Intel is planning to hit back AMD in the desktop and notebook market by offering price cuts on the existing Core lineup while competitively positioning their upcoming product lines. But all of this will come at a cost and if one slide from AdoredTV is to be believed, then Intel's going to be dishing out some hefty cash to mitigate or even disrupt AMD's Ryzen efforts.
Intel's Aggressive Pricing and Discounts To Cost Them $3 Billion, Would Utilize Their Financial Horsepower To Compete Against AMD
The slide in question comes from AdoredTV in his latest video in which he says how Intel is finally facing disruption in all market segments from AMD. These not only include Ryzen & Threadripper CPUs but also EPYC processors that are targeted against their Xeon lineup. The slide reads 'Intel's Scale Advantage... Financial Horsepower'.
The first thing you can get from that line is that Intel states that due to their sheer size and scale, their financial structure is much more powerful of a factor compared to AMD's. The slide goes on to show that AMD had a net income in 2018 of around $0.3 Billion. On the other side, Intel shows its '2019 Meet Comp Discount' at around $3.0 Billion, a 10 times bigger number than AMD's entire net income for 2018.
The $3.0 billion figure is the total cost Intel says they are willing to pay just to disrupt competition from AMD in 2019. This cost could include price cuts, discounts, etc for the current and upcoming lineup. We have seen in the past few weeks that Intel has announced significant price drops on the 9th Gen Core lineup while the upcoming 10th Gen X-Series and the new Xeon W-2200 processors feature much lower prices than their predecessors. Surely, that reduction in price would cost Intel a lot of money and that's where the '2019 Meet Comp Discount' comes in. It also means that Intel is unable to hit Intel back in terms of performance so the only factor left for them to compete on is where AMD also played them, pricing. Given the margins and yields of Ryzen chips, AMD may also be in a position to price their chips competitively against a counter-attack from Intel which already is in place as mentioned above, giving AMD not only the pricing edge but also the performance edge too.
Being a much larger company that AMD, Intel wouldn't be too worried about spending $3 billion just to retain competition in the market. Internally, Intel knows how much of a threat AMD's new processors are to them and they would go to any extent to remain competitive rather than let the competition take up significant chunks of market share which took Intel almost a decade to attain. In their 'AMD Competitive Profile' in which Intel termed AMD as a formidable competitor, they use the following points to evaluate AMD's competitive threats:
Key AMD Competitive Threats To Intel Are From High-End Products
- AMD offers high-performance CPUs, posing direct competition to Intel in both our client and datacenter CPU businesses. With our announced ambitions to bring new discrete graphics to the market, we are bringing new competition to both AMD's and NVIDIA graphics businesses.
- AMD has recently been gaining some traction in winning public cloud offerings. And competition from AMD is shaping up to be especially tough in high-performance computing. HPC performance is usually driven by the number of cores and the number of memory channels (or memory bandwidth). Intel is challenged on both fronts.
- AMD's upcoming next-generation Zen core products, codenamed Rome for servers and Mattise for desktop, will intensify our desktop and especially server competition. The latter is likely to be the most intense in about a decade.
- Outside of desktop and servers, Intel's competitive position in notebooks and business PCs is stronger as customers value specific aspects such as productivity performance, battery life, and overall manageability where Intel has clear advantages versus the competition.
- By leveraging TSMC's 7nm manufacturing, AMD no longer manufactures its own chips. AMD can drive higher core counts and higher performance than it could previously with Global Foundries as its in-house manufacturer. These 7nm products will amplify the near-term competitive challenge from AMD.
It was until 2017 that we were still getting quad cores as flagship processors but thanks to AMD for offering higher-core count desktop processors which prompted Intel to push up their core counts too on the mainstream lineup.
But as of now, we don't know whether this slide is real but considering how much AMD discussion is going on internally at Intel, it may have been showed off to their sales division, however, don't expect a confirmation from Intel on whether this slide is real or not. It's interesting that Intel shows AMD with such a small net income yet somehow, Intel and their absolute mammoth amount of financials couldn't stop AMD from resurging back and hitting them at all corners whether it be desktops, notebooks or servers.
This shows that AMD Zen (and its later variants) were a huge shocker for Intel who had convinced themselves that nothing can outdo them after years of dominance. Intel tried to pull off some cheap marketing stunts by calling AMD's Infinity Fabric interconnect as glued-down dies, using dubious 3rd party benchmarks for CPU comparisons and telling reviewers to change their benchmarking methodologies that reflect their own 'real-world usage' standards.
We all know how well that has worked out for Intel but if they are really serious, then they should try to offer more compelling products at competitive prices and in that sense, these leaked slides show that they are very serious about their competition. In the end, all of this means good news for the consumer market which should resurge with many decent options for all tiers of users.