spent at least $116 million on legal representation for the AMD lawsuit in the US. And the European investigation was still ongoing. In two separate sets of charges in 2007 and 2008, the European Union competition authority corroborated Japan’s findings and added a few of its own. Intel had apparently
abused its dominant position in the market for PC processors, not only through rebates but also by paying computer makers to delay or cancel product lines and selling server processors below their actual cost of production.
In the course of arguing its position in Europe, AMD won a significant ancillary US Supreme Court victory, in which the court ruled in 2004 that litigants in foreign legal proceedings can request evidence in a US federal court. This so-called “Section 1782 discovery” has been used several times since, most notably in recent developments in the decades-long, Kafka-esque pollution dispute between Chevron and the indigenous inhabitants of the Amazon rainforest.
But for non-lawyers, the most memorable part of the legal battles between AMD and Intel, by far, are the aforementioned emails that Andrew Cuomo presented to the court of public opinion, as the US and European cases came to a preliminary conclusion in 2009. Intel agreed to pay $1.25 billion to settle all outstanding disputes with AMD in the US. Meanwhile, European officials levied a €1.06 billion ($1.2 billion) fine, with a trove of damning emails to lend credibility to the eyebrow-raising amount. Intel is still appealing that fine today, but the messages have been made public—thanks in part to Cuomo, who included many of them in yet another antitrust suit filed in late 2009.
Former NY State Attorney General Andrew Cuomo's antitrust suit against Intel. If you’re a fan of legal wrangling, it’s worth scanning the details of Cuomo’s complaint with a giant tub of popcorn handy. You’ll discover that executives at HP and Dell were allegedly beside themselves with worry, because they believed AMD’s Opteron chips were technologically superior to Intel’s, but they thought that without Intel’s financial support, they couldn’t make money. You’ll read about how Intel was allegedly “prepared for jihad if Dell joins the AMD exodus.” (The original European complaint replaces “jihad” with “all-out war” because commissioners believed that the original wording was too offensive. Cuomo, perhaps courting controversy, went with the original.)
Intel disputed the relevancy of the emails, claiming in a statement to The New York Times that the European investigation was heavy on “speculation found in emails from lower-level employees that did not participate in the negotiation of the relevant agreements,” and that the messages were cited “if they favored the commission’s case.” A federal court said Cuomo could not seek damages for many of the sensational allegations in the suit, and it was settled by his successor, Eric Schneiderman, in 2012 for just $6.5 million.
AMD Finds Its Zen Damning details, billion-dollar fines, technical one-upmanship, and scandalous emails aside, the AMD-Intel battle is far from over. But two surprising things happened in 2017 that will likely define the next phase of the battle. One favored Intel: The European Court of Justice agreed with Intel’s appeal of the €1.06 billion fine, remanding it back to the competition authority in a retrial that is still ongoing . The second surprise is technical: After years of trying to compete with Intel using Opteron and Athlon processors, AMD launched an entirely new processor architecture called “Zen,” to rave reviews and reassuring market-share gains.
AMD Ryzen To date, there have been five generations of Zen-based processors sold under two main brands—Ryzen (for consumer PCs and workstations) and Epyc (for servers). Their performance has bested Intel competitors on many benchmark tests and real-world applications, thanks both to the efficiency of their multicore, multithreaded designs and the fact that AMD has sold many of them for less than competing Intel Core and Xeon products go for.
To understand how completely AMD has turned the tables with Zen, just glance at reviews of processors such as the Ryzen 7 5800X , a favorite of PC-building enthusiasts searching for the ultimate blend of price and performance for their next custom, tricked-out gaming rig or content-creation workstation. Based on our own performance testing late last year, PCMag didn’t see any areas where this chip could be considered objectively worse than Intel’s comparative offerings. And as we noted in the review, “Once you factor in the price-to-performance ratio, Intel finishes further behind in the race than ever.” The Zen architecture is now on its third revision—5800X and other 5000 Series desktop CPUs are Zen 3-based—and Zen 4 is in the works.
But AMD hasn’t succeeded in only the high-performance desktop PC market. Even its laptop processors outclass their Intel competitors in some measures. One of the best inexpensive laptops of 2020 won the approval of our editors based to a great extent on the fact that its AMD Ryzen 5 processor offers better computing performance than competing laptops with Intel processors in some laptops that cost twice as much.
AMD Ryzen The Zen architecture took years to develop, and during that time, AMD benefited from major strategic shifts. The first is new executive leadership, including the 2014 appointment of Dr. Lisa Su as AMD’s president and CEO. Widely admired inside and outside the company, Dr. Su’s background is in semiconductor research and development. Before joining AMD, she had spent four years at Freescale Semiconductor, where she was chief technology officer, following that company’s spinoff from Motorola. (Freescale was perhaps best known for making the PowerPC processors for Mac laptops and desktops until Apple’s transition to Intel processors in 2006.) Before Freescale, Dr. Su spent 13 years at IBM, including a stint as technical assistant to then-CEO Louis Gerstner.
Dr. Su’s move to AMD in 2012 came amidst a multi-year management overhaul. In just two years, she went from senior vice president to chief operating officer to CEO. One of her first significant strategic decisions was to double down on the company’s business for PC processors, instead of abandoning it to focus on refining Fusion for consoles and other electronics. To do so, Dr. Su had to free AMD from the setbacks it had faced in developing its Athlon chips, including finding more research and development capacity. She negotiated a breakup in 2013 with AMD’s former supplier, GlobalFoundries, which cost a cool $320 million in termination fees.
The about-face was risky. “You would think that the decisions get easier because you have more resources, but they actually don’t, because you have a much broader set of opportunities,” Dr. Su told The Wall Street Journal . Broadening AMD’s manufacturing horizons ended up paying off big time for the development of the new Zen architecture. AMD can now rely upon an ecosystem of partners to produce current chips and refine the technology for future generations.
Dr. Lisa Su One of the company’s most crucial partners is Taiwan Semiconductor Manufacturing Company (TSMC), whose fabrication facilities (fabs) assemble the Zen chips. Unlike Intel, which owns its own fabs, AMD outsources almost all chip production. Still, once everything came together, the Zen launch couldn’t have been better timed to coincide with the climax of negative attention that Intel had garnered with its billions of dollars in proposed fines for alleged anti-competitive concerns.
Add in AMD’s remarkable technical advances, so different from its flagging Athlon and FX products of a decade earlier, and you get a remarkable result: The company’s market share is coming back from the brink at an impressive clip. Turning to the PassMark benchmark database once more, it’s clear that the share of PCs with Intel CPUs peaked in late 2016 at 83% and then began a fitful decline. Following a precipitous rise in the third quarter of 2019 (which mirrors 2006’s precipitous drop), AMD’s share of the installed CPU base now stands at 43% to Intel’s 57%. That figure includes all CPU categories—laptops, consumer desktops, and servers. When you limit the PassMark data to just desktop chips, AMD’s reversal of fortunes is even more significant: AMD slightly surpassed Intel in this category in the first quarter of 2021, and the two companies are now essentially tied for desktop CPUs.
Measured by sales of new products, the market-share trends are slightly less dramatic but still represent a win for AMD. The company’s share of notebook processors reached 19% last year, up from just 5% in 2015, according to Mercury Research. And during the same five-year period, Intel’s notebook-processor market share declined from 95% to 81%.
A Worldwide Pandemic Changes the Game At this point, anyone who declares AMD ascendant versus a flagging Intel is credible—the scrappy Texas underdog has plenty of reasons to celebrate. But such a declaration would be premature, not only because the jury is still very much out on Intel’s alleged anti-competitive practices in Europe. In fact, the processor situation today is just as complicated as it was when AMD claimed technical superiority over the far-better-selling Intel chips in its advertisements more than 15 years ago. This complexity has many contributing factors, but two of the largest are the result of exogenous shocks that neither AMD nor Intel could have reasonably predicted, including the effects of COVID-19.
Against many odds, the humble multithreaded desktop processor that originally pitted AMD against Intel is seeing a resurgence of interest. Industry experts and consumers alike once believed desktop PCs were a dying breed, taking a backseat to the allure of phones, tablets, and watches. In 2015, when AMD and Intel were still in the heat of battle, declining PC sales had vendors wringing their hands and trying to find ways to make the PC more vital to a person's computing experience.
But the COVID-19 pandemic changed all that. PC sales skyrocketed early in the pandemic, as many white-collar workers and parents of school-age kids worldwide realized that they might be working and learning from home for the foreseeable future. Last year, PC vendors shipped 302 million units across the globe, an annual increase of 13%, according to the research firm IDC. “To put things into perspective, the last time the PC market saw annual growth of this magnitude was 2010, when the market grew 13%,” the company said in a research note. According to data collected by Canalys, global shipments of desktops, notebooks, and workstations in the first quarter of 2021 increased by an even greater 55% year over year. The raw numbers—82.7 million units—also make it the highest Q1 shipment order since 2012, though some of that is tempered by the fact that much of the world was under lockdown in the first quarter of 2020, which hampered shipments of everything.
Rising demand and COVID-19-induced shortages in materials and production capacity have conspired to create a perfect storm for AMD. TSMC simply has no fab capacity to spare, and even if it did, AMD might not necessarily get to use it right away; TSMC fabs also make chips for many other companies, including Apple and Qualcomm. These clients typically book chip orders months or even years in advance, and TSMC CEO C.C. Wei said during his company’s last earnings call that it is witnessing “strong demand” for its manufacturing capabilities, which will keep chip supplies tight for at least the next 18 months.
The trickledown result is that it can be difficult to find Ryzen- or Epyc-based computers. While the Passmark data paints a rosy picture for AMD in terms of the CPU preferences of PC performance enthusiasts, many consumers care more about whether they can buy a basic new laptop for homework or Zoom calls. In this respect, AMD’s picture is not so rosy. According to Mercury Research, the company’s chips were in just 19.5% of PCs sold in the second quarter of 2020 during the height of the pandemic. That’s up significantly from 7.3% of new PCs sold in 2015, but it still represents a small share of the market for new PCs.
Intel has faced production shortages as well, but the output of its dedicated fabs has mitigated the situation. Now, some industry watchers are predicting that the differing manufacturing capabilities of the two combatants will open new battlefronts in the future. As Intel doubles down on its manufacturing strategy, including committing $20 billion for two new fabs in Arizona, it could actually be playing right into AMD’s hands. Loath to cede manufacturing prowess to Intel, TSMC could award AMD more manufacturing capacity, “cementing the company's x86 process technology leadership for the foreseeable future,” according to one analyst.
It’s too soon to declare that because everyone wants PCs and AMD can’t produce chips fast enough, Intel will benefit. theoretically capable of producing up to
12 chip layers, so AMD has a lot of headroom for future technical innovations.
The second unforeseen aspect that adds to the complexity of the AMD-Intel rivalry is that Intel corporate leadership, once a stable succession of engineers-turned-executives, has experienced unprecedented turnover in recent years. Following the 2013 retirement of CEO Paul Otellini (whose emails litter Cuomo’s trove), the company has gone through three other top bosses in eight years. Bob Swan, who occupied the job for little more than a year before he stepped down in February, inherited massive production problems and many suspicious employees, not to mention the competitive threat from AMD. Swan attempted to improve internal communication and camaraderie, unveiling a “One Intel” slogan and extolling employees to honor truth and transparency in their dealings with customers. He made it his mission to transform the company culture, pivoting it away from Andy Grove’s “only the paranoid survive ” approach.
Intel CEO Pat Gelsinger Current CEO Pat Gelsinger has so far echoed Grove in taking a more combative approach. Like Dr. Lisa Su, Gelsinger is an engineer with deep roots in the semiconductor industry. He spent decades working at Grove’s Intel, helping to design groundbreaking processors in the 1980s, before decamping for EMC in 2009. But unlike Dr. Su and her shakeup at AMD, he has given no indication that Intel will undertake a major shift away from its traditional research, development, and manufacturing methods. Instead, Gelsinger is doubling down on in-house fabs as a means of catching up with AMD and TSMC. Gelsinger also reportedly told employees in January that Intel must “deliver better products to the PC ecosystem than any possible thing [made by] a lifestyle company in Cupertino,” a reference to Apple’s 2020 decision to begin ditching Intel processors in its Mac desktops and laptops in favor of proprietary silicon like the M1 chip.
Could This Fierce Rivalry Fizzle? Indeed, it is Gelisinger’s swipe at Apple that represents perhaps the biggest change to the terms of the Intel-AMD rivalry over the next decade or so. As impressive as Apple’s M1 chip is, it’s trivial in a bigger-market-picture sense at the moment—Macs are a drop in the bucket of overall PC sales. Instead, it’s what the M1 represents that could have a lasting impact on the way Intel and AMD do business. Longtime Intel and AMD clients may no longer rely on the two semiconductor veterans for all of their chip needs.
Amazon, Facebook, and Google are spending small fortunes to design their own server chips that can power everything from simple data cold storage to machine-learning algorithms.launched in 2018, is reportedly less capable than even five cores of Intel’s Xeon E5-2697v4 CPU, from 2013.
Google's TensorFlow chip But if AMD and Intel are tempted to gloat, it would be to their own detriment. This is no longer purely a game of Xeon versus Ewpyc and Operton in the server market. Even if the AWS chip can’t match a Xeon’s power, it requires no sales agreement and no middlemen. And plenty of servers don’t require powerful silicon at all, instead running only specialized artificial intelligence-boosted applications. Google’s TensorFlow server chips are “an order of magnitude higher performance per watt than commercial FPGAs and GPUs,” CEO Sundar Pichai claimed in 2016, referring to the field-programmable gate arrays and graphics processors that Intel, AMD, and other silicon veterans offer to server customers.
The fact that Amazon, Apple, Google, and other tech giants can now design their own processors if Intel and AMD don’t offer suitable solutions could profoundly alter the semiconductor industry at a time when its veterans are facing protracted silicon supply problems. If that happens, a rebate scheme that runs afoul of anti-monopoly rules would be a quaint anachronism rather than a billion-dollar blunder. There would be no position to monopolize. Rather than locking horns, AMD and Intel could quickly find themselves circling the wagons to ward off competition from dozens of private-label processors.
Under Gelsinger, Intel has started planning for this possibility. The company’s new fabrication facilities in Arizona, together with existing ones in Oregon, will form a new division of the company dedicated to making chips from other companies. Qualcomm and Amazon have already signed up to be among the first clients of the new Intel Foundry Services . Some of the chips will be based on Intel technology, with Qualcomm planning to use Intel’s 20A production process, announced in July. If the contract chip-making business takes off, Intel could conceivably reinvent itself as a silicon middleman.
That would be a bittersweet eventuality from the perspective of PC enthusiasts and old-school IT execs. To many, the decades-long AMD-Intel rivalry is something of a pastime. To lawyers and OEMs, it was occasionally a very profitable one. But if budding silicon from the likes of Apple and Amazon already rival that of companies with decades of experience in semiconductor engineering, there might not be an opportunity left for either AMD or Intel to don a crown in the decade to come.
