When Advanced Micro Devices (AMD -1.35%) launched its Ryzen 5000 series of desktop CPUs toward the end of 2020, budget chips were conspicuously absent. The lowest-priced chip available at the time was the $299 Ryzen 5 5600X. Prices have come down since then, but anyone looking for a sub-$200 processor had to turn to older products.
Intel (INTC 0.58%) took advantage of this situation with its Alder Lake chips, the bulk of which launched earlier this year. Not only did Intel make strides in the high end of the market, but the company also offered multiple options below $200. Reviewers at Anandtech found that the $143 i3-12300 from Intel beat out AMD's high-end CPUs in single-threaded performance, making it a potent option for gamers on a budget.
Turning to Zen 3
AMD isn't expected to launch chips based on its next-gen Zen 4 architecture until later this year, and when it does there's no guarantee that budget chips will be part of the lineup. AMD depends on Taiwan Semiconductor for manufacturing, along with scores of other fabless semiconductor companies, so the company is limited by how much advanced manufacturing capacity it can secure. Intel doesn't have that problem since it manufactures most of its own chips.
By not launching budget CPUs, users of AMD's older budget processors haven't had a viable upgrade path. Someone who's running an inexpensive Zen 2 chip from a few years ago and wants to upgrade without breaking the bank hasn't had a good option on the AMD side.
AMD is rectifying this situation by turning to its aging Zen 3 architecture. The company is launching two new chips, the $159 Ryzen 5500 and the $199 Ryzen 5600, that finally bring Zen 3 to the sub-$200 market.
For those running older AMD processors looking for a performance bump, these chips are great options. AMD has been using its AM4 socket since 2016. With some exceptions, AMD chips going back multiple generations can simply be replaced with these new 5000-series processors. Switching to an Alder Lake chip from Intel requires a new motherboard, so the switching costs are higher than just the price of the processor itself.
Beyond upgraders, though, AMD's new budget chips are a tough sell. They don't beat out comparable Alder Lake chips in terms of performance, and AMD's AM4 platform is not future proof. AMD is moving to its new AM5 platform with the Zen 4 launch, for one. And AM4 doesn't support faster DDR5 memory, among other things.
Better late than never, but AMD could have locked down the budget category had these chips launched a year ago. Instead, these new chips are mostly a way to minimize the number of cost-conscious customers jumping ship to Intel.
The tides are shifting
The story in the CPU market over the past few years has been a resurgent AMD taking market share from a flat-footed Intel. AMD was able to leverage industry-leading manufacturing tech from TSMC to pull ahead of Intel, which struggled with manufacturing delays for years.
That story now appears to be changing. Intel has aggressively priced its Alder Lake chips, making them highly competitive across the entire price spectrum. It's now AMD that's scrambling to plug gaps in its product line.
The launch of Zen 4 later this year will change the competitive landscape again, although Intel is planning to follow up Alder Lake with Raptor Lake before 2022 comes to a close. Intel has an aggressive roadmap. The company is no longer sitting idly by as AMD steals market share.
AMD's new budget chips play an important role by providing a viable upgrade path. But they don't change the equation much for anyone building a new budget PC.