Intel Is Feeling the Heat from Amazon's Homegrown Chips

cageymaru

cageymaru

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Intel has dominated the server market with a 96.6% market share even after AMD reentered the competition. Intel seems secure, but the landscape of the server market is different from conventional tech markets as 10 corporations have the purchasing power to command 35% of the total sales in the server market. In the NY Times article, Shane Rau at research firm IDC said, "Each one of these companies is so large, they represent a market unto themselves."

For a large corporation like Amazon, which generates 56% of its revenue from its Amazon Web Services subsidiary, to start making its own chips will surely affect Intel's profits in the future. Google has already designed three generations of A.I. chips and eventually wants to design its own CPUs. Amazon has the volume to get their chip designs manufactured through cutting edge foundries such as TSMC and others. Dozens of small chip design houses exist today and waiting in the wings to take their part of the server market pie.

Intel acknowledges that companies like Amazon want to reduce their dependency on one big chip supplier. "I am not unaware of the dynamic," Lisa Spelman, an Intel vice president, said. "Our goal is to understand and respectfully acknowledge that desire." Intel's data center group, which sells both server and A.I. chips, pulled in $6.1 billion, a 26 percent increase over the previous year. The group now accounts for more than 30 percent of Intel's revenue.
 
Intel owns x86, and AMD owns the x86-x64 extension. I am sure there are many other patents involved here.

Not sure Amazon is going to be able to completely eliminate Intel/AMD from the picture on this.

Unless AWS is going to run on a custom OS, that is something completely different.
 
J3RK said:
Not a great time for them to ignore the desktop market then. :p
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Perhaps. I know its oft been said that the "PC is dead" which we all know is just BS but I wonder just how much longer does a traditional PC have to live? With the proliferation of smart phones and tablets I find myself using a traditional computer (outside of work) far less. In fact my desktop is now 98% a gaming machine. At work thin clients are starting to take over and traditional desktops are disappearing.

So there is still a need for a discrete CPU based on x86-x64 today...but I wonder just how much longer that will be true. As we get more advanced task specific chips it may be less so and we might just have "dumb" terminals into services. I honestly dont know. Personally I think CPUs will evolve and stay around but I am def not sure we will see just two major manufacturers. I do hope we have some sort of standard though...you can hate on x86 all you want but having a standard really gave computing a boost.
 
People wouldn’t be looking for alternatives if Intel didn’t suck so much lately. Not to mention their pricing.
 
El Derpo said:
People wouldn’t be looking for alternatives if Intel didn’t suck so much lately. Not to mention their pricing.
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Not sure what you mean by Intel sucking, but pricing isn't really the only reason they are looking for alternatives. If they can design chips themselves for their specific needs and send them out to a fab to create, they can get more optimized solutions that they fully control. They wouldn't be dependent on Intel and/or AMD, and they can continue to innovate their designs at their own pace. This is especially useful when you are building large scale infrastructure like Amazon and Google where you don't necessarily need all of the power and instructions in the AMD64 or the IA64 platforms.

Initial costs of doing this are generally far greater than just buying Intel or AMD servers, but the long term savings and benefits may outweigh them.
 
Glad Intel has been caught with their pants down, hands in the cookie jar. We needed a big shake up in the CPU market (Enterprise, Consumer, HEDT, etc). Real competition is great.
 
Stanley Pain said:
Glad Intel has been caught with their pants down, hands in the cookie jar. We needed a big shake up in the CPU market (Enterprise, Consumer, HEDT, etc). Real competition is great.
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I am confused what cookie jar you are referring to and what this article has to do with it? Also realize this article is not about competition in the market place. This is strictly Amazon making chips for themselves. It is taking stuff out of the marketplace. This is almost certainly good for Amazon's needs and I am surprised this didn't happen sooner, but this isn't necessarily good for us or anyone else.
 
NoOther said:
I am confused what cookie jar you are referring to and what this article has to do with it? Also realize this article is not about competition in the market place. This is strictly Amazon making chips for themselves. It is taking stuff out of the marketplace. This is almost certainly good for Amazon's needs and I am surprised this didn't happen sooner, but this isn't necessarily good for us or anyone else.
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So you don't think that Amazon making their own chip is not competition? While they might not be selling that chip publicly it's still competing for space in the data centre amongst other things. The cookie jar here is Intel's penchant for anti competitive practices, and hyper market segmentation. Let's say Amazon decided to go all in with their own chip, that would take a pretty huge bite out of Intel. Cue Google, Facebook, et al doing the same and now you have a pretty serious problem if you're Intel. This is going to force them to innovate or get pushed out of highly profitable market.

We win, because it forces Intel and others to create and innovate to meet a new demand or what have you. Even if that demand isn't in the particular market you "care" about.
 
Stanley Pain said:
So you don't think that Amazon making their own chip is not competition? While they might not be selling that chip publicly it's still competing for space in the data centre amongst other things. The cookie jar here is Intel's penchant for anti competitive practices, and hyper market segmentation. Let's say Amazon decided to go all in with their own chip, that would take a pretty huge bite out of Intel. Cue Google, Facebook, et al doing the same and now you have a pretty serious problem if you're Intel. This is going to force them to innovate or get pushed out of highly profitable market.

We win, because it forces Intel and others to create and innovate to meet a new demand or what have you. Even if that demand isn't in the particular market you "care" about.
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It might just mean they make cheaper crap. Look: it's a space where, at that scale, the cheaper node that is sufficient probably wins. Crank them out of China as fast as possible, as cheap as possible.
 
Stanley Pain said:
Glad Intel has been caught with their pants down, hands in the cookie jar.
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Dude! My imagination was seriously halted by that analogy.


P.S. On Amazon right now, ordering my girlfriend a cookie jar for Christmas.

P.P.S. OMG! This one is perfect. So many bad puns... "If it's not the right size I can send it back - I want to be sure you can get both hands into it."
 
Stanley Pain said:
So you don't think that Amazon making their own chip is not competition? While they might not be selling that chip publicly it's still competing for space in the data centre amongst other things.
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No, it is not competition, in fact it is the complete lack of competition. It is not competing against anything, there literally is no competition. Amazon makes a chip for their servers in their data center. That is their own product used for their own needs. It isn't competing with anything else.

Stanley Pain said:
The cookie jar here is Intel's penchant for anti competitive practices, and hyper market segmentation. Let's say Amazon decided to go all in with their own chip, that would take a pretty huge bite out of Intel. Cue Google, Facebook, et al doing the same and now you have a pretty serious problem if you're Intel. This is going to force them to innovate or get pushed out of highly profitable market.

We win, because it forces Intel and others to create and innovate to meet a new demand or what have you. Even if that demand isn't in the particular market you "care" about.
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First, Intel has been innovating and continues to innovate. Intel actually is making stuff in the ARM market, they aren't just relying on their X86 market. This still doesn't explain what Amazon making their own chips has to do with the cookie jar? The article makes no mention of anti-competitive practices. In fact, it is almost the opposite, the point is not to rely on any other chip makers at all, Intel or AMD.

Joust said:
It might just mean they make cheaper crap. Look: it's a space where, at that scale, the cheaper node that is sufficient probably wins. Crank them out of China as fast as possible, as cheap as possible.
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Just for reference, they aren't making them in China, although your premise is correct. The point is they can make a lower power chip specifically for their needs that is cheaper over the long run. They don't need the full AMD64 or IA64 instruction set.

From the article:

"Though it is still enormously difficult, building a chip is easier than it used to be. Amazon licensed much of the technology from ARM, the company that provides the basic technology for most smartphone chips. It made the chip through TSMC, a Taiwanese company."
 
seanreisk said:
Dude! My imagination was seriously halted by that analogy.


P.S. On Amazon right now, ordering my girlfriend a cookie jar for Christmas.

P.P.S. OMG! This one is perfect. So many bad puns... "If it's not the right size I can send it back - I want to be sure you can get both hands into it."
Click to expand...

I'm glad I made something like this happen ;)
 
Stanley Pain said:
Glad Intel has been caught with their pants down, hands in the cookie jar. We needed a big shake up in the CPU market (Enterprise, Consumer, HEDT, etc). Real competition is great.
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At this point Intel has been caught with their pants down so many times they deserve a nickname. I propose one of the following; Bill Clinton (maybe Slick Willy), Bill Cosby, or Harvey Weinstein.
 
Ultima99 said:
At this point Intel has been caught with their pants down so many times they deserve a nickname. I propose one of the following; Bill Clinton (maybe Slick Willy), Bill Cosby, or Harvey Weinstein.
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I'm kinda partial to Slick WiIly.
 
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mothandras said:
Intel owns x86, and AMD owns the x86-x64 extension. I am sure there are many other patents involved here.

Not sure Amazon is going to be able to completely eliminate Intel/AMD from the picture on this.

Unless AWS is going to run on a custom OS, that is something completely different.
Click to expand...
 
NoOther said:
No, it is not competition, in fact it is the complete lack of competition. It is not competing against anything, there literally is no competition. Amazon makes a chip for their servers in their data center. That is their own product used for their own needs. It isn't competing with anything else.

First, Intel has been innovating and continues to innovate. Intel actually is making stuff in the ARM market, they aren't just relying on their X86 market. This still doesn't explain what Amazon making their own chips has to do with the cookie jar? The article makes no mention of anti-competitive practices. In fact, it is almost the opposite, the point is not to rely on any other chip makers at all, Intel or AMD.
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I'm not sure you 100% understand what the competition is here. I'll give you a hint, it's not actually about the "chips" but the %mix within a Data Centre. There's a finite amount of space within the Data Centre. Chip A is not competing with Chip B directly here.

I'll throw out some numbers here. Let's say Amazon were to do a massive roll out these chips and they now take up 50% of the rack space in a Data Centre,The means there is some % less space available for other chip types. Do you not think this would impact Intel (or AMD) both from a market share perspective, as well as financially. More so if the other heavyweights in this field start making their own chips as well?

Point being here is that Intel has been top of the shit heap (across multiple lines of business) for a long, long time and this has caused them to innovate less and less per product cycle. ANY kind of shake up is good.
 
Stanley Pain said:
I'm not sure you 100% understand what the competition is here. I'll give you a hint, it's not actually about the "chips" but the %mix within a Data Centre. There's a finite amount of space within the Data Centre. Chip A is not competing with Chip B directly here.

I'll throw out some numbers here. Let's say Amazon were to do a massive roll out these chips and they now take up 50% of the rack space in a Data Centre,The means there is some % less space available for other chip types. Do you not think this would impact Intel (or AMD) both from a market share perspective, as well as financially. More so if the other heavyweights in this field start making their own chips as well?

Point being here is that Intel has been top of the shit heap (across multiple lines of business) for a long, long time and this has caused them to innovate less and less per product cycle. ANY kind of shake up is good.
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I understand quite well how data centres work and especially at scale.

I don't think you understand the concept of competition in a marketplace. This is the removal of competition, not the addition or changing of it. This isn't Intel facing competition to a competitor AMD. This isn't Amazon making a chip to turn a profit from it. This is removal of a segment from that marketplace altogether. Does it have a financial effect? Yes, but not from competition, they are not losing that money to a competitor, that money is being taken out of that marketplace altogether.

EDIT: To better illustrate this, the market in this case is the x86_64 Server chip Market. The competitors are Intel and AMD. Competition would be AMD signing a deal with Amazon to make more chips for them, taking product and thus market capital away from Intel.

However, what is actually happening here is that Amazon makes their own product. So they are not getting any product from Intel or AMD. They are also not competing with Intel or AMD as they are not selling their product to anyone else. What they are doing is removing product from the marketplace altogether. Thus, removing competition.
 
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Stanley Pain said:
You're still missing the point :)
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I'll bite, which point am I missing? The top of the shit heap? This doesn't help AMD, it hurts them as well. This doesn't have much to do with Spectre, so that isn't really a factor. Performance? This is actually about Amazon realizing they don't need all that performance. So what is the shit heap specific to Intel?

If your point is that this hurts Intel's financials, then you didn't read my posts. Obviously reducing the market hurts Intel.
 
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