AMD is purportedly raising prices of its EPYC data center processors for some customers by 10% to 30%, a new reality in the face of chip shortages that have resulted in reduced visibility for future shipments. We reached out to AMD for comment on the matter, but the company declined due to its policy of not commenting on customer pricing. The report also cites a potential delay for Intel’s next-gen Sapphire Rapids chips into Q3 2022, meaning Intel could miss the re-revised timeline it announced last year.
The excerpt comes from a report by Mizuho Securities’ Managing Director Jordan Klein that cites Dolly Wu, the VP and GM of Datacenter/Cloud at Inspur Systems (the world’s second-largest server vendor).
The report says that AMD has increased pricing by 10 to 30%, but the impact varies by customer, with large cloud customers given less of an upcharge. The report claims that without any guidance of when more CPUs could arrive, AMD’s customers are simply accepting the higher prices.
(Image credit: Mizuho)
AMD’s Milan holds the peak performance, and perhaps more importantly, performance-per-watt crown in the data center. Milan’s higher core counts also offer superior performance density, thus allowing data centers to cram in more performance per server and further lower their operating costs, all of which is obviously attractive enough to justify the price increases.
AMD’s price hikes aren’t surprising given ongoing shortages coupled with its reliance upon outside firms for both lithographic (wafer) and packaging (OSAT) capacity, with the latter being a particular pain point in the industry. Both of these factors could impact EPYC supply more acutely than AMD’s other types of chips due to EPYCs multi-chip design that scales up to nine die in a single package. Manufacturing costs have risen at nearly every link in the supply chain, and AMD’s price increases probably reflect the company passing that increased pricing on to its customers, as opposed to simply hiking prices to increase margin.
The report also says that Intel has ramped Ice Lake production and projects a possible 50% year-over-year increase in supply in 2022. In addition, in an attempt to retain market share, Intel isn’t raising prices for its Ice Lake processors. Both of those factors could help blunt AMD’s market share gains.
However, the report claims that Intel’s 7nm Sapphire Rapids’ full-scale volume launch will be delayed until ‘maybe’ Q3 2022 (Intel had previously projected the formal launch in Q2 2022). Furthermore, the firm doesn’t anticipate Sapphire Rapids will help Intel much, predicting that Intel will see further market share degradation due to ‘materially higher’ BOM pricing for Sapphire Rapids.