Intel Pulls Out the Big Guns

Shanghai has been Shanghaied. There's no rosier way for an Advanced Micro Devices (NYSE: AMD  ) shareholder to look at today's launch of Intel's (Nasdaq: INTC  ) long-awaited Nehalem chips.

Intel calls the new lineup of server and consumer chips the "most revolutionary server processors since targeting the market with the Pentium Pro processor nearly 15 years ago." The Xeon 5500 series, formerly known as Nehalem, obliterates previous-generation Xeon chips in nearly every benchmark you throw at it. It also makes mincemeat out of AMD's finest Shanghai products under most circumstances.

The chip giant proudly presents eye-popping server benchmarks from launch partners like IBM (NYSE: IBM  ) , Cisco Systems (Nasdaq: CSCO  ) , and Hewlett-Packard (NYSE: HPQ  ) . Third-party testing confirms that Intel now rules the roost however you slice the data: pure performance, performance per watt, performance per invested dollar, it doesn't matter.

So is the processor war over? Did Intel win? No, and not yet.

AMD is certainly down at the moment, but hardly out. Knowing that Intel had Nehalem up its sleeve, AMD has stayed away from speed races recently. Its press releases now focus mainly on graphics products, putting pressure on rival NVIDIA (Nasdaq: NVDA  ) rather than inciting response from Intel. And the company is obviously working on its own next-generation chips, which will be produced at low capital costs by AMD's recently spun off manufacturing arm.

In the meantime, AMD can cling to a few niche markets where it still shows quite a bit of muscle, like eight-processor monster systems, which are some of the biggest beasts Sun Microsystems (Nasdaq: JAVA  ) can produce, and in low-end servers where price cuts on reasonably fast chips can make a difference.

Above all, it's not really a head-to-head battle at the moment. The entire chip market is so beaten down by this recession and the resulting IT budget cutbacks that you can think of Intel and AMD as rivals stuck in the same boat. It makes more sense to simply try growing back the lost total market instead of killing each other over a few points of market share. It's time to bake a bigger pie. Fight over the slices later.

Good showing, Intel. You have done a service to your faithful shareholders and provided a ray of light in an otherwise bleak landscape.

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Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 31, 2009, at 4:27 PM, toddot04 wrote:

    i like

  • Report this Comment On March 31, 2009, at 5:31 PM, SSchlesinger wrote:

    Good article. The thing to keep in mind is that these newer server chips from Intel and AMD come from R&D going back a year or two ago in better financial times. Right now Intel is still cash rich and AMD is a heavily leveraged company. Do you really think AMD is investing into R&D at the pace that Intel is at? What will this do for AMD's future?

    AMD may just have to focus on a future of ATI driven sales, and commodity CPU sales. That's not the the deathmarch for AMD, but as the article alludes to they don't have the stamina anymore to take on Intel.

  • Report this Comment On March 31, 2009, at 7:34 PM, NeverBoard wrote:

    AMD is on very thin ice in a time of wicked heat. Their plans for a new Chip Fab in upstate NY is key to the GlobalFoundries cash infusion by ATIC of Abu Dhabi. INTEL has a solid legal challenge based on a cross-license deal...and if the JV is not seriously altered by May 15, INTEL denies AMD the right to make the x86 chip... the product planned for the NYS Fab. If Abu Dhabi can't fund the plant for the chips they want, they'll want to reduce their $9 billion cash offer to AMD by 2-3 billion. Keep an eye on the calendar. May 15 comes quick up North.

  • Report this Comment On April 01, 2009, at 1:06 AM, TEBuddy wrote:

    So Intel finally caught up with AMD on server cpus, and analysts really needed to yell it at the top of their lungs? Its only been like 5 years since AMD surpassed Intel in this.

    AMD had a significant leg up on previous Xeon anyway, so saying the Nehalem makes mincemeat out of AMD's latest is a little cocky.

    Seeing that Intel is using AMD technology and AMD is using Intel technology there is no way to break their license agreement, Intel wouldnt be able to make any of their new cpus either. It makes no sense and Intel is an idiot for even suggesting that GlobalFoundries isnt a subsidiary, go look up the dang definition.

    I have no doubt the Nehalem chips are faster, since they take AMD's technology and throw 10 times as much R&D at it, using 5 years of AMD experience as testing.

  • Report this Comment On April 01, 2009, at 11:38 AM, markfenix wrote:

    In these tight economic times, a clear-cut winner on value between Intel and AMD could trump brand loyalty as companies are more open-minded to other technologies when it means a better bottom line for them.

    Is Nehalem better than Shanghai, YES.

    Does Nahalem make "mincemeat" out of Shanghai: HARDLY.

    According to INTC "internal" testing their chip averages a 15% increase in comparable processing output - Really?

    I'll be interested to see what third-party testers come up with. Ironically enough, AMD's line-up is slated to average around 15-20% less in price.

    Mincemeat, pfft.

  • Report this Comment On April 01, 2009, at 10:18 PM, TEBuddy wrote:

    Wow, I thought for a second that I posted the last comment by markfenix. Someone else with a brain decided to post, I love it. Not just the Intel mafia.

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