Trying to gain an edge over rival Intel, Advanced Micro Devices on Tuesday announced new chips that will be available in the coming year and a deal to supply Amazon with microprocessors for its cloud servers.
The news sent AMD’s shares up 4% on the day.
The new chips mark shot improvements on CEO Lisa Su’s multi-year plan to emphasize higher performing chips, instead of just lower cost imitations of rivals’ products. And they should give the company a strong base to attack Intel’s near 99% market share in chips for corporate and cloud data centers.
AMD unveiled a new series of graphics processing chips, which can also be used for many machine learning and A.I. computing tasks, called the Radeon Instinct MI60 and MI50. They are the first graphics chips for datacenters that are manufactured using the semiconductor industry’s new process for packing more circuits on a chip, called 7 nanometer scale, which should make them more efficient and faster.
And starting today, Amazon is offering corporate customers the ability to run some of their cloud computing apps on servers that use AMD’s Epyc chip. Companies that do so would reduce the cost renting computing power from Amazon by about 10% compared with using servers that run rival processors, AMD said.
If the option proves popular with Amazon’s customers, it could lead to a big sales gain for AMD. The company has already announced chip supply deals with most of the other large cloud providers, including Microsoft and Baidu.
AMD also demonstrated a future version of the Epyc chip coming next year, code named “Rome,” that is also made on the 7 nanometer scale. Su said the new chip would perform common calculations two to four times faster than current Epyc processors.
The news helped boost AMD’s stock price, which has taken investors on a wild ride this year, to as high as $21.65 on Tuesday. The price had risen as high as $34 in mid-September, on excitement that AMD could grab more market share from stumbling Intel. But the stock then fell almost to $16 last week, after AMD’s earnings report showed that the gains weren’t happening as quickly as some investors had hoped.
On Tuesday, Intel’s share price fell 1% while shares in Nvidia (NVDA), AMD’s leading competitor in the graphics chip market, were about unchanged.
AMD (AMD) doesn’t manufacture the chips that it designs, and instead relies on others, such as Taiwan Semiconductor (TSM) and GlobalFoundries. Recently, Taiwan Semiconductor has improved its production so that it can print circuits on chips at a scale of 7 nanometers (although the measurement is more of a shorthand and doesn’t indicate the actual size of circuits on chips).
That advance has helped AMD and others that rely on Taiwan Semiconductor, including Apple, offer chips that can more easily compete with Intel chips on price and performance.
Intel (INTC) both designs and manufactures its own chips. And the company has been stuck for years at 14 nanometer scale. Most recently, Intel said it would not produce chips at high volumes at 10 nanometer scale until late next year, four years later than it initially said.