Advanced Micro Devices (NASDAQ:AMD) CEO Lisa Su said earlier this year that the company plans to achieve "mid-single-digit server unit share" by the end of 2018. But the latest numbers show that AMD is still some way off that target.

The chipmaker's server chip market share crossed 1% at the end of the second quarter. Mercury Research estimates that AMD now commands 1.3% of the server market as compared to just 0.5% earlier. This might not look like a big deal in percentage terms, but the market share gain added nearly $60 million to AMD coffers, according to Mercury's estimates, as reported by

Using these figures, assuming that AMD manages to hit mid-single digits in the server market by the end of the year, its top line could jump by almost $300 million in the second half. So the server market alone could boost AMD's revenue by 10% in the second half of 2018 as compared to the prior-year period. This, however, could be just the beginning, as AMD looks all set to mint billions from the server space thanks to the rising popularity of its EPYC chips.

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EPYC makes a mark

AMD had made it clear from day one that it was going after Intel's (NASDAQ:INTC) server monopoly, touting the superior performance of its chips before they were officially launched last year. Once EPYC hit the market, there was no looking back, as server OEMs (original equipment manufacturers) and cloud computing specialists were quick to deploy it in their systems.

Not surprisingly, AMD has been able to cross the 1%-market-share mark in servers for the first time in four years. What's more, consumers are still lining up for these chips even though an updated version is set to come out in 2019. GIGABYTE, for instance, recently added three new GPU (graphics processing unit) and storage servers based on EPYC.

GIGABYTE believes that EPYC's single-socket server chips help save processor software licensing costs by displacing dual-socket servers thanks to their computing power. EPYC chips pack 32 cores and 64 threads, making them powerful enough to be as effective as a dual-socket server. Now, AMD is going to push the envelope further with its next-generation server chips that will be based on more efficient 7-nanometer Zen 2 architecture.

AMD's current EPYC lineup is based on the 14-nm Zen architecture. So the company could deliver massive improvements with the next-generation offering because it is based on a smaller node process, enabling AMD to lower the cost of manufacturing chips and improve the power efficiency. In fact, AMD will reportedly launch a chip that packs 48 cores thanks to the advanced manufacturing process, which will allow it to steal a march over Intel's current flagship server processor.

Additionally, Intel will find it difficult to get back at AMD because it is currently stuck with an older process generation. In fact, Chipzilla will fall behind on the technology curve once the Zen 2–based server chips hit the market sometime next year, as Intel's competing chips based on the 10-nm process probably won't see the light of day until 2020.

Big opportunity here

Chipzilla fears that AMD could carve out a much bigger share of the server chip market. In an interview earlier this year with Instinet analyst Romit Shah, then-Intel CEO Brian Krzanich remarked that his aim was to keep AMD from capturing 15% to 20% of the server market.

The chip giant had also slashed its guidance for server chip sales in the second half of 2018 on account of increased competition. So it shouldn't be long before AMD starts getting substantial revenue from the server market by increasing its share of the pie.

Assuming that AMD manages to corner just 10% of the server processor market, it could pull in more than $1.5 billion in annual revenue from this segment, going by Intel's 2017 sales. But it won't be surprising if AMD goes further, as there was a time when it used to control a quarter of the server processor market when it sold the Opteron chips.

In all, the server processor market has the potential to become a multibillion-dollar business for AMD. However, the company needs to ensure that it keeps winning more share from Intel by landing more customers on the back of solid product-development moves.

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