Intel CEO Pat Gelsinger spoke at the Evercore ISI TMT conference yesterday, saying that the company expects to continue losing data center market share throughout at least 2023 and will only begin regaining in 2025 and 2026. Gelsinger also said that the company would likely exit other businesses, much like it recently began exiting Optane memory, as it continues to narrow its focus to its core competencies.
Intel's recently delayed its Sapphire Rapids launch again, with the chips now slated to arrive in 2023. Gelsinger remarked that while the new chips are 'better than the AMD alternatives" in power and performance and will win in some benchmarks, the advantages aren't dramatic enough to slow AMD's advance. As a result, Intel's data center business won't grow at the same rate as the market, meaning the company will continue to lose market share.
"We do expect that overall our data center business grows every year as we go forward. From where we are, as we said, Q2, Q3 [is] the bottom. But we believe that we're still losing share at least through next year," Gelsinger said.
"Competition just has too much momentum, and we haven't executed well enough. So we expect that bottoming. The business will be growing, but we do expect that there continues to be some share losses. We're not keeping up with the overall TAM growth until we get later into '25 and '26 when we start regaining share, material share gains," Gelsinger added. Notably, the statement isn't definitive about the company's performance in 2024 — Gelsinger specifically stated that the company wouldn't begin regaining market share until 2025.
"Now, obviously, in 2024, we think we're competitive. 2025, we think we're back to unquestioned leadership with our transistors and process technology," Gelsinger said.
AMD has already taken data center market share from Intel for 13 consecutive quarters, reaching 20.2% of the market, and Gelsinger's comments point to at least five more quarters of share losses — and perhaps more.
Gelsinger pointed to the company's Sierra Forest processors as a key innovation that will help the company address the other chip architecture steadily siphoning off market share — Arm. The Sierra Forest Xeon processors have efficiency cores optimized to provide the utmost power efficiency and performance density, so they'll have higher core counts.
"Well, when we deliver the Forest product line, we deliver power performance leadership versus all Arm alternatives, as well. So now you go to a cloud service provider, and you say, 'Well, why would I go through that butt ugly, heavy software lift to an ARM architecture versus continuing on the x86 family?'" Gelsinger said.
|AMD vs. Intel Roadmap||2022||2023||2024|
|Intel||-||Sapphire Rapids / Emerald Rapids - Intel 7||Granite Rapids / Sierra Forest - Intel 3|
|AMD||Milan-X - 7nm | Genoa - 5nm - 96 Cores||Bergamo - 5nm - 128 Cores||Turin - 4nm/3nm|
Intel's Sierra Forest processors, which the company designed at the behest of its largest customers, look promising. However, Sierra Forest isn't scheduled to arrive until 2024.
The Long Road Ahead
While it's clear that Intel has several tough years ahead as it works to rebuild, Gelsinger did point to leadership changes that will help accelerate the turnaround.
"Seventy percent of the leaders, or the leaders minus one, are new to the company or new to the role that they're in. So it's been a pretty dramatic rebuilding of the leadership team." Gelsinger noted. He also announced that the company had promoted Shlomit Weiss to senior vice president and Co-GM of the Design Engineering Group.
Gelsinger also plans to continue focusing on the company's core competency: Logic chips. That means he will stay open to exiting more businesses, much like Intel recently decided to wind down its Optane business.
"Obviously, Optane. And man, I sort of joke that Intel exited the memory business 40 years ago, and they've just kept making that decision. Right? Well, I'm gonna close that frickin' door, and we're gonna stay out of the memory business and really get a cleanliness of our business strategy around logic," Gelsinger said. "You know, we have a few more that we'll likely exit as we continue to prune and get more focused."