AMD To End Intel’s Monopoly Of The Data Center Business With Their Monstrous Server CPUs

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Advanced Micro Devices Inc. (NASDAQ:AMD) recently made some significant announcements at Computex 2017, especially regarding their upcoming line of EPYC server CPUs. AMD CEO Lisa Su said that the EPYC server CPU family would launch on June 20, with production being ramped up over the next few quarters. EPYC will provide servers and cloud/on-premise data centers with 45% more cores, 122% more memory bandwidth, 60% more I/O capabilities compared to current offerings.

Offering up to 32 physical cores and 64 threads, EPYC beats Intel’s current Xeon range based on Skylake and Broadwell architectures by a fair margin in terms of specs. It features higher clock speeds, more gigabytes per socket and more PCIe 3.0 lanes (up to 120 for dual sockets). These features mean that EPYC will excel in memory bound workloads and virtualized compute workloads.

Headlining the stack will be the Ryzen based Threadripper CPU, a 16 core/32 thread behemoth. It features quad channel memory and 64 PCIe 3.0 lanes for connectivity. As with the recent launch of Ryzen 7 and Ryzen 5 consumer line of CPUs, AMD is expected to undercut Intel Corporation (NASDAQ:INTC) on price severely. The Ryzen 5 flagship – R5 1600x features 6 cores/12 threads retails at a $249 price point. In contrast, the Intel equivalent i7 6800K retails for

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In contrast, the Intel equivalent i7 6800K retails for ~$440. Similarly, AMD’s Ryzen 7 flagship R7 1800x features 8 cores/16 threads, matching Intel’s i7 6900k. However, AMD’s offering retails for less than half the price at $500 compared to $1000+. This aggressive pricing led to AMD recapturing nearly 2.2% of the consumer CPU market share back from Intel in Q1 2017.

If similar pricing strategy continues, we can expect EPYC to be significantly cheaper than Intel’s current offerings. Intel has had a near monopoly on the data center business, with a whopping 99% market share! This amounted to around $17.2 billion in revenue in 2016 alone. With their EPYC line of CPUs, AMD is hoping to tap into the lucrative, and high-margin server CPU space. According to Lisa Su, AMD has set a target to capture 10% of the data center business at Intel’s expense. If they succeed in doing so, AMD would add nearly $1.7 billion in revenue to their yearly statement.

Of course, this is not something Intel will want to allow to happen. Intel is gearing up to release their new enthusiast x299 platform later this year. The Kabylake-X and Skylake-X platform will be headlined by the new Core i9-7980XE, featuring 18 cores/36 threads!

AMD is in a precarious position right now. Its future success will depend not only on the success of Ryzen but also of its EPYC server CPUs, Ryzen Mobile for laptops and its upcoming Vega GPU architecture. If they manage to do this, they may be able to reverse the significant losses they have been operating on in recent years ($497 million in 2016).

However, AMD is almost certain to undercut Intel on pricing, and that may be enough to snatch a portion of the server CPU market from Intel. This could be the stimulus they need to become legitimate contenders in the market once again.

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