AMD is about to double down on a huge opportunity

Advanced micro-systems (NASDAQ: AMD) has made impressive progress in increasing its sales of server processors and has taken market share to Intel (NASDAQ: INTC) In the process. Its biggest rival still dominates this niche, but things are about to improve for AMD in 2021.

The chipmaker reportedly increased its server market share from 5% to 8% in 2019, and its share reached double-digit percentages in the second quarter of 2020. According to an article in DigiTimes, some semiconductor industry observers expect AMD to double its server market share in 2021 and end the year with 20% of the market. While that’s an ambitious forecast, don’t be surprised to see it come to fruition: AMD is poised to hurt Intel further with its new processors.

Image source: Getty Images.

AMD launches a wide range at Intel

AMD has finally given investors a preview of its third-generation EPYC server processor – dubbed “Milan” – based on the Zen 3 microarchitecture. Although details are sparse as the chipmaker only previewed the new processor at CES 2021, it looks like AMD is about to give Intel another boost.

AMD showed off two processors from Milan at CES by having them run a weather forecast simulation, comparing them to Intel’s Xeon Gold 6258R. The Milan was 68% faster than the Xeon processor in single-socket performance, and also won the award in dual-socket performance, where it was 46% faster.

Investors should take these results with a grain of salt as they come from the company and not from an independent third party. Plus, the CES event was just a preview, not a real-world test. It would be safe to wait and see what independent testers have to say about comparative processor speeds after the launch of the Milans and AMD’s claims can be verified.

But it won’t be surprising to see these upcoming AMD server chips beating Intel’s by a comfortable margin, for a few simple reasons. First, AMD’s Zen 3 microarchitecture helped the chipmaker achieve 19% IPC (instructions per cycle) gains in desktop chips over the previous architecture. To put it more simply, chips based on AMD’s new platform can perform more tasks in one cycle thanks to a refined manufacturing process.

This brings us to the second reason why AMD could hammer Intel into servers yet again this year. The Milan chips are based on a 7 nanometer (nm) manufacturing node, and although it is the same as the previous generation Rome chips, the Zen 3 microarchitecture features some improvements in thermal management and a unified memory cache. to remove latency. This allows the newer chips to perform better than the previous generation and blow Intel’s offerings out of the water as the Xeon AMD processor was opposed in the preview is built using a lower 14nm process.

Intel is trying to reclaim some of the ground it lost to AMD with its 10nm Xeon Scalable processors, which have already entered production. Chipzilla will start the ramp-up of these chips during this quarter. But it remains to be seen how much good that will do, given that AMD has already refined its 7nm process with third-generation EPYC Milan chips, which are expected to launch this quarter.

Huge financial gains in cards

If AMD’s new chips perform according to its claims and hijack the market further from Intel this year, it could add billions of dollars to its revenue from the data center market.

The chipmaker appeared to be on track to squeeze $ 1.5 billion from data center activity in 2020 after generating roughly $ 1 billion from this segment the previous year. AMD estimates that the market size for server processors could reach $ 19 billion by 2023. A 20% share of that amount would rise to $ 3.8 billion, suggesting that data center revenues AMD’s data could in a few years almost quadruple from their 2019 level to more than double its 2020 mark.

But AMD could also speed things up and take an even bigger share of the server processor market over the next couple of years, as it is expected to move to the Zen 4 5nm microarchitecture next year. It could certainly help him widen the gap with Intel. Thus, AMD could continue to win big in the data center market by wresting market share from Intel. This is all the more reason for investors to buy this top growth stock, which has other strong catalysts to boot.