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Experts attributed structural changes in demand to the causes of Intel problems in the server segment
At yesterday’s quarterly conference, Intel CEO Robert Swan noted that the main problem in terms of competition with AMD is not price pressure, but structural changes in demand. What character they were, the Intel representative did not explain, but third-party analysts did it. The problem lies in the server segment.
Image source: Intel
According to Bank of America, Intel is now facing three major challenges. Firstly, it has not yet been decided how exactly third-party vendors will be involved in the release of 7nm products. Recall that the company is going to announce its decision in this area only by January next year.
Secondly, according to analysts, demand is shifting from the PC segment to the server segment, and in it the competition is more pronounced than in the corporate. In the consumer market, Intel is also facing increasing competition – not only from AMD, but also from Arm customers, who are increasing their presence in the increasingly popular Chromebooks. The situation is exacerbated by the fact that 10nm Ice Lake-SP processors will only begin shipping to the market in the next quarter.
Third, Intel’s position is undermined by the general increase in competition from processor developers who are not burdened with their own production facilities. These are AMD, Arm and NVIDIA, which in planning the announcement of new products can rely on the capabilities of manufacturing contractors, the main one among which is TSMC.
Other analysts are also in favor of strengthening competition with AMD. BMO Capital Markets believes that the drop in Intel’s server operating margin from 49% last year to 32% today is direct evidence of the drop in server processor prices as a result of competing with AMD. Raymond James is convinced that structural changes in demand are not the only cause of Intel’s problems, the company should face competitive pressure from AMD. Recall that at yesterday’s trading, Intel shares fell by more than ten percent, and in general, they have not been doing very well since the end of July, when problems with the development of the 7-nm technical process were announced.