Advanced micro devices 09.30 NASDAQ: AMD took impressive steps to increase sales of server processors and took market share from Intel 09.30 NASDAQ: INTC in the process. Its bigger rival still dominates this niche, but things are about to get even better for AMD in 2021.
The chipmaker reportedly increased its market share from 5% to 8% in 2019, and its share reached double-digit percentages in the second quarter of 2020. According to an article in DigiTimes, some observers in the semiconductor industry expect that AMD could double its market share in 2021
AMD has launched a wide distribution in Intel
AMD has finally given investors a glimpse into its third-generation EPYC server processor – called “Milan” – based on the Zen 3 microarchitecture. AMD is about to deliver another blow to Intel.
AMD showcased two CES processors in Milan, prompting them to run a weather simulation, pitting them against the Intel Xeon Gold 6258R. Milan was 68% faster than the Xeon processor in single-socket performance, and also took the prize in two-socket performance, where it was 46% faster.
Investors should accept these results with a certain amount of salt, as they come from the company and not an independent third party. In addition, the CES event was only a preview, not a real-world test. It would be wise to wait and see what independent testers will say about CPU comparative speeds once Milans launches and AMD’s claims can be verified.
But it won’t be surprising to see that these upcoming AMD server chips beat Intel by a convenient margin for a few simple reasons. First, AMD’s Zen 3 microarchitecture has helped the chipmaker achieve 19% IPC (cycle instructions) gains in desktop chips over the previous architecture. Simply put, chips based on AMD’s new platform can perform multiple tasks in a single cycle due to an advanced manufacturing process.
This brings us to the second reason why AMD may drive Intel back into servers this year. The Milan chips are based on a 7-nanometer (nm) production node, and although this is the same as the previous generation of chips in Rome, the Zen 3 microarchitecture has certain improvements in heat management and a unified cache to eliminate latency. This allows the new chips to perform better than the previous generation and blow Intel’s offerings out of the water, as the Xeon AMD processor faces it in a preview built using a lower 14nm process.
Intel is trying to regain some of the land it lost to AMD with its 10-nanometer Xeon scalable processors, which are already in production. Chipzilla will begin increasing the volume of these chips this quarter. But it remains to be seen how well this will do, given that AMD has already refined its 7nm process with the third-generation EPYC Milan chips, which are expected to launch this quarter.
Huge financial gains in the cards
If AMD’s new chips are in line with its claims and as a result it attracts more of Intel’s market this year, it could add billions of dollars to its data center market revenue.
The chipmaker seemed about to raise $ 1.5 billion from the data center business in 2020, after generating approximately $ 1 billion from that segment a year earlier. AMD estimates that the size of the server processor market could reach $ 19 billion by 2023. The share of 20% of this would amount to $ 3.8 billion, which suggests that the revenues of the data center of AMD could increase almost four times compared to its level in 2019 and more than twice its 2020 mark.
But AMD could also move things around and take an even bigger share of the server processor market in the next two years, as it is expected to move to the 5-nanometer Zen 4 microarchitecture next year. This can certainly help him bridge the gap with Intel. So AMD can continue to make big money in the data center market by taking away market share from Intel. This is another reason for investors to buy this biggest growth, which has other solid catalysts.