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AMD Fixing Its Data Center Processor Business Strategy


Aug. 19 2019, Updated 3:46 p.m. ET

At the end of 2006, Advanced Micro Devices (AMD) held about 24% of the global data center processor market. However, AMD lost a lot of ground in the decade that followed, with its market share contracting to only 1.0% in the first quarter of 2018. Intel (INTC) currently dominates the data center processor market.

If inconsistent product rollout is what caused AMD to lose ground, its current management is out to fix that problem. In an interview with CNBC after AMD’s second-quarter release last month, CEO Lisa Su talked about her team’s focus on delivering on product commitments. She also discussed how AMD has been the first to bring a 7nm (nanometer) process to market. Intel’s 7nm data center processor isn’t set for shipment until 2021, TechRadar reports.

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Google and Twitter on board for AMD’s EPYC Rome data center processor

AMD has released several new data center processors. This month, for instance, the company introduced the second generation of its EPYC data center processor, Rome.

Google (GOOGL) and Twitter (TWTR) are already on board for the Rome data center processor. AMD also counts Microsoft (MSFT) and Amazon (AMZN) among its data center customers. Baidu (BIDU) uses EPYC chips in its data centers as well.

Out to grab market share

While Intel still dominates the data center processor market, AMD is steadily gaining ground. In last year’s second quarter, the company’s market share jumped sequentially, from 1.0% to 1.4%. From there, it expanded to 3.4% in this year’s second quarter.

We believe AMD still has huge potential to grow its market share, given that, at one point, it controlled more than 20% of the data center processor market. It’s also very encouraging that its current leadership seems to be out to fix the problems that caused the company to lose big to Intel years ago.

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AMD is using a multipronged approach to gain market share. In addition to trying to surpass Intel in manufacturing process technology, it seems to be waging a price war. The company has priced its top-of-the-range EPYC processor at under $7,000, while Intel’s comparable processor costs more than $13,000.

What does the data center chip market mean to AMD?

Allied Market Research reports the global market was worth $7.7 billion in 2017, and expects it to top $15.6 billion by 2025. Growing demand for cloud computing services is fueling data center construction and chip demand, creating business for both AMD and Intel.


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