AMD re-entered the server CPU market a few years ago with the new EPYC product line. Its focus so far is to provide massively more cores per CPU, while keeping a decent single-core performance. For example, AMD’s most powerful server CPU offers 64 cores while Intel’s products top out at 28 cores. The strategy worked as AMD was able to take almost 10% market share over the past 2 years from Intel.

However, the 3 new server CPUs AMD introduced last week took a very different approach. They were optimized for single-core performance with rather modest core counts ranging from 8-24, a similar approach took by Intel. Why is that?

We believe part of the reason is VMware, the virtualization software provider. The company recently updated its licensing model. Under the new licensing model, one license will cover up to 32 cores in a single CPU. If a CPU has more than 32 cores, another license will be required. So for anyone buying server CPU to run virtual-machine, you’ll have to buy 2 licenses from VMware if you use AMD’s high-end 64-core products vs only 1 if you are using Intel. This new licensing model increased the TCO (total cost of ownership) of using AMD’s server CPU by a decent amount. 

AMD has done a great job taking market share from Intel over the past 2 years in the server CPU market by being differentiated. With the 3 new CPUs, AMD is taking the fight to Intel’s backyard and trying to beat the competitor at its own game. The fight is on.