Summary
- Leaked Intel roadmap suggests that Ice Lake server chip is unlikely to be competitive with AMD Rome.
- AMD Rome will be an easy winner in 2020 against both Intel Cooper Lake and Ice Lake server products.
- AMD prospects continue to make AMD one of the best semiconductor stocks to own for 2020.
- This idea was discussed in more depth with members of my private investing community, Beyond The Hype. Get started today »
Appearances can be deceptive. In Q3, Intel's datacenter business grew by about 26% and Intel (INTC) beat expectations and raised guidance by about $1.5B. Advanced Micro Devices (AMD), on the other hand, barely met expectations and the forward guidance barely hit the median of analyst expectations. With Intel's upside to guidance being nearly as much as AMD's quarterly revenues, it is natural for some investors to conclude that Intel is winning and whatever technical advantage AMD has does not matter much in front of mighty Intel.
Such a conclusion would be very far off the mark. AMD's market share gains against Intel are a grinding process. One may not see big changes initially, but the erosion is relentless. Before long the results start becoming visible and the outcome will be clear to everyone. Take the client x86 business for example; Intel's own disclosures show that client units dropped 10% in Q3 2019 compared to Q3 2018 even as market research sources suggest market grew by about 3%. In other words, Intel may have lost about 13% market share just within the last year. The reason for the market share erosion is not just one product from AMD but a series of leadership products. In this article, we will exclusively discuss the server side of the business.
It is no secret that with Rome introduction, AMD has decisively gone past Intel in server technology. Hopeful Intel investors and customers have been looking for Intel to leapfrog AMD Rome with its Ice Lake products. However, despite Intel demonstrating Ice Lake server chips very early in 2019, there has been very little market talk about this product line. Now, Intel partner ASUS has all but confirmed the uncompetitiveness of Ice Lake at a recent customer seminar.
The slide is telling. Ice Lake, based on Intel 10nm technology, is set for release in Q3 2020 and only has 38 CPU cores per socket compared to AMD Rome's 64 cores. While it is difficult to say affirmatively, Ice Lake server chip appears to be a monolithic design instead of a Rome-like chiplet based design. The lack of chiplet partitioning along with the problematic 10-nm process are the key reasons why Ice Lake has fewer cores per socket than a high-end AMD Rome alternative. What is worse is that, despite fewer cores per socket, Ice Lake is rated at 270W which compares unfavorably to Rome's 225W (AMD recently added a higher wattage HPC specific SKU at 280W but that is a low volume specialty SKU).
Even more dubiously, Intel is displaying a lack of faith in Ice Lake server chips by launching 14nm Cooper Lake server chips in Q2 2020. This Cooper Lake chip family offers up to 48 cores per socket - i.e. 10 more cores than what "leading edge" 10nm Ice Lake offers. Due to the use of older 14nm process, Cooper Lake burns even more power at a 300W rating. Notably, missing from the slide is the 56-core Cascade Lake part that Intel claims to have launched several months back. It is unclear if that part made it into volume production and if anyone is buying it. What is clear from the roadmap is that a 48 core CPU may be the edge of what is possible with the 14nm process and current architecture.
What Are The Implications?
Assuming the specifications in the slide are accurate and there is no reason to doubt them, it appears that higher IPC and PCIe4 will let Ice Lake compete with Rome up to 32 cores per socket - although Rome is likely to edge out these parts on the basis of power consumption and cost. The 14nm/10nm server strategy is similar to what Intel did on the laptop front by offering 14nm and 10nm products simultaneously and dubbing them all as "10th generation" products. Ironically, while the 14nm laptop CPUs are being widely used by customers, the 10nm laptop chips have become specialty chips offered in very few SKUs. The outcome on the server side may be similar. 10nm Ice Lake server may be used in a few specialty SKUs and the 14nm Cooper Lake may be the volume runner.
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