AMD’s Ryzen chips could spark price (or performance) war with Intel
Chip maker Advanced Micro Devices Inc. released details Wednesday on its forthcoming Ryzen chip, including pricing that has the potential to set off a price war with its big rival, Intel Corp.
AMD AMD, +0.28% said the first three chips based on its highly anticipated Zen architecture will be launched March 2 for the desktop PC and gaming market, with the most powerful chip in the lineup priced at half of what Intel INTC, +0.30% charges for a similarly configured chip. Investors were enthused by the first concrete news of the chip family, with AMD’s shares rallying almost 2%.
Chief Executive Lisa Su said at an event Wednesday in San Francisco that AMD had one goal in mind when it was developing the new chips. “We wanted to disrupt the PC market, we wanted to bring innovation, choice and performance to as many people as possible,” she said.
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Its highest-performance chip, called the Ryzen 7 1800X, with 8 cores, is priced at $499, which the company compared to a similarly configured 8-core, 16-thread Intel Core i7-6900K, at $1,000. “More performance, half the price,” Su said. AMD’s other two Ryzen chips are priced slightly below Intel’s chips, she said. The Ryzen 7 1700X will be priced at $399, versus Intel’s pricing of a comparable chip for $425, and the Ryzen 7 1700 will be priced at $329, versus $350 for a comparable chip from Intel, AMD said.
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Patrick Moorhead, principal analyst with Moor Insights & Strategy, said he believes Intel will take a wait-and-see approach, and focus on the high performance of its own chips, possibly increasing the clock speeds of its own chip offerings, rather than hurt its profit margins by lowering prices.
“Overall, I see Intel marketing the heck out of their advantages to basically own the channel,” he said in an email. “Further on down the road, we could see some product enhancements, but only at last resort will Intel pull the price lever.”
In the past, Intel and AMD have sparred over pricing, but that was in the days of a much stronger PC market. It’s feasible that now the chip rivals will engage instead in a performance war over clock speeds, which have become less of a focus for most consumers but are still important to videogamers.
AMD shares have soared it the past few months as investors have big hopes for the company’s new chip family, which Su said was “truly our best product lineup in over a decade.” But the real hope for investors is AMD’s foray again into the server and data-center market, where as Bernstein Research analyst Stacy Rasgon noted, the company currently has less than .2% market share.
“The biggest incremental opportunity could be in servers, but that takes longer,” he said.
AMD said it will launch its Naples chip for data centers in the second quarter, along with two other chips based on the Zen architecture. Investors will be waiting to see AMD’s financial results for proof that 2017 will be “an incredible year.”
AMD shares have gained 625% in the last 12 months, while Intel shares have gained 25%. The S&P 500 SPX, +0.04% has gained 23% in the same time frame
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