Intel Corp. has unveiled a new design for its server chips that is key to the company regaining control of one of the most lucrative markets in the computer sector, servers.
Yesterday, Intel said the Xeon processor based on the new Sapphire Rapids design is already in use in cloud computing systems operated by Alphabet’s Google and Amazon.com’s AWS, in addition to servers offered by Hewlett Packard Enterprise Co. and Dell Technologies Inc.
For Intel, the world’s largest maker of computer processors, the new product presents an opportunity to stem market share losses and prove it has restored its ability to deliver the competitive chips needed for servers that serve as the backbone of Internet and enterprise networks. Sandra Rivera, head of Intel’s data center and artificial intelligence division, said the Sapphire Rapids debut is the company’s first step in rebuilding confidence that Intel will once again lead the computer industry forward.
In an interview, Rivera said, “After a couple of missteps, we’ve been working hard to regain the trust of our customers to show that we’re improving and are regaining excellence in execution.”
As the industry has exploded, Intel’s data center business has been languishing. The company’s Xeon family of chips once held more than 99 percent of the market share needed to analyze and make sense of the growing amount of data generated by smartphones and the Internet. Over time, however, localization efforts by Intel’s rival AMD and some of the company’s biggest customers have eaten away at the company’s dominant position in the server space. The company’s capabilities have been undermined by delays in producing technology and bringing new chips to market. sapphire Rapids, a product first announced by Intel in 2019, has been delayed at least twice in its launch.
Third-quarter sales for Intel’s data center division, which typically contributes a large portion of Intel’s profits, fell 27 percent to $4.2 billion. AMD’s data center division saw its revenue rise 45 percent over the same period. AMD took 3.6 percentage points of market share from Intel, but Intel still has 83 percent of that market, according to research firm Mercury Research.
Intel said the new server products are part of CEO Pat Gelsinger’s ambitious plan to bring the chipmaker back to the forefront of the industry. However, investors have previously expressed dissatisfaction with the cost and time required for the plan, causing the company’s shares to fall 49 percent in the last year.
Intel executives said the new Xeon chips, designed with Sapphire Rapids, bring technological advances that will allow its customers to become more flexible. These processors could work in the current environment where server buyers want to combine multiple types of chips from multiple chipmakers.
At least one of Intel’s competitors has expressed agreement with that statement. NVIDIA has chosen the new Intel design as the processor for its DGX artificial intelligence-accelerated server system, ditching the AMD chips the company used in its previous generation.
Intel was willing to work with Nvidia early on, sharing test chips to help Nvidia fine-tune the software for its own chips, which eventually made their way successfully into the machines used to train AI software. Charlie Boyle, vice president of NVIDIA, said, ” Intel has been a great partner, providing us with technology when we needed it and working deeply with our engineering team.”
In addition to its role in high-end AI devices such as NVIDIA’s DGX, Sapphire Rapids has several gas pedals built into its design. Users who use less powerful servers, such as owners of in-house enterprise data centers, can take advantage of AI to analyze their data, said Lisa Spelman, vice president of Intel.
Overall, the new design will help data center operators save energy, allow some customers to use fewer separate chips, and enable servers to do their jobs more quickly.
AMD unveiled its latest server design last November, when the company made some similar efficiency claims. And analysts such as Rosenblatt Securities’ Hans Mosesmann and Sanford C. Bernstein’s Stacy Rasgon said Intel’s competitive position will remain challenged this year. Even Intel Chief Executive Officer Geir Singh has also said that the server competition will be a “short” battle for some time.
For Rivera, Sapphire Rapids and its successor will be the beginning of a reversal of Intel’s decline. Revenue and market share are important tracking metrics that allow us to look at what we’ve done and what we haven’t done over the years,” she said. I think all of the leading indicators, including product health, product enhancements, on-time, on-demand launches of upcoming products, are important tools for us to turn our biggest critics into supporters and convince them that Intel has gotten its mojo back.”
