A couple of weeks ago, the semiconductor company AMD surpassed the market capitalization of Intel, its adversary for more than four decades: $160 billion and $148 billion, respectively. It has not been exactly a surprise, but it contains some paradox: AMD's turnover does not reach 40% of that of Intel, and its share of the market in which both compete –chips based on the 86 architecture– is only 30%. %.
AMD's revenue growth during the second quarter was 70%, while its rival's was negative: -22%. Which means that the first, the small one, has taken advantage of the strategic mistakes made by Intel, which have made it lose its leadership. Above all, in processors for data centers, a market that is on the rise and very profitable: since 2018, AMD has increased its share of this market tenfold, according to Mercury Research, although Intel remains in the majority.
This picture does not seem to be changing in the short term and investors do not believe that the wind is blowing in Intel's favor. His main manager, Pat Gelsinger, has acknowledged that the next models of his Xeon family will suffer another delay. Significantly, Intel has put Optane, its loss-making memory division, up for sale: it would be the sixth divestment since Gelsinger was called to the company's rescue in February 2021.
All this must be placed in the context of an industry that lives hectic hours. Riding the boom experienced by semiconductors in recent years, AMD believes it is possible to prolong the good streak: at least three of its four business lines should continue to grow, but the timely acquisition (49,000 million dollars) of the Xilinx company will help generate a new stream of demand. At the moment, in the second quarter it has contributed with 1,000 million revenues and 300 million profit.
Lisa Su, CEO of AMD, has confirmed that the trajectory is one of growth despite macroeconomic disturbances. "AMD has never been stronger than it is now, and the markets for our products are not only growing, but diversifying."
Demand for server processors has been robust in the first half of the year: 83% growth for AMD, 16% for Intel. A different case is that of the chips that equip PCs: after a boom caused by the pandemic and teleworking, the category has declined due to supply difficulties, followed by inflation. The world market should fall between 10% and 15% this year. In addition, AMD has sold 1,151 million in graphics chips for Xbox and PlayStation consoles, a demand in which Intel is absent and which, according to analysts, is beginning to falter.
The geopolitical situation has altered the cycles of this industry. Still, AMD's cyclical exposure is different from Intel's since it decided in 2009 to become a manufacturer without factories. Some argue that insistence on integrated manufacturing is a cause of Intel's problems. Be that as it may, Lisa Su recognizes the urgent need to contract more capacity with her usual maker, Taiwanese TSMC, courted by too many boyfriends.
The hostility between the US and China adds fuel to the fire, all the more so because of the delicate situation in Taiwan. Joe Biden's plan to strengthen US manufacturing capacity (Chips Act) is approved and initially has an endowment of 52,000 million dollars, which is not much considering that a new factory usually requires investments of 10,000 million. Intel paints as the first beneficiary of the mana, while AMD stays out.
