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AMD's EPYC 2 Starts Epic Battle With Intel

Sejuti Banerjea

Advanced Micrro Devices AMD has more than delivered on its promises with the second generation of its EPYC processors (code-named Rome and built on its Zen 2 microarchitecture). At an event announcing the chips, the company claimed world records on a variety of performance metrics including Hadoop RT analytics, Java throughput that it says is 83% better, fluid dynamics that it says is 2X better, and virtualization that it says lowers total cost of ownership by 50%.  Overall, AMD claims 80 world records.

But that isn’t all. What’s more important is that its OEM partners are confirming most of the improvements. So for instance, Hewlett Packard Enterprise HPE and Lenovo agree that it has beaten 37 and 16 world records, respectively. And Twitter TWTR says it has achieved a 25% reduction in the total cost of ownership.

Industry Support

While all of this doesn’t constitute third-party analysis in stringent and varied use cases, there’s enough support from the ecosystem as evidence that the company has made great strides.

So for example, AMD can boast support from cloud service providers like Microsoft’s MSFT Azure and Alphabet’s GOOGL GCP. Google, which is currently using the chips in its own servers like Twitter and the U.S. Air Force, will offer them to GCP customers in the not-too-distant future.

AMD can also claim support from hyperscale and other OEMs like Cray (CRAY), Dell Technologies, HPE, Lenovo, Cisco CSCO and H3C, all of which are sampling the chips.

Independent software vendors like VMware (VMW), Canonical, RedHat and SUSE, original design manufacturers like Gigabyte, Quanta and Supermicro, and independent hardware vendors like Broadcom (AVGO), Micron (MU), Xilinx (XLNX) and Samsung are also on board.

Is All Lost For Intel INTC?

There are a number of factors here.

First, this is the strongest ever push by AMD to take share in the data center and follows inroads it has already made in desktops. It’s heartening to see people gaining confidence in the company’s execution. This is actually the first step in winning over big enterprise customers. For companies deploying really large volumes, there has to be a compelling reason to buy. Particularly since AMD remains focused on optimizing certain workloads and building on its strength. It hasn’t reached the stage where it offers a really broad set of technologies covering all needs. This means that companies essentially need to buy AMD tech and stitch it together with offerings from a range of other players. So technology companies that already employ a large number of technical staff are likely to be its first and most enthusiastic customers. 

Second, AMD needs to devote more resources to sales and marketing. Although it has compelling products now, it still needs to get its story in front of enterprise buyers who are very much accustomed to Intel products. So selling them on its future roadmap will take work. It’s true that with so many leading OEMs supporting it, a certain amount of brand building will happen, but it is likely to take more time and effort to outdo a goliath like Intel, in the areas that it can.

Third, Intel still leads in several important areas, supported by its focus in recent years on developing memory solutions. In the words of semiconductor analyst Patrick Moorhead “Intel will likely have advantages on low latency ML inference workloads that take advantage of Intel's DLBoost instructions and will also look very good in in-memory database workloads utilizing Optane DC.”

Conclusion

The battle has just begun, although it has been brewing over several years as Intel continued to miss its delivery targets and AMD doubled down on improving its technology. AMD looks set to deliver under a very determined CEO and particularly because customers would really like some competition to come in and lower cost. Intel looks to be floundering with leadership challenges. At this point, it does look like it’s advantage AMD, but the competition between the two has several levels and Intel still has some leverage from its product breadth and long-standing relationships.

Recommendations

Both Intel and AMD are Zacks Rank #3 stocks. For other semiconductor plays, you can look to Cirrus Logic, Lattice Semiconductor or Soitec SA, all of which have Zacks Rank #1 (Strong Buy). Or consider the complete list of today’s Zacks #1 Rank stocks here.

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