Top 5 data center chip players, number one revenue plummets

Market research firm 650 Group recently shared a slideshow showing data center revenue for major semiconductor companies including Intel, NVIDIA and AMD.

The 650 Group shows the vendor positioning of selected data center companies, including Intel, NVIDIA, AMD, Broadcom and Marvell. According to the research firm, artificial intelligence and cloud servers will play a significant role in changing vendor positioning and vendor preferences for each cloud provider. Today, cloud providers are also demanding higher ASP per server and more accelerators per server.

In terms of data center revenue breakdown, Intel still leads the list, but Big Blue began to decline significantly at the end of 2021, with revenue falling from approximately $8 billion to nearly half. NVIDIA is in second place, and the gap between the two giants has narrowed since the beginning of 2022. The huge demand for AI and HPC has led to explosive growth in NVIDIA's DC business, but entering the fourth quarter of 2022, the company has experienced a slight decline, which is also reflected in its recent financial report.

Broadcom is in third place and AMD is in fourth place. AMD is slowly making headway in the data center space. Their EPYC CPUs and Instinct accelerators are performing very well, and it looks like the company will break 30% market share in the server space by the end of 2023. You can also note that AMD's data center revenue has been trending upward since 2020.

Turning to server shipments, which include servers and smart NICs, x86 was mostly flat and is expected to continue that trend. AMD and Intel CPU updates will determine x86 performance, and growth in Arm (non-x86) chips also reflects growth in AI/ML shipments, which tops the list with a total of approximately 21 million units shipped. This is a major growth area where NVIDIA maintains its dominance, and others are expected to follow suit.

After being beaten black and blue by AMD in the server field, Intel hopes to stop the bleeding in the server market through next year's chip products.

Intel CFO Dave Zinsner said last week at the Morgan Stanley Technology, Media and Telecommunications Conference that the distinctive products will be Sierra Forest and Granite Rapids, which will be launched in 2024. "We will drop Emerald [Rapids], but the really important products ... that can have a significant impact are Sierra Forest and Granite Rapids ... in terms of our competitive position," Zinsner said.

Intel's current server product is a Xeon chip code-named Sapphire Rapids. The chipmaker will launch its successor, codenamed Emerald Rapids, later this year, offering incremental performance upgrades. Emerald Rapids will be more of a bridge to differentiated chips released in 2024, but it won't stop the company from losing market share from AMD.

"We're going to have market share decline in the first quarter [2023]. We expect the year to stabilize -- I wouldn't call it a win. I would call it 'we're slowing the stock churn,'" Intel CFO CEO Dave Zinsner said at the Morgan Stanley Technology, Media and Telecommunications investor conference.

AMD took advantage of Intel's delays and mismanagement of its server product roadmap, with chips like the Sapphire Rapids being delayed multiple times.

According to Mercury Research, Intel's server market share was 82.4% in the fourth quarter of last year, down from 89.3% in the same period in 2021. In the fourth quarter of last year, AMD's server market share was 17.6%, up from 10.7% in the same period in 2021.

AMD's next big chip release is the Bergamot, which will launch in the first half of this year. The chip is based on the same instruction set as Genoa, but has more cores and a lower frequency. It is targeted at dense servers. "It's optimized for cloud native, so it's not a 96-core cluster, it's 128 cores. It's running at a different peak frequency than Genoa," AMD Chief Technology Officer Mark Papermaster said at last week's Morgan Stanley Technology Conference.

Zinsner said Sierra Forest and Granite Rapids will stabilize Intel's server offerings for several reasons.

"Granite [Rapids] will perform very well relative to what our customers want and what our competitors want," Zinsner said.

Granite Rapids will have performance cores, or "P" cores, while Sierra Forest will be Intel's first core with energy-efficient "E" cores. Intel already mixes performance and power-saving cores in its PC chips.

Sierra Forest chips, like Bergamot, are targeted at cloud-native applications.

HPE touts the need for dedicated servers that can efficiently run cloud-native applications. HPE's RL300 ProLiant Gen11 Arm server runs on Ampere's Arm-based Altra and Altra Max chips and is targeted at cloud-native applications. HPE chose Arm because it believed x86 chips were too power-hungry and designed to run legacy data center applications.

Intel's continued growth in Sapphire Rapids comes amid a downturn in the server market, which has also hurt AMD. Technology companies are cutting budgets, which is slowing the transition to the current generation of server chips. The cost of servers has also increased at the platform level, and chipmakers are working to clear excess inventory of server chips.

All things considered, "Sapphire Rapids has very good reception...and actually performs very well in certain workloads," Zinsner said.

Intel will produce the Granite Rapids and Sierra Forest chips on the Intel 3 process, which the company says will offer "a further 18 percent improvement in performance per watt" compared to chips based on the Intel 4 process, which itself offer "transistor Approximately 20% more "performance per watt" compared to Intel 7 for Sapphire Rapids.

Like Sapphire Rapids, the next generation Emerald Rapids will be built based on Intel 7. Intel will not make server chips on the Intel 4 process, but will use it to make PC chips like Meteor Lake, which will be released later this year.

"We're going into Intel 3 in 2024," Zinsner said, adding that "we're well on our way to ETA" on those processes for Intel chips, including Sierra Forest and Granite Rapids.

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