Intel battles AMD with new data center chips

By Max A. Cherney and Stephen Nellis

TAIPEI/SAN FRANCISCO – Intel launched its next generation Xeon server processors on Tuesday as it looks to claw back data center market share and revealed that its Gaudi 3 artificial intelligence accelerator chips would be priced much lower than its rivals’ chips.

The sixth generation Xeon chips are crucial for Intel, which has been steadily losing data center market share to AMD. Intel’s share of the data center market for x86 chips has declined 5.6 percentage points over the past year to 76.4%, with AMD now holding 23.6%, according to data from Mercury Research.

Stumbles with Intel’s manufacturing process have allowed AMD to take business as it uses Taiwan Semiconductor Manufacturing Co to fabricate its chips.

The Xeon 6 server processors come in two main flavors, a larger, more powerful version, and an “efficiency” model that Intel pitched as a replacement for older-generation chips.

To achieve the same level of computing power as its second generation chips will now require about 67% fewer server racks with the efficiency model, which is designed to serve media, websites and perform database calculations.

The more powerful performance model is designed to run the computations necessary to generate responses from complex AI models and other tasks that need the increased horsepower.

The efficiency Xeon chip is available on Tuesday, with the “performance” model arriving in the third quarter. Intel plans to launch additional variations next year. The sixth generation chip was delayed a year because the company wanted to use a different manufacturing process.

On a briefing call with reporters, Intel said that a Gaudi 3 accelerator kit, which includes eight of the AI chips, sells for about $125,000, and the earlier generation Gaudi 2 has a list price of $65,000.

AMD and Nvidia do not discuss pricing of their chips. A comparable HGX server system with eight Nvidia H100 AI chips can cost more than $300,000, according to custom server vendor Thinkmate.

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Intel revealed the details of the Gaudi 3 AI chip in April and has positioned it as a considerably cheaper and viable alternative to Nvidia’s H100 chips.

Also on Tuesday, Intel said its next generation laptop chip, called Lunar Lake, uses 40% less power and has more a powerful AI processor in it. Intel said it will ship the chip in the third quarter.

(Reporting by Max Cherney in San Francisco; Editing by Sonali Paul)