Intel competes with AMD with new data center chips By Reuters

Author: Max A. Cherney, Stephen Nellis

TAIPEI/SAN FRANCISCO – Intel on Tuesday launched its next-generation Xeon server processors in a bid to regain data center market share, saying its Gaudi 3 artificial intelligence accelerator chip will be priced significantly lower than competitors’ products.

The 6th generation Xeon chips are critical to Intel (NASDAQ:), which has been steadily losing data center market share to Advanced Micro Devices (NASDAQ:).

Intel’s x86 chip data center market share has fallen 5.6 percentage points over the past year to 76.4%, while AMD now holds 23.6%, according to data from Mercury Research.

Mistakes in Intel’s manufacturing process put AMD in business, as the latter uses Taiwan Semiconductor Manufacturing Co (TSMC) to manufacture its chips.

The Xeon 6 server processor comes in two main versions: a larger, more powerful version and an “efficiency” model that Intel announced to replace the previous generation of chips.

To achieve the same level of computing performance as second-generation chips, approximately 67% fewer server racks are now required using an efficiency model designed to serve media, websites, and perform database computations.

“Put simply, performance goes up and power goes out,” Intel Chief Executive Pat Gelsinger said during a presentation on servers at the Computex trade show in Taipei.

More powerful performance models are designed to run the calculations needed to generate responses in complex AI models and other tasks that require increased horsepower.

“Efficiency” Xeon chips will be released on Tuesday, with “performance” models arriving in the third quarter. Intel plans to release additional variants next year. The 6th generation chips were delayed by a year because the company wanted to use a different manufacturing process.

In a briefing call with reporters, Intel said that the price of the Gaudi 3 accelerator kit, which includes eight AI chips, is about $125,000, and the list price of the previous generation Gaudi 2 is $65,000.

Speaking in Taipei, Gelsinger said the prices were “very attractive,” especially when compared to competitors.

“That means crushing competition.”

AMD and Nvidia (NASDAQ:) do not discuss chip pricing. A comparable HGX server system with eight Nvidia H100 AI chips could cost more than $300,000, according to custom server vendor Thinkmate.

Intel revealed details of its Gaudi 3 AI chip last April, positioning it as a much cheaper and more viable alternative to Nvidia’s H100 chip.

Also on Tuesday, Intel said its next-generation laptop chips, called Lunar Lake, use 40% less power and feature more powerful AI processors. Intel said it would ship chips in the third quarter.

Gelsinger said he was “really excited” to see so many new PCs using Lunar Lake.

He added, “It will power the largest number of next-generation AI PCs in the industry.” “We are committed to AI PCs.”

He also thanked TSMC, which he said was critical in supporting many of Lunar Lake’s key technologies.

Looking ahead to more advanced versions, Gelsinger said Arrow Lake will be released next year and Panther Lake will be released in 2025.