Editor’s note: This article is from the micro-channel public number “beast Finance” (ID: mengshoucaijing), Author: Arne Verheyde, 36 krypton release authorized.Interestingly, this statement also means that AMD will not reach its claimed 10% market share in the second quarter.AMD Announcement On March 5th, the Financial Analyst Day (FAD), AMD (AMD) issued several announcements related to its CPU data center business.By the second quarter, its market share will reach 10% (double digits).Zen 3 will be launched later this year, and Zen 4 will be launched by the end of 2022.It will enter the (5G) telecommunications network infrastructure part of the data center.As we mentioned in a recent 5G article from Intel (NASDAQ: INTC), network infrastructure is a $ 5 billion value for Intel (becoming the largest silicon supplier in Q3’19)Business, the silicon market will grow to around $ 25 billion in the next few years.Today, Intel is grabbing 3G and 4G market share through so-called “network cloudification”, where standard Xeon CPUs are deployed instead of custom chips.This will lower the total cost of ownership (TCO) of the telecommunications company and benefit Intel.This will only accelerate in the 5G era.With Intel’s recent announcement, it also entered the base station portion of the network infrastructure with its x86 architecture, and is expected to reach a 40% market share by 2021, becoming the largest base station silicon supplier.As an x86 chip supplier, it is clear that this is also an opportunity for AMD to be interested, because so far, AMD has not developed this part of the data center.In fact, this is exactly what the company announced.This seems to be AMD’s way of doing business, it may be trying to pass the core counting contest, and it has created the Epyc series.This statement has several market implications.Hint 1: Intel is under attack For Intel, it now finds itself heavily attacked in another market.It is clear that AMD intends to compete with Intel in many markets because it has a competitive architecture.AMD’s success in this area is difficult to predict.He would tend to believe that AMD ’s network share (even) is lower than the 5% market share it gained after working with Zen in the data center for 2.5 years.This is because of partnerships and more specific software running in that area.For example, we described how Snow Ridge has several specific network acceleration technologies built in.We don’t know AMD has these.Nevertheless, AMD appears to have established a partnership with Nokia (NYSE: NOK), although Nokia seems to work with almost everyone.Intel also leverages its low-power and low-cost Atom architecture to some extent.AMD may not be able to compete with Epyc.In this part, Intel also has its low-power Xeon-D lineup.Although based on standard Xeon scalable silicon, this particular solution may continue to give Intel an advantage.But in the long run, this does improve AMD’s total target market (TAM) and may gain some share from existing Epyc investments, driving revenue growth.On the software side, it can be said that AMD has benefited from Intel’s pathfinding investment in software-defined networking on x86.Intel shouldn’t be too worried because its own market share is well below cloud computing and enterprises at around 95%: as we described, it has $ 5 billion in revenue in a $ 20 billion segment.Hint 2: AMD Q2 won’t have a 10% market share. Interestingly, this statement has a second meaning.As mentioned earlier, AMD announced that it will reach 10% market share in the second quarter of this year.This seems to be much higher than the nearly 5% market share in the fourth quarter, as Mercury Research also recently announced the news.However, this is itself misleading, as not all market shares are equal.Intel announced on a 2018 earnings conference call that 8 million CPUs were delivered to data centers during the quarter, with 30 million units delivered throughout the year.In contrast, AMD’s announced 10% market share is based on 20 million TAMs (as reported by IDC).This seems to be due to AMD not participating in several parts of the data center.But this obviously increased AMD’s market share by 1.5 times.Now, as AMD intends to develop the entire data center, it should use a full TAM.As a result, using Intel’s 30 million TAM chips, AMD announced that its market share in the second quarter is expected to reach 6.7%.Although growth in the fourth quarter was less than 5%, it was much smaller than it seemed.Investor Impact AMD’s stock price has fallen like most markets in recent times.In the short term, there are two opposing drivers.On the one hand, the economic downturn may affect many businesses.On the other hand, the work of the home paradigm is driving the growth of network demand, although this may not necessarily apply to 4G / 5G.However, as AMD’s telecommunications business is still in its infancy, this may not have a significant impact on this part of AMD’s business.In the short term, we believe that AMD’s “bomb” supports its long-term goals of 20% annual revenue growth and 50% + gross margin.The company also revealed this goal on the analyst day: as this is a new business, its incremental revenue may be higher than the company’s average gross margin because it is part of the data center.However, at the time of this announcement, it may be too early, and it is difficult to say how much this new business will bring to AMD.But for investors, it may be important that AMD has entered a new $ 20 billion market.From a stock price perspective, AMD’s stock price is already at a premium level, so its future financial performance is likely to be reflected in the stock price.Outlook AMD has announced a long-term goal of (over) 20% annual revenue growth.It may intend to do this by taking market share from Intel and entering new market segments.To this end, AMD announced that it will now also be in the network infrastructure segment, which was previously inactive, and announced a partnership with Nokia.AMD is now advancing the entire data center.Although AMD may benefit to some extent from Intel’s investments over the past decade, enabling “network cloudification” on standard Xeons, AMD may currently lack some specific investments to be able to compete completely with Intel (e.g. in base stations).AMD’s current development momentum is also largely based on its advantages in 10nm process chips, but AMD’s telecommunications business will not have similar advantages in the next few years.The web announcement may not have much impact in the short term, although it leverages the Epyc / Zen architecture to provide AMD with a high level of TAM (+ $ 20 billion) through a modest additional investment cost.For Intel, this situation may not change much in the short term, because the company’s own market share in the network field is still growing significantly.In addition, AMD’s expansion to telco conflicted with its 10% market share announced in the second quarter.AMD’s data center is based on 20 million TAM, while Intel’s data center is 30 million TAM.AMD is now chasing the opportunity for the entire data center, which means it should use a complete TAM system, which will reduce its market share in the second quarter to 6.7%.Investors should be aware that AMD’s data center is not as fast as it seems because its market share statement is misleading.Although, if it is running close to $ 1 billion in revenue, AMD’s data centers are becoming a more important part of its overall business.In the end, it may be more meaningful to look at the overall growth rate of this market segment rather than market share.Although AMD did not disclose this, Intel expects this year’s competitive environment to become increasingly fierce..
AMD drops a bomb in 5G, but Q2 market share will not reach 10%
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