdings’ technology. IBM has already announced that it will ship its own server chips in the second half of this year, notes The WSJ.
Intel ready for a fight
Intel is not taking the completion lightly and has issued a statement saying it will continue to dominate the competition with its Xeon server processors. In a statement, the chip maker said that it takes all competitors very seriously, and though AMD is making efforts to reenter the server market, it has been dominating that market for the last 20+ years with its broad ecosystem investments in data center innovations.
Referencing the performance of its chips, the company said that with its next-gen “Xeon Scalable processors, we expect to continue offering the highest core and system performance versus AMD. AMD’s approach of stitching together 4 desktop die in a processor is expected to lead to inconsistent performance and other deployment complexities in the data center.”
The x86 server chips which are used by companies and big data centers has been Intel’s forte, so it will defend it by any means. Intel’s quick response to AMD’s Epyc server chips suggests the same. Last year, Intel’s server chip business reported 8% growth in revenue to $17.2 billion. In comparison, the chip maker witnessed just 2% growth in its larger $32.9 billion PC chip unit.
Investors are also taking an interest in this epic battle. Over the last three days, AMD shares are up by about 10%, while Intel shares are down by 1%. Some of AMD’s gain can be attributed to Intel’s Core i9 Extreme Edition, a new top-end desktop chip which won’t be available until at least October. This will help AMD’s competing top-end chip, the Ryzen Threadripper, to get a head start, notes Fortune.