While Advanced Micro Devices (AMD +6.88%) is facing challenges in the PC CPU market, with weak demand for PCs and tough competition from Intel (INTC +7.76%) hurting sales, the server CPU market is a different story. Intel has long dominated this lucrative market, but the company has faced severe execution problems over the past couple of years. Those missteps have opened the door for AMD, and AMD has certainly taken advantage.
Intel is finally set to launch its heavily delayed Sapphire Rapids server CPUs in January, but the product line is so late that it's unlikely to dramatically change the balance of power in the server CPU market. AMD should be in good shape for much of 2023.
NASDAQ: AMD
Key Data Points
Winning with Genoa
Reviewers at Tom's Hardware called AMD's latest Genoa server CPUs a "slam dunk" in November. The chips use a 5-nanometer (nm) manufacturing process, enabling them to deliver huge gains in efficiency and performance. In fact, Tom's Hardware found that AMD's Genoa chips beat Intel badly in terms of total cost of ownership, an important metric for power-hungry chips running 24/7 in data centers.
The size of the performance and efficiency gap between AMD's Genoa and Intel's server lineup is partly the result of huge delays on Intel's part. Intel's Sapphire Rapids server CPUs, which are now officially set to launch on Jan. 10, were originally supposed to launch in late 2021. This delay of more than a year has exaggerated AMD's advantages.
Intel ran into all sorts of problems with Sapphire Rapids, partly because the product line introduces a raft of new features and functionalities. Sapphire Rapids will ship with four special-purpose accelerators built in, ramping up the complexity but positioning the chips to perform well for a wide variety of workloads. One such workload is AI inference, which Sapphire Rapids can accelerate without requiring a GPU or other stand-alone accelerator.
Intel reportedly had to fix some 500 hardware bugs over the course of developing Sapphire Rapids, and the chips required 12 revisions to get to the finish line. Each of those revisions cost tens of millions of dollars and pushed back the launch date, leading Intel to where it is today.
While we don't have third-party performance figures for Sapphire Rapids yet, given how late the chips are to the party, it's unlikely they'll blow AMD's Genoa out of the water for general-purpose workloads. Specialty workloads that can take advantage of those built-in accelerators are a different story, but Genoa seems likely to hold on to the performance crown for the time being.
Intel is getting aggressive
While Sapphire Rapids clogged up the server CPU pipeline for Intel, the company is planning a barrage of product launches over the next two years. Before 2023 ends, the company expects to launch the successor to Sapphire Rapids, currently called Emerald Rapids. Emerald Rapids will be built on the same Intel 7 node as Sapphire Rapids, but the upcoming chips are rumored to feature a higher core count and potentially a newer microarchitecture.
NASDAQ: INTC
Key Data Points
In 2024, Intel is shooting to launch two new lines of server CPUs. The first, Granite Rapids, will be the successor to Emerald Rapids. Granite Rapids will be built on Intel's more advanced Intel 3 node, assuming that node is ready for mass production by then. While Emerald Rapids will likely bring modest improvements, Granite Rapids represents Intel's best chance to steal the performance crown back from AMD.
In addition to Granite Rapids, Intel plans to roll out the efficiency-minded Sierra Forest processor family in 2024. These chips will feature less powerful cores, instead focusing on higher core counts and maximizing performance per watt. For certain types of cloud-based workloads, that will be a potent combination.
Of course, AMD won't be sitting still. Specialized variants of its current-gen server processors are coming next, including the ultra-powerful 128-core Bergamo chip aimed at heavy-duty cloud workloads. By the end of 2024, AMD expects to have rolled out its next-gen Turin family of server CPUs, which will likely go head-to-head with Intel's Granite Rapids.
While 2024 is shaping up to be an interesting and competitive year in the server CPU market, AMD is in a great position going into 2023. Sapphire Rapids will close the gap for Intel, but the litany of problems that have bogged down development doesn't inspire much confidence. AMD should have no trouble winning server CPU market share from Intel throughout 2023, although a potential slowdown in the cloud computing market could limit sales growth.
