Delay in mass production of new Intel products is a boon for AMD, share of AMD x86 server processors expected to exceed 22% in 2023, according to TrendForce

According to the latest research from TrendForce, the mass production schedule of new Sapphire Rapids products has been delayed due to the low yield rate of Intel 7 process. At present, the production yield rate of Sapphire Rapids is estimated only 50-60%, which affects traditional Sapphire Rapids MCC products. The company’s mass production planning has been postponed from 4Q22 to 1H23. This delay in the mass production schedule not only affects the ODM materials readiness cycle, but also significantly reduces the proportion of OEMs and CSPs introducing Sapphire Rapids this year. AMD will be the biggest beneficiary. We estimate that the market share of AMD x86 server processors will be around 15% in 2022 and will increase to 22% in 2023.

AMD sees a huge improvement in ABF capability since 2H21. At the same time, more and more end customers have increasing requirements for reducing energy consumption. Considering the total server cost (TCO), they started to favor single-socket servers. TrendForce believes that changing customer demand will allow AMD to break the bottleneck created by a 2-socket solution, thereby increasing the company’s overall deliveries.

In addition to weak demand in the general environment, Intel also faces continued shortages of low-end FPGAs, affecting its dual-socket processor orders, as well as pressures such as the weakening of demand in terms of government tenders and inventory control policies at OEM. In addition, the high-end computer chip market has suffered from the recent ban imposed by the US Department of Commerce and shipments of custom chips from Intel and AMD are indeed under pressure. If the conflict between China and the United States escalates in the future, Intel’s dominance in the server processor market could be a double-edged sword, implying a more serious impact than AMD.

ESG included in enterprise sourcing metrics, driving demand for single-socket servers

Intel’s new product mass production schedule has been delayed. ODM orders show that major communication service providers have increased their reliance on AMD. Since AMD Milan’s overall server cost is lower than Intel Ice Lake, AMD Milan offers better RDIMM scalability and SSD channel count. Unlike Intel’s standard dual-socket design, AMD can achieve the performance required by customers while effectively helping customers save more on their capital expenditure.

In the short term, market share for Intel x86 server processor shipments fell nearly 6% in the last two quarters compared to the same period last year, mainly due to a large migration of orders US-based CSPs. Among these orders, AMD Milan-X shipments boosted storage momentum for US-based FSCs such as Microsoft and Meta. Additionally, the supply of Lattice CPLDs required by 2-socket servers with Intel processors remains limited and customers are also turning to AMD due to supply issues. In the long term, as companies and governments successively include ESG indicators in their purchasing considerations, energy efficiency performance will become a key consideration in purchasing decisions. Therefore, TrendForce estimates that AMD will experience rapid growth in 2023. Market share of AMD x86 server processor shipments is expected to reach 25% in 4Q23, with an annual increase of 7% in 2023.