The rhetoric regarding the inherent war between central processing unit makers Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD) has taken on a clear flavor of late. Intel, and by extension INTC stock, is in trouble.
Underscoring that paradigm of late is last week’s official launch of AMD’s new server chip, EPYC Rome. It’s not only the world’s first 7-nanometer processor, but the rumor is that some big names like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) are already using the high-powered tech. Intel’s first 7-nanometer hardware is still a couple years off.
Oh yeah — the EPYC Rome CPU is also considerably cheaper than Intel’s most comparable data center processor chip line call Xeon.
Past the sheer fascination with the fact that Advanced Micro Devices seemingly came back from the dead to leapfrog the dominant name in server chip technology, however, lies another reality. As impressive as EPYC Rome may be, Intel’s still got something bigger and better in the works.
Not Your Father’s Intel
There’s no denying it. Intel got caught being lazy and complacent. Advanced Micro Devices was supposedly a has-been, leaving the CPU market wide open for Intel. Since Lisa Su took the helm in 2014, AMD is back from the dead.
Nothing lights a fire under a company like a little pressure though.
Granted, research and development of technologies like computer processors is neither cheap, nor quick. Intel is still working on an effective answer to the 2016 launch of AMD’s Ryzen CPU line, which offers almost as much computing power as Intel’s comparable wares at the time, and at a much lower price. In the meantime, Intel continues to chase other debuts of Advanced Micro Devices hardware, though not necessarily all of them. Intel isn’t looking to respond to AMD’s “Threadripper” CPU.
The launch of AMD’s EPYC 7002 series of 7-nanometer server processors earlier this month underscored the depth of Intel’s distance behind AMD. After multiple delays, Intel doesn’t expect to offer its first 7-nanometer processor until 2021.
It’s all very unlike Intel.
This Competition May Not Matter
Much of the value of technological breakthroughs like 7-nanometer CPUs is leveraging them as publicity tools. Undoubtedly, Advanced Micro Devices has gotten much mileage from being able to say it was the first to reach the 7-nanometer milestone.
Companies and consumers alike just want solutions that work well, however they work.
Even with its less-thrilling 14-nanometer “Coffee Lake” processors and its 10-nanometer “Ice Lake” CPUs, Intel is making highly marketable products right now.
Admittedly, with the inherently slower speeds of 10-nanometer processors, Intel has to do everything else right on a computer’s or server’s (or a tablet’s or a smartphone’s) main board to extract comparable performance. But, it is doing that. Its Project Athena, for instance, is an overarching effort to make laptops and mobile devices faster not with a more powerful CPU, but by building a device from the ground up with speed and performance in mind.
The device has already mapped out how it can best handle multiple files and apps, for instance.
AMD hasn’t thought as much beyond the development of a powerful processor. In fact, it may not have even given fully adequate thought to the development of its 7-nanometer tech.
Did AMD Rush 7-Nanometer Development?
It’s only anecdotal, but a closer look at the performance of AMD’s Ryzen 3000 series suggests not every core of the CPU is reaching the advertised operating speed.
Some are wondering if AMD’s rush to get a 7-nanometer chip on the market could be the culprit. Others are wondering if 7-nanometer tech is even worth the effort. As ExtremeTech’s Joel Hruska wrote late last month, “Higher silicon variability [stemming from the 7-nanometer foundry process] is going to demand a response from software. The entire reason the industry has shifted towards chiplets is that building entire dies on 7nm is seen as a fool’s errand…”
If that’s the case for other 7-nanometer hardware like the EPYC Rome, the actual performance of these new devices may disappoint some users.
According to Hruska, the physical limitations involved in manufacturing silicon-based CPUs cause the bulk of the performance bottleneck. He says that future performance improvements won’t come on the hardware fronts.
That bodes well for Intel’s Project Athena, which aims to address more feasible performance enhancements.
The Bottom Line for INTC Stock
Don’t misread the message: Intel dropped the ball. It’s also willingly wading into projects that have a questionable payoff.
It’s already competing with AMD on the CPU front. Intel has recently begun work on discrete graphics cards that will go up against Advanced Micro Devices’ graphics processing units as well as those made by Nvidia (NASDAQ:NVDA). The company is also planning a line of dedicated gaming PCs through a program currently called Phantom Canyon. There’s an established market for both, but neither are necessarily aligned with Intel’s core competencies. As such, they may prove more distracting than fruitful.
Still, Intel is hardly being forced into the retreat mode some investors and pundits have suggested.
That doesn’t make INTC stock bulletproof — market-wide weakness could still inflict damage. Assuming the global economy doesn’t slip into a full-blown recession though, dips like the one Intel stock just made could continue to be great entry points.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.