Intel and AMD: Details of the Market Share Battle

Intel (INTC) is in the midst of a major transformation effort to restore the once-great semiconductor manufacturer to its former glory. The company has begun to show signs of life thanks to the strong performance of its data center products, as its latest financial earnings exceeded expectations; however, it remains on shaky ground.

In this process, its long-time rival AMD (AMD) is gaining some advantage in the market, capturing market share from Intel in the data center and personal computer sectors. During the Financial Analyst Day in New York, CEO Lisa Su stated that the company expects to capture more than 50% of the CPU server revenue market share over the next three to five years, supported by its Epyc processors. This percentage represents an increase from the company's current level of 40%.

Su also mentioned that AMD expects to see a 10% revenue growth in its client business, an area that includes sales of gaming and personal computer chips. Overall, the company aims for its client revenue market share to exceed 40%, a significant increase from the current 28% rate.

According to data from Mercury Research, this situation will reduce Intel's market share in the client sector from approximately 72% to 60%, marking a rapid decline for the company. Both Intel and AMD are the only companies producing processors that use the x86 architecture. These processors differ from chips based on architectures like Arm’s or Nvidia’s, but they form the foundational building blocks of the technology industry.

Analyst Stacy Rasgon noted in a note to investors that the projections are "a bit ambitious/idealistic," suggesting that while there's a dream world in which this is possible, it does not provide any guarantees. Ultimately, the uncertainty regarding whether Su's forecasts will materialize continues. Companies often present short- or long-term projections that can be either missed or surpassed; however, the risks are real for Intel.

Intel is fighting rather than sitting idle. The company has finally begun releasing the long-awaited 18A chip technology with the Core Ultra series 3 client CPU and Xeon 6+ data center CPU. Additionally, both companies are working to gain market share against Nvidia (NVDA), which is estimated to have an 80% to 90% control of the artificial intelligence (AI) market. However, AMD is significantly ahead compared to Intel, and Su stated that a 60% increase is expected in AI GPU revenue, projected to be $16 billion in 2025.

In October, Intel unveiled its next-generation AI data center chip, codenamed Crescent Island. The company announced that this chip would use the Xe3P microarchitecture and feature up to 160GB of memory.

Newman stated, "Intel is currently recovering. They are regaining focus and improving economic conditions. However, AMD has successfully implemented and gained momentum. The prospect of Intel losing its number one position in CPU and DC CPU is real. There is a chance for correction, but there is also risk," he said.