from the trying-to-turn-the-tide dept.
Two stories regarding chipmaker AMD in the news today. First, they missed their Q1 earnings target, after reporting losses of $180 million, or $0.23/share:
Revenue landed at $1.03 billion, down 26 percent on the year-ago quarter (statement) ...Non-GAAP earnings were a loss of 9 cents per share ...Wall Street was expecting a loss of 5 cents per share on revenue on $1.05 billion.
"Under the backdrop of a challenging PC environment, we are focused on improving our near-term financial results and delivering a stronger second half of the year based on completing our work to rebalance channel inventories and shipping strong new products," [said AMD chief executive Lisa Su].
Secondly, AMD is withdrawing from the high-density server business, reversing a strategy that began 3 years ago with the acquisition of SeaMicro:
AMD paid $334 million to buy SeaMicro, which developed a new type of high-density server aimed at large-scale cloud and Internet service providers ...The purchase was made under former CEO Rory Read, and has now been reversed by Lisa Su, who took over the CEO job last October ...AMD said the move is part of its effort to "simplify and sharpen" its investment focus. As a result, it is taking a charge of $75 million.
AMD still sees growth potential in the server market, but not from selling complete systems. It's returned its focus to x86 chips and to the development of its first ARM server processor, code-named Seattle.
Intel has enjoyed a virtual monopoly in the server CPU arena for some time. However, AMD's EPYC series of processors, based on the latest iteration of Zen architecture, may change that. The first generation of these chipsets, Naples, managed to reduce Intel's market share to 99% shortly after its launch. This may sound less than impressive, but in a billion-dollar industry, it was possibly quite valuable to AMD.
The latest report on the server market by DRAMeXchange indicates that Intel's share is down to 98% by now. This represents a 100% improvement for AMD. Furthermore, the analysts estimate that the release of EPYC Rome-based silicon will result in further gains. They will ultimately result in a total market share of 5% for these CPUs by the end of 2019.
Intel is keeping AMD under 15%. For now:
Now it's easy to tell that Intel will still remain the dominant player in the market, retaining a 90-95% market share lead over AMD but Intel's Ex-CEO, Brian Krzanich, stated that his company wouldn't want AMD capturing 15-20% server market share. In fact, at the pace at which AMD is gaining their server market share, 15% doesn't really feel like a far cry from now.
[...] Looking at the market penetration rate, Intel's Purley platform has been adopted by 60% users in the server space and is expected to reach 65% in the coming year. On the other hand, AMD's EPYC Naples platform has been adopted by 70% and considering that AMD is keeping socket longevity intact with Rome, we can see the adoption rate further expanding after 7nm chips launch.
Previously: AMD Misses Q1 Earnings Target; Withdraws from High-Density Server Market
AMD Ratcheting Up the Pressure on Intel
More on AMD's Licensing of Epyc Server Chips to Chinese Companies
AMD's server marketshare hits 1% for the first time in 4 years