Interesting development. Switches are hard to roll back, I think, but it’s not like Intel has had no share in data centers, hyperscalers etc. so maybe they will start winning back share in six months or a year… Or are they battling enough ill will among customers from so many years of misdelivering that it will take longer to turn the ship?
One somewhat surprising thing about the Granite Rapids launch was the pricing. Intel decided to go big, setting the pricing for the flagship model at the highest level ever for an x86 server CPU. Given that Intel was still playing catch-up, this pricing decision was either a sign that Intel was extremely confident in Granite Rapids, or an indication that the company hasn’t accepted that the competitive landscape is very different today than it was a few years ago.
Tom’s Hardware reported earlier this week that Intel had drastically slashed the listed prices for Granite Rapids CPUs without any formal announcement. The flagship model is now listed at $12,460, a full $5,340 less than the original launch price. Other models received price cuts as well, bringing pricing below comparable AMD alternatives.
Notably, the price cut has brought the price per core on the highest-end Granite Rapids chips far below AMD’s top-tier chips, making Granite Rapids an attractive proposition for customers building out densely packed cloud data centers.
There are a few ways to interpret this price cut. First, Granite Rapids may not be selling as well as Intel had hoped. While the product family looks like a winner, the pricing was elevated and could have driven customers away. Intel is set to report its quarterly results on Thursday, so hopefully the company will provide an update.
The second way to interpret this move is that Intel is taking aggressive steps to win back market share. The company is still the leader in the server CPU market, but AMD has made enormous gains over the past few years. AMD’s x86 server unit share stood at 24.2% in the third quarter of 2024, up from just 6.6% in the third quarter of 2020.
The truth may be a combination of the two. Slashing prices could hurt Intel’s margins, but that’s not a foregone conclusion. Because Intel manufactures Granite Rapids in-house on its Intel 3 process, if the price cut boosts unit sales and improves utilization rates in the company’s fabs, profit margins may not take that big of a hit. Intel 3 is a process that Intel offers to foundry customers, and it’s possible that the company has excess capacity that it needs to fill.