According to a report from MoneyDJ, citing the Reuters, Intel’s share price has plummeted this year as the company falls behind in the AI race and faces substantial losses in its foundry business.

Intel is set to release its third quarter 2024 earnings report after the U.S. stock market closes on October 31. According to the report from the Reuters, Intel is expected to announce its largest quarterly revenue drop in five quarters, with Wall Street expecting an 8% decline in revenue to USD 13.02 billion, according to data from LSEG compiled as of Oct. 26.

The Reuters indicated that shareholders are now looking to CEO Pat Gelsinger for detailed plans to help the company navigate this crisis, as the company reports significant losses in its foundry business and struggles to capitalize on the generative AI-driven chip boom.

The report from the Reuters highlighted that Intel’s losses in its foundry business are substantial, driven by the high construction costs of fabs. The foundry’s operating loss for the third quarter is estimated to reach USD 2.55 billion, significantly impacting the company’s overall profit.

According to the report from the Reuters, based on estimates compiled by LSEG, Intel is expected to see a decline of more than 7 percentage points in its adjusted gross margin, dropping to 37.9%.

On the other hand, Intel’s revenue from producing chips for AI-powered PCs is also expected to see an annual decline of more than 6% in the third quarter, as its rival AMD expands its AI PC product lineup, according to the Reuters.

Furthermore, the report noted that Intel’s Data Center and AI business group is also losing market share to AMD, with third-quarter revenue expected to decline by 17%, marking ten consecutive quarters of annual declines.

While Intel still holds a significant share of the server CPU market, demand is increasingly shifting toward AI graphics processors, an area where the company has limited presence, as the report from the Reuters pointed out.

Since taking office in 2021, Gelsinger has aimed to restore Intel to its former glory. He made ambitious promises to bring chip manufacturing back to the U.S. and to compete with TSMC in the foundry market. However, according to MoneyDJ, the second-quarter financial report released in August revealed a significant loss of USD 2.8 billion in the foundry business. On that day, the stock price dropped by 26%, marking its worst single-day decline in 50 years.

Read more

• [News] Intel Steps Back from AI Race with NVIDIA, Shifts Focus to Cost-Effective Solutions with Gaudi 3
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: Intel)

AMD posted third-quarter results on October 29th, with a quarterly revenue of USD 6.8 billion and net income to USD 771 million, while data center revenue surged 122% year-over-year. With new products such as MI300X hitting the market, the world’s second largest data center GPU provider also raises its AI chip sales forecast for this year to USD 5 billion, up from an earlier estimate of USD 4.5 billion, according to a report by CNBC.

For the fourth quarter of 2024, according to the company’s press release, AMD expects revenue to be approximately USD 7.5 billion, plus or minus USD 300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 22% and sequential growth of approximately 10%. Non-GAAP gross margin is expected to be approximately 54%.

Fourth Quarter Forecast Falls to Impress; Concerns Raised on Capacity Constraints

However, the fourth-quarter forecast is slightly below market expectations, which raises concerns about whether the growth of the AI sector might be slowing down. According to Bloomberg, analysts had an average estimate of USD 7.55 billion.

AMD CEO Lisa Su reiterated that the company still sees robust momentum in AI, as interest from customers and partners in the MI325X is strong, a report by CNBC notes. AMD plans to begin production shipments of the MI325X this quarter, according to Su.

In October, AMD introduced the MI325X, and projected that the AI GPU market could reach USD 500 billion by 2028.

Nonetheless, Su also said that the environment will “continue to be tight”, but AMD has also planned for significant growth going into 2025, according to Bloomberg. She stated that the company feels good “about our overall supply-chain capability,” Bloomberg indicates.

AMD’s major foundry partner, TSMC, indicated in July that constraints on AI chip production will persist into 2025, which may imply a significant hurdle for clients like AMD, as it not only has to compete with NVIDIA on product performance, but also on the race of securing capacity.

Strong Data Center Revenue with 122% YoY Increase, while Gaming/ Embedded on the Decline

For the third quarter of 2024, AMD delivered a quarterly revenue of USD 6.8 billion, gross margin of 50%, operating income of USD 724 million, net income of USD 771 million and diluted earnings per share of USD 0.47. On a non-GAAP basis, gross margin was 54%, operating income was USD 1.7 billion, net income was USD 1.5 billion and diluted earnings per share was USD 0.92.

AMD’s AI chips are included in its data center segment, which saw annual sales more than double, reaching USD 3.5 billion. Overall, data center revenue rose 122% year-over-year. Su attributed the strong results to higher sales of EPYC and Instinct data center products and robust demand for the Ryzen PC processors, according to AMD’s press release.

The company also sees robust growth in its client segment, as revenue was USD 1.9 billion, up 29% year-over-year and 26% sequentially primarily driven by strong demand for “Zen 5” AMD Ryzen processors.

However, the gaming segment revenue was USD 462 million, down 69% year-over-year and 29% sequentially primarily due to a decrease in semi-custom revenue. According to CNBC, this could be attributed to reduced “semi-custom revenue” from custom chips used in consoles like the Sony PlayStation 5.

Embedded segment revenue was also declining, down 25% year-over-year to USD 927 million, as customers normalized their inventory levels. On a sequential basis, revenue increased 8% as demand improved in several end markets.

Read more

• [News] AMD Unveils its Latest AI Accelerators MI325X and MI355X, with TSMC Emerges as the Major Beneficiary
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: AMD)

On October 15th, Intel and AMD announced the formation of an x86 Ecosystem Advisory Group. According to the press release, these two tech giants established this group to enhance architectural interoperability and simplify software development for the x86 system.

Other members of this x86 Ecosystem Advisory group include industry leaders from Broadcom, Dell, Google, Hewlett Packard Enterprise, HP Inc., Lenovo, Meta, Microsoft, Oracle, and Red Hat.

The press release stated that for over forty years, x86 has served as the foundation of modern computing, establishing itself as the preferred architecture in data centers and PCs worldwide.

According to a report from Forbes, x86 has long been the dominant architecture in both datacenters and PCs, while Arm has a strong presence in smartphones and IoT. However, Arm has recently started to encroach on x86’s territory, as seen in its increasing adoption within hyperscale datacenters and its emerging role in Microsoft’s Copilot+ PC initiative.

A report from Reuters stated that Intel and AMD have formed this group in response to the challenges posed by the rise of Arm Holdings, which is increasingly adopted by tech giants including Apple, Qualcomm, Amazon, Microsoft, and Alphabet.

According to the report from Reuters, one of the main reason behind Arm’s success is that Arm has indicated in its contracts that all Arm chips should be able to run all Arm software, regardless of who made the chip.

The report noted that, in contrast, while Intel and AMD use the same foundational x86 technology in their chips, software may require adjustments to function properly across their products.

To address this issue, one of the main objectives of the x86 Ecosystem Advisory Group is to identify “new ways to expand the x86 ecosystem by enabling compatibility across platforms,” as stated in the press release.

Intel and AMD have a rich history of both competition and collaboration within the industry, which makes this partnership quite interesting. In the past decade, Intel’s dominance in the laptop processors has gradually declined. In some sectors, AMD even caught up and overtook Intel’s throne.

Amid Intel’s efforts for restructuring, previous rumors even indicate that AMD could be a potential buyer of Intel’s Field Programmable Gate Array (FPGA) unit Altera.

On the other hand, the two companies’  joint efforts have played a crucial role in developing key technologies such as PCI, PCIe, and the Advanced Configuration and Power Interface (ACPI).

Additionally, both companies have been crucial in the development of USB, an essential connectivity standard for all computers, regardless of the processor.

This advisory group aims to elevate their collaborative efforts further, benefiting the entire computing ecosystem and serving as a catalyst for product innovation.

Read more

• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: Intel)

Ahead of TSMC’s upcoming third-quarter earnings call this Thursday, a report by the Commercial Times gives a heads-up on the foundry giant’s outlook of 3nm orders next year. With NVIDIA and AMD ramping up their next-gen AI accelerators, combined with the strong demand from smartphone chips, orders for TSMC’s 3nm node are set to see a surge in 2025, the report indicates.

According to analysts cited by the report, most flagship smartphone chips are expected to be manufactured with 3nm next year. For instance, Apple’s A19 Pro is said to adopt TSMC’s N3P process, while the Android phones are likely to follow suit.

In terms of the demand from AI accelerators, the report notes that AMD’s MI350 series will likely be manufactured with the 3nm node, which is going to benefit TSMC.

It is worth noting that according to another report by Commercial Times, at Advancing AI 2024 last week, AMD CEO Lisa Su highlighted the company’s close partnership with TSMC, saying that she would be glad to see the CHIPS Act bringing more manufacturing lines back to the U.S.

Sources cited by Commercial Times suggest that for now, AMD has no plans to collaborate with chip makers other than TSMC, and that the company is currently conducting a qualification assessment for chip production at TSMC’s Arizona fab (Fab 21).

On the other hand, Commercial Times indicates that NVIDIA’s orders on TSMC will likely see an increase next year, which would further tighten the foundry giant’s capacity in 3nm and 5nm. NVIDIA’s R-series GPUs are reportedly to be manufactured with TSMC’s 3nm as well, the report notes, but it would not be released until 2026.

TSMC is expected to see strong 3nm demands from other tech giants in 2025 as well. According to the report, Intel is said to outsource most of its Lunar Lake chips to TSMC, while the AI PC chip MediaTek co-develops with NVIDIA is also rumored to be built using the 3nm process. The report states that this chip is expected to debut in the second quarter of next year and enter mass production in the third quarter.

Sources cited by the report note that as clients turn to place orders on 3nm for their latest AI accelerators, foundry capacity will further be strained. Notably, TSMC’s CoWoS packaging reportedly allows interposers reaching 3.3 times for its maximum reticle size to manufacture chips such as NVIDIA’s B200, AMD’s MI300, or Intel’s Gaudi 3, with the number of chips produced on per interposer becoming fewer.

Read more

• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?
• [News] NVIDIA and MediaTek Reportedly Team up on 3nm AI PC Processors, with Tape-outs Expected This Month

(Photo credit: TSMC)

As AMD unveiled the roadmap for its upcoming AI accelerators at Advancing AI 2024, including MI325X and MI355X, its longtime foundry partner TSMC is expected to be the major beneficiary, according to the reports by the Commercial Times and the Economic Daily News.

TSMC, as AMD’s key chip making partner, is expected to benefit the most, as the foundry giant also provides advanced packaging services such chiplets and CoWoS, Commercial Times notes.

Other Taiwanese companies in the supply chain are also expected to benefit, including ASMedia, which provides PCIe Gen5 high-speed interface chips, as well as ASIC firms GUC and Alchip, according to the report. Among server OEM partners, Compal, Wistron, Wiwynn, and Inventec are listed as AMD’s collaborators.

According to the Economic Daily News, AMD’s Instinct MI325X AI accelerator is said to be manufactured with TSMC’s 4nm and 5nm, with mass production anticipated to begin this quarter. It is worth noting that the AI GPU would be the first of its kind to be equipped with 256GB HBM3e memory, according to another report by Wccftech.

On the other hand, to compete with AI chip giant NVIDIA’s GB200, AMD also introduced the MI350 series at the event. According to Commercial Times, MI355X will be launched in the second half of 2025, leveraging TSMC’s 3nm process while equipped with 288GB HBM3e memory.

The report by Commercial Times further notes that in addition to its larger memory capacity, the MI355X accelerator also incorporates the CDNA 4 architecture, allowing it to achieve a significant 35x increase in FP8 computational performance.

Featuring TSMC’s 3nm node just like NVIDIA’s Rubin reportedly does, AMD’s MI355X has the potential to catch up with, or even run ahead of its archrival in terms of product schedule, the report suggests. NVIDIA’s Rubin is reportedly to be released in the fourth quarter of 2025.

Notably, AMD’s MI300X accelerator has been reportedly adopted by a few tech heavyweights. According to Commercial Times, following Microsoft’s adoption, Samsung has also purchased USD 20 million worth of AMD MI300X units for AI training.

At Advancing AI 2024, which took place on October 10^th, AMD also introduced its latest EPYC server processors, EPYC 9005 Series, previously codenamed Turin. According to its press release, the EPYC 9005 Series is built on the latest “Zen 5” architecture, which offers up to 192 cores and will be available in a wide range of platforms from leading OEMs and ODMs. According to the Economic Daily News, EPYC 9005 Series is manufactured with TSMC’s 3nm and 4nm nodes.

Read more

• [News] AMD Unifies RDNA and CDNA into UDNA Architecture, Aiming to Compete with NVIDIA’s CUDA
• [News] AMD MI325X Reported to Debut in October, Claiming AI Supercycle Has Just Started

(Photo credit: AMD)