The battle between Intel and AMD will shape microprocessor leadership in coming years.
Some analysts think AMD will come out ahead eventually on several counts, but Intel has a big advantage for now in processors used in data centers.
Intel is viewed by many customers as the big old boy on the street, still highly important to both investors and technologists. Its AI and neuromorphic research keep it at the forefront for academics and cutting-edge customers. The focus of its competition with AMD is based on the microprocessor market segment, where Intel is 10 times bigger in revenues, but is not growing nearly as fast.
Intel got a shout out from Seeking Alpha investor Mauro Solis on Wednesday who reminded everybody that Intel’s sheer size in factories, personnel and top ranking in global semiconductor revenues remain its biggest asset.
“The most likely scenario is that both AMD and Intel will have a sizable portion of the market in the future,” Solis wrote. “At this time, betting on both horses might be the wisest strategy.”
Solis and others regard AMD’s development of 7nm chips, like the Ryzen 9 3900X, as currently making AMD the market leader, but Intel clearly believes that chip node metric is not entirely relevant. Intel believes that its 10nm chips are comparable to the AMD 7nm process.
“Our 10nm node is comparable to the foundries’ 7nm nodes today,” Intel said in a statement issued in August. (AMC uses TSMC as its chip foundry.)
“Our 7nm process, which is on track for a 2021 first-product production, will deliver 2X scaling on top of that. So purely from a process standpoint, we are neck-and-neck with the foundries. When you add to that our innovations in packaging, interconnect, architecture and software, it’s clear we have what it takes to deliver industry leading products today and in the future.”
At the time of that statement in early August, Intel CEO Bob Swan had just recently explained in part at a conference why Intel didn’t have a 7nm chip when both AMD and Qualcomm did. Apparently for Intel, chip node size matters, except when it doesn’t.
When Moore’s Law runs out, possibly around 2025, Solis argues that Intel will be able to maintain high gross margins on sales when chip prices fall because it owns its factories and can presumably control costs.
Intel is already cutting prices on some chips used in games and video editing on high-end desktops by half, evidently in response to AMD’s competition. This week it announced the Intel Core X-Series pricing, showing a Core i9-10980XE for $979, down from $1,990 for last year’s Core i9-9980XE. Price cuts for some other chips were down by 50%. The i9 chips will be available in November and are based on the company’s 14-nanometer technology.
Intel’s 10 nm chips, named Ice Lake, have started shipping in premium laptops after first being announced on Aug. 1.
AMD is expected to release a new version of the Ryzen Threadripper in November that is expected to cost less than Intel’s chips with comparable performance. The Ryzen 9 3950X will cost just $750 for mainstream desktops. Microsoft chose an AMD Ryzen processor that is customized for its new Surface Laptop 3 with a 15-in. display over an Intel Core processor.
Aside from this active competition between AMD and Intel on the CPU front, it is worth noting that Intel is the world’s clear market leader overall in semiconductor production, with $16.2 billion in revenues in the second quarter. Samsung came in second, and AMD finished well out of the top tier of chip suppliers, having reached $1.5 billion in second quarter revenue, less than 10% of Intel’s number.
For microprocessors only, analyst firm IHS reported that second quarter revenues for Intel were $12.2 billion, compared to $1.2 billion for AMD—still a huge difference. However, AMD has been steadily increasing market share in the past year and has the clear advantage with a compound annual growth rate of 7%, compared to Intel’s 0.29%.
“AMD is definitely making inroads” with Intel, said Ron Ellwanger, an analyst at IHS Markit, in an interview. “Intel still dwarfs AMD from a revenue standpoint, but analysts are looking at the growth percentages, and they are impressive for AMD.”
He cited several reasons for AMD’s market share gains, including the use of TSMC for the advanced 7nm process. Plus, he said Intel was three years late on their 10nm process, even though Intel claims their 10nm is comparable to TSMC’s 7nm process.
Also, Intel ran into a 14nm supply shortage in second quarter of 2018. The combination of these factors caused end users to begin migrating to AMD, for both PCs and data centers, Ellwanger said.
The coming months will be interesting, as the market watches the effect of Intel’s 10nm products, he said. “Both manufacturers have a very loyal customer base,” he added.