[The Exiled]

AMD hits Intel below the belt in the Datacenter wallet

What Intel calls “cloud digestion” as the cause of the massive pullback in spending in its Data Center Group is looking more and more like a case of “Epyc indigestion” for Intel, not for the hyperscalers and cloud builders. And the top brass at Intel should be thanking the heavens for their good luck that capacity for advanced fab processes has been severely constrained at the same time Intel struggled to get its server chip act together. If that had not been the case, AMD might be truly cleaning Intel’s CPU clocks. On a call with Wall Street analysts discussing the financial results with Wall Street, Lisu Su, AMD’s chief executive officer, said that AMD had managed to negotiate more capacity from TSMC and was able to up its revenue forecast for the year by $1.2 billion to $1.3 billion – most of which we think is going to come out of Intel’s hide in both client and server CPUs. When talking specifically about money for server chips, Su said that Epyc CPU sales more than doubled year over year and grew by a “strong double digit percentage” sequentially from Q4 2020. Intel’s operating income in Data Center Group is down a stunning $2.22 billion year on year in Q1 2021. Every dollar in operating income that AMD has gained has cost Intel about 11X that amount in lost operating income. You have to adjust that for increasing costs on 10 nanometer and 7 nanometer processes for the Xeon line and other factors. But even so, the AMD effect could be a 5X down draft on operating income for Intel’s Data Center Group for every dollar that AMD gains.

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