Advanced Micro Devices' (AMD 2.44%) plans to make progress in the data center space got a boost recently when the company announced major partnerships in China. The chipmaker's EPYC family of data center CPUs could be deployed by the likes of Tencent and JD.com, in association with data center infrastructure providers Lenovo and Sugon.
This is great news for shareholders, as the company has already racked up an impressive ecosystem of original equipment manufacturers (OEMs) and cloud service providers (CSPs) for the EPYC family. For instance, the likes of Acer, Dell, Asus, Gigabyte, and others have already committed to AMD for its new chip platform, setting it on its way to tap a market that could be worth $16 billion in 2020, according to the company's internal estimates.
Image Source: AMD
Chinese players in particular could be crucial to AMD's aspiration of becoming a major player in the industry, which is why its recent deals will play a major role in growing the data center business over the long run.
China's data center market set for rapid growth
Research firm TechNavio forecasts that China's data center market will register annual growth of 13% from 2016 to 2020, thanks to the growing demand for public cloud storage. Currently, China's data center infrastructure market is undersupplied -- demand has boomed on the back of data-intensive applications such as the Internet of Things.
As a result, Chinese data centers need scalable platforms that can provide the necessary density, power, and storage to meet the evolving needs of businesses in the country. Currently, the country's data centers aren't up to par when compared to the global market. This makes it all the more important for cloud service providers to deploy better infrastructure, since China's data traffic will take off remarkably in the next few years, thanks to the addition of 440 million mobile broadband subscriptions.
This is where AMD steps in with its EPYC line of chips, looking to make the most of the huge opportunity that China's data center market could provide.
AMD claims to deliver EPYC performance
The chipmaker believes that EPYC is the answer to the problems of cost-effective scalability and performance. In fact, AMD has openly claimed that the EPYC server chips won't be held back by the constraints of Intel's Moore's Law.
Additionally, internal tests performed by AMD claim that EPYC chips can outperform their Intel counterparts quite significantly while lowering operating costs by as much as 30% due to lower power consumption. AMD explains that the performance gains are a result of the smaller form factor and the new architecture, known as Infinity Fabric, of the EPYC chips, which leads to a superior product.
Of course, the reliability of these internal tests can only be confirmed by independent third parties, but it looks like Chinese data center companies have bought into AMD's claims already. At the China EPYC Technology Summit held late last month, AMD listed 20 names (including CSPs, hardware, and software providers) that have committed to the EPYC chips.
This can be considered quite impressive for a new product and should give AMD a lot of confidence in its goal of breaking Intel's monopoly in the x86 server chip market. In fact, Intel currently controls 99% of this market, pulling in revenue of over $17 billion from this business last year.
Therefore, AMD's data center revenue could get a nice boost even if it takes just a small bite from Intel's plate. This is where the EPYC chips and growth in the Chinese market will be essential.
