AMD Rallies After Landing Meta in Latest Server Chip Win
AMD Signs Up Meta in Another Big Win on Server Customers
(Bloomberg) -- Advanced Micro Devices Inc. will start supplying server processors to Meta Platforms Inc., formerly known as Facebook, further eroding Intel Corp.’s hold on that lucrative market.
Meta will use AMD Epyc processors in its data center computers, the chipmaker said Monday at an event, sending its stock up as much as 13%.
AMD also unveiled a new version of the product with extra memory, which Microsoft Corp. will use in an offering from its Azure cloud computing service. And the company showed off a graphics chip that can better handle artificial intelligence workloads and gave hints about its next generation of processors coming in 2022.
The addition of Meta, the world’s largest social media company, to AMD’s customer list means it now supplies all the top operators of the giant computing networks that run the internet. Winning those major spenders was part of Chief Executive Officer Lisa Su’s plan to resurrect AMD and have it reach market share levels it had only briefly flirted with amid years of struggling to keep up with Intel.
Monday’s announcements show that AMD is broadening out its offerings to add products that will cover more of the market, reflecting its confidence in its ability to execute, Su said. In addition to battling Intel, growth in the lucrative server chip market has helped fuel a surge in chip startups and in-house design efforts by buyers of the electronic companies.
AMD shares had gained almost 50% this year through Friday’s close after doubling each of the past two years. They rose as high as $153.60 after the news, marking their biggest intraday price gain since July 2020.
The availability of AMD chips as a viable alternative to Intel gives Meta, Microsoft, Alphabet Inc.’s Google and Amazon.com Inc.’s AWS more ability to negotiate lower prices and mitigate some of the runaway costs of building infrastructure needed to deal with the flood of data being created by online services. AMD now has about 10% market share, having cut into an Intel lead that topped out at more than 99% just a couple of years ago.
Individual chips for servers, which can sell for as much as a compact car, must be able to crunch information quickly. AMD has revamped its lineup allowing it to take advantage of Intel’s delay in manufacturing more advanced products.
Coming next year, AMD’s fourth-generation server part will come in versions that have more than 100 computing cores. Such chips are valued by data center operators because they enable computers to process lots of simple tasks, such as log-ons, in parallel. The next generation of Epyc will debut in 2022 manufactured on a custom version of Taiwan Semiconductor Manufacturing Co.’s 5-nanometer process.
AMD is also trying to make inroads into the lead of Nvidia Corp. in the market for graphics chips. which are increasingly being used to crunch data faster. The chips, designed to deal with information in parallel in the process of creating realistic images, have also found a growing niche in running artificial intelligence programs in the cloud. That shift has created a multibillion-dollar business for Nvidia, helping it become the world’s most valuable chipmaker by market capitalization.
AMD on Monday also introduced the MI200 Instinct graphics processor that contains multiple graphics chips in the same package. The new product will help speed up such tasks as scientific research identifying patterns in large data sets.
©2021 Bloomberg L.P.