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AMD takes aim at Intel in lucrative server-chip market

Rival Intel holds nearly 100% share of the $16.5bn market for server chips

AMD takes aim at Intel in lucrative server-chip market
AMD has introduced a new generation of server chips dubbed EPYC.

Chip designer AMD has started selling a new generation of chips for the servers that drive computing in data centres, challenging rival Intel Corporation.

Earlier this week AMD introduced the first four of nine chips dubbed EPYC that it claims offer higher performance at lower prices than comparable Intel chips currently on the market. Intel has said it will refresh its server processors over the summer.

The EPYC line reintroduces competition to a high-margin arena that Intel lately has had to itself. Intel holds nearly 100% share of the $16.5bn market for server chips of the x86, according to Mercury Research. That dominance helped the chip giant keep prices high and achieve a gross margin-a key measure of profitability-of 61% in 2016, compared with 23% for AMD.

AMD's last entry in the server-chip market came in 2013, and since then, its share has dwindled to less than 1%, according to Mercury Research.

AMD's share price rose sharply starting last year on optimism that it was regaining competitive clout under CEO Lisa Su, who took over in 2014. This spring AMD debuted its Ryzen chips for personal computers, which scored well in independent tests. That boosted anticipation of EPYC, which is based on the same core design.

AMD in the past has introduced competitive products but failed to follow through with ongoing releases to sustain its momentum. The company at a recent meeting with analysts assured them that it has a long-term road map for products this time.

AMD at its launch in the USA showed EPYC-based systems from several major server vendors including Dell Technologies Inc., Hewlett Packard Enterprise Co. , and Lenovo Group Ltd. , and announced that the chips were being used by major cloud-computing providers.

AMD is touting the line's performance and pricing, but also features intended to make it more economical in data-center systems. Each chip can interact more readily with memory and ancillary equipment like graphics processors, AMD said, allowing a single EPYC to do work that would require two Intel server chips. Slimming servers from two to one chip could produce a 20% saving in total cost, AMD said.

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