Intel’s CEO is Wrong About AMD

Intel’s CEO Pat Gelsinger has released a holiday video celebrating his first year at the company. The video mostly thanks employees for a good year but there’s one particular remark that’s drawn a lot of attention. “Alder Lake. All of a sudden, boom! We are back in the game,” Gelsinger said. “AMD in the rearview mirror in clients and never again will they be in the windshield; we are just leading the market.”

This is unlikely to be true and I suspect Gelsinger knows it. I don’t say that because I have any special or particular knowledge of how Zen 4 will compare against future Intel microarchitectures. It’s an unlikely statement based on how AMD and Intel have performed against each other over the past 31 years. Alder Lake is a good CPU microarchitecture and we expect it to compete very well in desktop, server, and mobile. That doesn’t mean Intel has permanently put AMD in the rearview mirror.

All of This Has Happened Before

Gelsinger is a longtime Intel veteran, having joined Intel in 1979. He’s been around long enough to see both Intel and AMD rise and fall. Gelsinger earned his degree in electrical engineering while working on the 80286. Andy Patrizio credits Gelsinger’s work on the 80386 as critical to saving Intel after the i432APX failed. The up-and-coming engineer then led the 80486 design team before shifting into management during the Pentium Pro era.

Pat Gelsinger was a relatively high-ranking Intel employee during the time when Intel was doing everything in its power to kill AMD and other x86 licensees. In 1991, Intel took AMD to the Supreme Court in an attempt to invalidate its x86 license. This successfully delayed the introduction of AMD’s 80386 for years, costing the company tens of millions of dollars. The bad blood between the two companies was legendary for well over a decade.

For most of the 1990s, AMD eked out an existence as a second-class CPU manufacturer. That didn’t stop it from launching the K7 in 1999 and catching Intel off guard. Intel roared back with the Pentium 4 Northwood a few years later. AMD then took the lead back with the Athlon 64 in 2003 and cemented it with the Athlon 64 X2 in 2005. Just over a year later, Intel’s Core 2 Duo stole back the performance crown, which Intel then held from 2006 – 2017.

All My Life’s a Circle

If there was ever a time to conclude that Intel had “permanently” put AMD in its rearview mirror it was 2012 – early 2017. For five years AMD racked up huge quarterly losses while Intel continued to iteratively improve its CPUs. As of March 1, 2017, Intel could claim to have led the CPU market for roughly 21 of the past 26 years and all of the past decade. On March 1, 2017, the only company actually competing with Intel in the CPU market was Intel. AMD had once again become the low-end budget alternative, with very few high-end system wins.

On March 2, 2017, AMD substantially caught up. The Ryzen 7 1800X delivered a 1.52x IPC improvement over Piledriver and made eight cores the high-end consumer desktop standard. AMD followed the Ryzen 7 1800X with multiple CPUs that further improved its competitive position against Intel. When Intel fought back with 14nm++ and the 8700K, AMD countered with the 2700X and so on, until we arrive at the present day. Over 30 years neither CPU manufacturer has managed to acquire a permanent advantage over the other, despite Intel’s size advantage. For nearly five years AMD has steadily chipped away at Intel’s position.

AMD: The Cockroach and/or Tardigrade of Companies*

All of the above is ancient history today and the AMD facing Intel in 2022 is not the AMD it faced in 2012 or 2002. AMD is no longer drowning in debt. It is not struggling with its own node transitions. It isn’t legally required to use a foundry partner that cannot ship leading-edge hardware. It is not dealing with the distraction of spinning off its manufacturing arm as an independent company or patching a broken microarchitecture. It is not racing to design a new CPU before it runs out of money.

This is not to say that AMD does not face challenges in 2022. Intel has set an aggressive launch schedule for itself over the next few years. It has stated that it intends to regain overall performance and process node leadership by 2025. Alder Lake is currently very competitive with Ryzen 5000.

Furthermore, both Intel and AMD face a renewed competitive challenge from ARM in the next few years courtesy of Qualcomm, Apple, and various hyperscale server vendors. Intel’s new hybrid core strategy puts pressure on AMD to demonstrate that it can match or exceed Alder Lake’s performance without efficiency cores. AMD’s overall position in the GPU market is weaker vis-à-vis Nvidia than its position in the CPU market with regard to Intel. With Intel planning to enter the GPU market, AMD may need to invest more aggressively in this space.

The struggle between Intel and AMD is broadening, not over. In the future, AMD’s Xilinx will compete with Intel’s Altera in the FPGA market. Intel’s Alchemist GPUs will take on GeForce and Radeon. The idea that Intel has left AMD permanently behind with Alder Lake doesn’t stand up to scrutiny.

*-Depending on how you feel about AMD. Both are very hard to kill.

Objects in the Rearview Mirror are Closer Than They May Appear

AMD has literally never been in a stronger position to face Intel’s challenge. The company has now been profitable every year since 2018. While this might not be a record yet, AMD was once infamous for its unreliable financial performance. Under Lisa Su’s management that’s no longer the case.

The fastest way for Intel to hand the pole position back to AMD would be to assume Alder Lake guarantees that outcome. Intel has never quite managed to dispose of its chief competitor, regardless of how strong its advantage in the moment might be. Gelsinger is likely aware of this. His message was probably more intended to inspire than to be evaluated by the press.

Importantly, there is no sign of a near-term return to the old status quo. Both manufacturers are reporting very healthy quarterly results courtesy of the PC boom. This is expected to continue through 2022 – 2023. In the past, stronger results for Intel have often had negative impacts on AMD. In an environment where both companies are selling every chip they can manufacture, that’s less likely to happen.

I don’t know whether Alder Lake Mobile or Ryzen 6000 Mobile will prove to be the better mobile architecture, but no matter what happens, it won’t be the last word. What we actually have for the first time in at least 20 years is two financially stable and healthy CPU design firms slugging it out for your dollars.

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