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Xeon has been making 50–70% profit margin depending on the Xeon type. Intel's profit margins will take a hit when they are forced to cut prices. It's unlikely t

Xeon has been making 50–70% profit margin depending on the Xeon type. Intel's profit margins will take a hit when they are forced to cut prices. It's unlikely that AMD has enough manufacturing capacity to fill all demand, so Intel will still make profit. History: AMD had similar upper hand against Intel with their Athlon processor 20 years ago. Intel's transition to the 180 nm process was delayed and AMD's K7 Athlon was superior microarchitecture. Intel's response was to lower profit margins until AMD was in the ropes again. This time AMD has better change, but don't count out Intel. AMD's success depends on their profit margins when competing against Intel. If Intel force AMD's profits close to zero, it can spoil AMD's technical win. https://www.macrotrends.net/stocks/charts/INTC/intel/profit-margins https://www.macrotrends.net/stocks/charts/INTC/intel/profit-... https://www.macrotrends.net/stocks/charts/AMD/amd/profit-margins https://www.macrotrends.net/stocks/charts/AMD/amd/profit-mar...

onli 7y ago
Correct me if I'm mixing up the timeline, but that's the moment in history when Intel used illegal market manipulation to keep AMD out of the OEM market, right? So Intel did more than lower their profit margin, they basically bribed their way through that period. An option they are unlikely to have again, and which as a strategy shouldn't even work anymore for the type of data centers existing today.
- Nokinside 7y ago
  They did everything they could, but Intel did not win with just bribery and dirty tricks.
- ncmncm 7y ago
  I am curious why you think it will not work as well as last time. It is not as if law enforcement is more active now. Generally law enforcement at the moment is forbidden to touch the big fish, since the biggest fish sets policy.
  - onli 7y ago
    While I'm similarly critical of US corruption and too big to fail thinking in general, there was a bit of (EU) progress in terms of monopoly control. Like the huge fines Microsoft and Google had to pay. But that would be retroactive and not help AMD. But what helps AMD in advance is the data center landscape. How would Intel force Google, Microsoft and Amazon to use their server processors in their custom servers for their cloud data centers? They can compete on price (though price dumping could alert regulators again), but Intel has zero influence on those three. Thus we see https://news.ycombinator.com/item?id=20643604 https://news.ycombinator.com/item?id=20643604. And smaller OEMs should be hard to pressure given the history and hard to mislead given the big companies validating AMDs processors. Regular vendors for desktops and laptops are already offering AMD, so there seems to be limited danger there.
  - bryanlarsen 7y ago
    The first AMD v Intel cost Intel $10 million. The second cost $1.25 billion. A third one would be immense. Also, Intel is operating under a consent decree and FTC supervision until October 29, 2020. The FTC would come down hard on direct violations of the decree.
    - ncmncm 7y ago
      Intel put $5B into Itanic, destroyed by Athlon. But the consent decree is new to me. I guess FTC has been slightly more active than I gave them credit for.
    - rasz 7y ago
      Intel still to this day hasnt paid that $1 billion https://pcper.com/2016/06/intel-still-hasnt-paid-amd-the-1-2-billion-usd-anti-trust-fine/ https://pcper.com/2016/06/intel-still-hasnt-paid-amd-the-1-2... and it looks like they finally brib^^convinced right people and have a chance of cancelling it https://www.nytimes.com/2017/09/06/business/intel-eu-antitrust-fine.html https://www.nytimes.com/2017/09/06/business/intel-eu-antitru...
      - bryanlarsen 7y ago
lmilcin 7y ago
Of course, even if they were totally kicking ass it will take many years for AMD to build more capacity to what Intel has. Fabs take astronomic investment and time to build. But, it seems Intel is and has been for quite some time unable to even keep up with competition. It was leader and it seems 10 and 7nm processes completely stopped them in their tracks with regards to competition. I am kind of interested what actually happen. Probably there is an interesting book to be written on Intel's troubles with getting 10nm node.
- Nokinside 7y ago
  They made some process technology choices that didn't work out as they planned. The delay of the 10nm process and patching the delay with 14+ and 14++ didn't stop anything else they do in process technology. They have accelerated the path to 7nm (similar to TSMC's 5mm). ps. Intel plans to launch their first discrete GPU in 2020 using 7nm process. That's going to be interesting.
  - ksec 7y ago
    >ps. Intel plans to launch their first discrete GPU in 2020 using 7nm process. That's going to be interesting. It is 10nm in 2020, defiantly not 7nm. That is scheduled for 2021, if they could make it on time.
    - ethbro 7y ago
      The issue with Intel's scheduling statements now is they're highly suspect. I feel like they would have burned a lot less goodwill if they hadn't straight up lied for multiple years about their maturity and timeline.
- O5vYtytb 7y ago
  AMD is fabless and uses TSMC and Global Foundries. I imagine they can ramp faster than you say.
  - lmilcin 7y ago
AChamarthy 7y ago
https://www.goodreads.com/book/show/16145208-slingshot https://www.goodreads.com/book/show/16145208-slingshot is a good book that covers Intel/AMD history
ksec 7y ago
>It's unlikely that AMD has enough manufacturing capacity to fill all demand, Betting against TSMC, not a very wise move at the moment. >If Intel force AMD's profits close to zero, it can spoil AMD's technical win. That is assuming Intel will make a lost in other to hurt AMD, and I am not sure if predatory pricing is legal in US. AMD is not pricing their product to undercut Intel, AMD is pricing their product as it is because their Chiplet strategy allows them to do so while still retaining Industry level margin. I am pretty sure Intel can afford to lose billions, just like their contra revenue, but this time around the value will be so great I am not sure if their Investor will be happy with it, not to mention their declining margin.
- dbancajas 7y ago
  They can only lower their profit margin if AMD has the same performance as Intel. Seeing AMD has higher performance there is no way customers will buy a cheaper offering with less performance. It's like Intel vs AMD but reversed. For years AMD's offering lower performance lower priced chips but can't break through the market (CPU).
- ggg3 7y ago
  TSMC works out for intel. instead of illegally bribing OEM like the last time to buy from them, they can legally move a new chip to TSMC and foot the fine for cancelling amd's contract.
kllrnohj 7y ago
> It's unlikely that AMD has enough manufacturing capacity to fill all demand, so Intel will still make profit. Keep in mind AMD's dies are tiny compared to Intel's. The CPU dies, the 7nm parts, are a mere 74mm2. They are going to be getting fantastic yields on them as a result, and can trivially allocate them to what's selling well. And it's the same die for their entire stack - consumer & enterprise. Meanwhile the 28 core Xeons are a monstrous ~694mm2. Even though the 14nm process is mature, that's still a hugely expensive chip to make due to yields and capacity. You can only fit so many of those rectangles on the circular wafer.

onli 7y ago

Correct me if I'm mixing up the timeline, but that's the moment in history when Intel used illegal market manipulation to keep AMD out of the OEM market, right? So Intel did more than lower their profit margin, they basically bribed their way through that period. An option they are unlikely to have again, and which as a strategy shouldn't even work anymore for the type of data centers existing today.

Nokinside 7y ago
They did everything they could, but Intel did not win with just bribery and dirty tricks.
ncmncm 7y ago
I am curious why you think it will not work as well as last time. It is not as if law enforcement is more active now. Generally law enforcement at the moment is forbidden to touch the big fish, since the biggest fish sets policy.
- onli 7y ago
  While I'm similarly critical of US corruption and too big to fail thinking in general, there was a bit of (EU) progress in terms of monopoly control. Like the huge fines Microsoft and Google had to pay. But that would be retroactive and not help AMD. But what helps AMD in advance is the data center landscape. How would Intel force Google, Microsoft and Amazon to use their server processors in their custom servers for their cloud data centers? They can compete on price (though price dumping could alert regulators again), but Intel has zero influence on those three. Thus we see https://news.ycombinator.com/item?id=20643604 https://news.ycombinator.com/item?id=20643604. And smaller OEMs should be hard to pressure given the history and hard to mislead given the big companies validating AMDs processors. Regular vendors for desktops and laptops are already offering AMD, so there seems to be limited danger there.
- bryanlarsen 7y ago
  The first AMD v Intel cost Intel $10 million. The second cost $1.25 billion. A third one would be immense. Also, Intel is operating under a consent decree and FTC supervision until October 29, 2020. The FTC would come down hard on direct violations of the decree.
  - ncmncm 7y ago
    Intel put $5B into Itanic, destroyed by Athlon. But the consent decree is new to me. I guess FTC has been slightly more active than I gave them credit for.
  - rasz 7y ago
    Intel still to this day hasnt paid that $1 billion https://pcper.com/2016/06/intel-still-hasnt-paid-amd-the-1-2-billion-usd-anti-trust-fine/ https://pcper.com/2016/06/intel-still-hasnt-paid-amd-the-1-2... and it looks like they finally brib^^convinced right people and have a chance of cancelling it https://www.nytimes.com/2017/09/06/business/intel-eu-antitrust-fine.html https://www.nytimes.com/2017/09/06/business/intel-eu-antitru...
    - bryanlarsen 7y ago

lmilcin 7y ago

Of course, even if they were totally kicking ass it will take many years for AMD to build more capacity to what Intel has. Fabs take astronomic investment and time to build. But, it seems Intel is and has been for quite some time unable to even keep up with competition. It was leader and it seems 10 and 7nm processes completely stopped them in their tracks with regards to competition. I am kind of interested what actually happen. Probably there is an interesting book to be written on Intel's troubles with getting 10nm node.

Nokinside 7y ago
They made some process technology choices that didn't work out as they planned. The delay of the 10nm process and patching the delay with 14+ and 14++ didn't stop anything else they do in process technology. They have accelerated the path to 7nm (similar to TSMC's 5mm). ps. Intel plans to launch their first discrete GPU in 2020 using 7nm process. That's going to be interesting.
- ksec 7y ago
  >ps. Intel plans to launch their first discrete GPU in 2020 using 7nm process. That's going to be interesting. It is 10nm in 2020, defiantly not 7nm. That is scheduled for 2021, if they could make it on time.
  - ethbro 7y ago
    The issue with Intel's scheduling statements now is they're highly suspect. I feel like they would have burned a lot less goodwill if they hadn't straight up lied for multiple years about their maturity and timeline.
O5vYtytb 7y ago
AMD is fabless and uses TSMC and Global Foundries. I imagine they can ramp faster than you say.
- lmilcin 7y ago

AChamarthy 7y ago

https://www.goodreads.com/book/show/16145208-slingshot https://www.goodreads.com/book/show/16145208-slingshot is a good book that covers Intel/AMD history

ksec 7y ago

>It's unlikely that AMD has enough manufacturing capacity to fill all demand, Betting against TSMC, not a very wise move at the moment. >If Intel force AMD's profits close to zero, it can spoil AMD's technical win. That is assuming Intel will make a lost in other to hurt AMD, and I am not sure if predatory pricing is legal in US. AMD is not pricing their product to undercut Intel, AMD is pricing their product as it is because their Chiplet strategy allows them to do so while still retaining Industry level margin. I am pretty sure Intel can afford to lose billions, just like their contra revenue, but this time around the value will be so great I am not sure if their Investor will be happy with it, not to mention their declining margin.

dbancajas 7y ago
They can only lower their profit margin if AMD has the same performance as Intel. Seeing AMD has higher performance there is no way customers will buy a cheaper offering with less performance. It's like Intel vs AMD but reversed. For years AMD's offering lower performance lower priced chips but can't break through the market (CPU).
ggg3 7y ago
TSMC works out for intel. instead of illegally bribing OEM like the last time to buy from them, they can legally move a new chip to TSMC and foot the fine for cancelling amd's contract.

kllrnohj 7y ago

> It's unlikely that AMD has enough manufacturing capacity to fill all demand, so Intel will still make profit. Keep in mind AMD's dies are tiny compared to Intel's. The CPU dies, the 7nm parts, are a mere 74mm2. They are going to be getting fantastic yields on them as a result, and can trivially allocate them to what's selling well. And it's the same die for their entire stack - consumer & enterprise. Meanwhile the 28 core Xeons are a monstrous ~694mm2. Even though the 14nm process is mature, that's still a hugely expensive chip to make due to yields and capacity. You can only fit so many of those rectangles on the circular wafer.