Partners: Intel Still Strong Despite 7nm Delays, AMD Gains
While Intel’s recently disclosed 7nm delays prompted a nosedive in the chipmaker’s stock price—and an opposite reaction for rival AMD—solution providers say the impact of its 7nm struggles on its future isn’t as clear cut as the market reaction would have one believe. ‘Challenges ahead? Yeah. Are they going to lose some market share? Probably. But are they going to get severely damaged by this whole fiasco? I don‘t think so,’ one partner says.
When Intel disclosed new manufacturing problems in late July that will cause a six-month delay in the launch of 7-nanometer products, the market acted swiftly. The semiconductor giant‘s stock price fell 16 percent the next day while its CPU rival, AMD, gained nearly just as much in its share price.
However, to solution providers that partner with both chipmakers, even the ones bullish on AMD‘s prospects in servers and PCs, the impact of Intel’s 7nm struggles on its future isn’t as clear cut as the market reaction would have one believe, and there are some big reasons to have confidence in Intel’s standing in the space: the company’s incumbency in the market, its vast sales and marketing resources, and its long history of support for partners.
“I feel like some parts of the market are behaving like they’ve totally lost faith, but some of our biggest customers have not,” said Eliot Eshelman, vice president of strategic accounts and high-performance computing initiatives at Microway, a Plymouth, Mass.-based systems integrator that sells HPC systems to universities, government agencies and manufacturers, among other verticals.
But partners also said Intel‘s newly disclosed manufacturing issues will likely give AMD another boost as the company has proven the performance and efficiency benefits of moving to its own 7nm architecture, which began last year as Intel debuted its first batch of 10nm processors for volume shipments after years of delays in the manufacturing process.
At issue is Intel‘s ability to make chips with greater transistor density, which can translate into improved performance and efficiency. But while the company’s manufacturing capabilities have historically been a strength, the company has experienced manufacturing issues in recent years, most recently with 10nm and now 7nm, that have cleared the way for AMD to lead in the transistor shrink race for x86 CPUs.
Intel has previously said its 10nm node is comparable to TSMC‘s 7nm node, which is being used by AMD. But even then, the company has only been able to get ahead of AMD’s 7nm with its 10nm in one segment—laptops—while falling behind by more than a year in servers and likely two years in desktops based on its most recent road map update.
And while Intel plans to debut a second-generation 10nm mobile processor lineup soon and begin shipments of its 10nm Ice Lake server chips by the end of the year, the company has continued to rely on its older 14nm manufacturing process for most of its desktop and server processors on the market as well as some new mobile processors. To advance the performance and efficiency of Intel‘s chips independent of its manufacturing capabilities, the company said it will leverage advances in design methodologies like die disaggregation and advanced packaging.
“We will continue to invest in our future process technology road map, but we will be pragmatic and objective in deploying the process technology that delivers the most predictability and performance for our customers, whether that be on our process, external foundry process, or a combination of both,” Intel CEO Bob Swan said on the company‘s July 23 earnings call.
An Intel spokesperson declined to comment on this story and pointed to Swan‘s recent remarks during the earnings call on how the company plans to navigate any further manufacturing issues.
Intel's Incumbency Helps Sales Surge Continue
Eshelman said delays can be frustrating for customers, particularly for those who are ready to refresh their systems, but Intel continues to hold a lot of influence within Microway‘s customer base, some of whom are “very dependent on Intel technology” and “aren’t even considering an alternative.”
“Intel‘s still winning the majority of the projects for us,” he said. ”I like working with AMD, and their technology is very compelling. But I think there maybe are still some challenges for them. Some of it’s just a challenge of incumbency, and you have to prove to someone that’s very comfortable with Intel there are other options.”
Intel‘s staying power was represented in its recent second-quarter financial results, which saw a 20 percent year-over-year increase in revenue to $19.7 billion. The main drivers of that growth were the Data Center Group, which grew 43 percent to $7.1 billion, thanks to strong demand from cloud providers, communications service providers and enterprises; and the Client Computing Group, which grew 7 percent to $9.5 billion, driven by a pandemic-fueled surge of laptop sales.
That growth came in for Intel‘s two biggest businesses, PC and server processors, even as the company relies on an advanced version of its six-year-old 14nm process for most of its CPUs. Meanwhile, AMD’s new 7nm chips have been on the market for months—nearly a year for its server and desktop variants.
Eshelman said one of the benefits of Intel‘s incumbent position comes down to risk aversion: Organizations know they can rely on Intel processors to perform well on a wide variety of applications.
The challenge some customers face with AMD, according to Eshelman, is optimization. He pointed to how Intel‘s MKL library is baked into many commercial HPC products as an example and said while it doesn’t “intentionally slow down” on EPYC, it’s also “pretty clear” MKL doesn’t go out of its ”way to run efficiently.” That means extra work may be required when using EPYC processors in these cases.
“The argument is anything that runs on an Intel will run on AMD, [but] I have seen tweaks are needed sometimes to make it run right on an AMD, where it just runs out of the box on Intel,” he said while adding that overall runtimes for EPYC were “roughly in line” with Intel Xeon processors.
An AMD spokesperson told CRN the company provides technical support for customers who need it while adding that the chipmaker has achieved several world records for HPC applications.
But optimization issues aside, another hurdle for AMD is the investment it takes to validate new server platforms, according to Eshelman.
“Evaluating a new technology takes time and resources, and some people don‘t have that time,” he said.
Wallace Santos, CEO of Maingear, a Kenilworth, N.J.-based PC builder for the enthusiast market, said despite AMD‘s new performance gains with 7nm CPUs, Intel still has a lot of “brand loyalty,” which is reflected by the fact that his Intel-based PC sales have doubled this year so far.
“Challenges ahead? Yeah. Are they going to lose some market share? Probably. But are they going to get severely damaged by this whole fiasco? I don‘t think so,” he said. “Obviously this only goes so far, but you can’t forget they have a really, really amazing sales team [and] business development team. These guys are like a well-oiled machine.”
Santos said Intel‘s strengths also include engineering and design resources for partners, which Maingear used to create its Element line of high-performance gaming laptops.
“We worked on this project together, and it‘s delivering on the sales side. We have a good notebook business now because of that product,” he said.
Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based distributor, said Intel‘s other major advantage is its comprehensive programs and support for partners. Intel is in the process of merging multiple partner programs into one into its new Intel Partner Alliance, which is set to launch in the fourth quarter. Key parts of the program, like new training and collaboration tools, are already available.
“For resellers in the channel, there are a lot of other things to factor into it: the support that they get, the programs and all the other things that are involved when you‘re dealing with a manufacturer,” he said.
AMD Gains Market Share With 7nm Processors
While Intel has continued to drive strong sales for its processors, the company has lost market share to AMD, which has reported gains across x86 segments for desktops, laptops and servers as its latest 7nm processors gain wider support from OEMs and cloud service providers.
Mercury Research, which tracks x86 processor shipments, reported that AMD‘s overall share of the x86 processor market reached 18.3 percent in the second quarter against Intel, growing 1.2 points from the same period last year and 3.5 points from the previous quarter. The research firm said the only other x86 competitor, Via Technologies, rounded down to zero in the overall market.
Most notably, AMD‘s share for laptop processors reached a new all-time high of 19.9 percent, thanks in part to strong growth of its new Ryzen 4000 mobile processors—which are expected to go into more than 100 laptop designs this year—according to Mercury Research. That meant AMD‘s laptop share grew 5.8 points year over year and 2.9 points from the previous quarter.
During AMD‘s second-quarter earnings, CEO Lisa Su said the company believes AMD reached double-digit market share in the server market against Intel due to “broad, high-volume adoption” of its EPYC processors, which are based on a “server-specific total addressable market of roughly 20 million CPUs” for 2020 based on IDC research. Dean McCarron, president of Mercury Research, said in the larger market for servers, AMD’s server share was 5.8 percent since AMD’s figure likely excludes a “large part of the single-socket market that isn’t data center,” such as servers for storage and communications.
That high-volume adoption of EPYC has been driven by growing acceptance among OEMs like Dell Technologies, Hewlett Packard Enterprise and Lenovo as well as cloud service providers like Amazon Web Services, Microsoft Azure and Google Cloud. For instance, HPE said AMD‘s EPYC Rome processors are allowing the company to claim major price-performance advantages in its SimpliVity and Nimble Storage dHCI platforms. And Google Cloud recently launched Confidential VMs that only run on EPYC.
As for AMD‘s road map, Su said the company’s launch plans for next-generation processors remain on track, which includes next-generation 7nm Zen 3 processors for desktops and servers arriving in the second half of this year. The company has previously said its 5nm Zen 4 architecture is on track for launch in 2022. Intel, on the other hand, said it may now release its first 7nm CPU—equivalent to TSMC’s 5nm node used by AMD—in late 2022 or early 2023 due to the recently disclosed delay.
“When we talk to our customers, it‘s about ensuring that they understand we have a consistent road map that is pushing the leading edge of performance and ensuring that we deliver the performance improvements that we promised,” Su said during AMD‘s recent earnings call.
An executive at a solution provider, who asked to not be identified, said while Intel is a good partner, the company‘s continued manufacturing problems threaten its ability to counter AMD’s growing momentum. The higher core counts of AMD’s EPYC processors have already given the company a performance-per-dollar advantage against Intel’s Xeon chips across multiple areas, the executive said, and it could soon close, or at least narrow, the gap on frequency with its upcoming Zen 3 processors.
“Generally, core-to-core, Intel still pulls ahead, and they have for quite a while, but that may not last here when Zen 3 comes out,” the executive said.
While the new 7nm issues are putting Intel “in a scramble position,” the executive doesn’t think the problems will last forever.
“We’ve seen Intel scramble before and come back, so I wouldn’t count them out,” the executive said.
Randy Copeland, CEO of Velocity Micro, a Richmond, Va.-based PC builder for the enthusiast and commercial markets, said concerns about Intel maintaining frequency advantage over AMD extends to the client side. If AMD manages to catch up on speed with the next batch of processors, he added, “it‘s going to be a real challenge for Intel.”
“AMD is keenly aware that Intel‘s advantage right now is in frequency. And I know that they are targeting frequency with every last ounce of energy,” he said. “Going from 7nm down to 5nm, all those things, they know that frequency now is what they’ve got to have, so they’ve been designing for it for probably a couple years now.”
To keep up with AMD, Intel will have to either find ways to squeeze more performance out of its 14nm and future 10nm processors or lower prices, Copeland said. Either way, he added, it will ultimately benefit partners and customers because the competition will result in better value propositions.
“That‘s always great for customers, for end users, which means it’s good for partners because we benefit when customers are ready to pull the trigger on the next technology. And if it’s a better value, that makes the sale even easier for us,” he said.
Eshelman, the executive at Microway, said while the server validation cycle can put AMD at a disadvantage due to customer risk aversion, any delay of next-generation products from Intel could give customers more time to consider AMD processors as a serious alternative.
“Adopting a new technology does take some time, and if Intel delays, their competitors have more time to seek that adoption while Intel is standing still,” he said.
One of the big things AMD‘s 7nm EPYC processors have going for them is PCIe 4.0 connectivity support for high throughput, Eshelman said, which is significant because it means AMD is currently the only CPU vendor that can support PCIe 4.0 parts like Nvidia's new A100 GPU for artificial intelligence workloads.
“If you want a PCI Express 4.0 platform to drive it, it‘s going to be AMD,” he said. “How long is it going to remain AMD is what we’re looking at right now—until Intel has a platform that supports it.”
Santos, of Maingear, said AMD has done a great job on the marketing side with its Ryzen brand for high-performance consumer processors, which he thinks Intel should learn from.
“What I keep on telling Intel is, pay attention to what [AMD] did with their brand reset. Pay attention to what they did with Ryzen,” he said. “Ryzen speaks to the enthusiasts from the branding, from the naming conventions, from everything. It‘s fresh. It’s new. It makes me want it.”
Like Copeland, Santos said AMD’s recent advances and market-share gains are causing Intel to rethink its strategy and find new ways to get back to the top, performance- and architecture-wise. It’s a competitive dynamic that has already played out multiple times between the two companies, he added, like when Intel released its Core 2 Duo processors in response to AMD’s Athlon 64 products.
“I think what AMD did to Intel is good for even Intel. Overall, in the long term, it‘s going to spark innovation,” he said.