Is AMD growing on the back of Intel’s troubles?
Previously, we saw that the 2019 State of Servers survey by Spiceworks showed that Advanced Micro Devices’ (AMD) EPYC server CPUs (central processing units) are being largely adopted by enterprises. AMD’s EPYC server CPUs offer a better value proposition than Intel (INTC).
Future Tech Enterprise, an IT solutions provider and Intel’s partner, thinks that even though the survey shows that AMD’s server CPUs are popular among enterprises, it will likely face challenges in this space. According to CRN, citing Future Tech Enterprise’ CEO Bob Venero, Intel is facing a CPU shortage. Some of the impact is also felt by server CPUs with the lead times extending by weeks. The supply shortages have made customers open to AMD.
AMD hasn’t proved its worth
Venero stated that AMD hasn’t proved its worth in the server market. The company’s last attempt with its now-defunct Opteron CPU in 2003 didn’t gain market share. He stated that customers migrated to Opteron server CPUs, which offered cost savings. However, the CPU had issues running software, which was never the case with Intel’s CPUs.
However, Opteron helped AMD gain 20%–25% server CPU market share in mid-2006. Intel was struggling with Prescott and Smithfield. AMD’s Opteron offered additional scaling potential compared to Intel’s Xeon CPUs. Opteron took more than three years to make its mark. Intel overtook AMD and reduced the latter’s market share to less than 1% by 2015.
Intel is struggling with a 10-nanometer process node that’s helping AMD gain market share. Venero said that it remains to be seen if AMD’s new EPYC server CPUs can run applications as smoothly as Intel’s CPUs. We’ll have to see if the risk is worth the “cost delta” offered by AMD’s CPUs.
What does Spiceworks’ survey mean to AMD investors?
Spiceworks’ survey tells AMD’s investors that its higher-margin server CPUs are creating a buzz in the market. However, the survey only takes into account the enterprise customers. The survey leaves out cloud service providers, which drive volume sales in the data center market. AMD’s overall data center revenues might grow to profitable levels.
Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!
