Intel recently took a significant step towards enhancing its position in the competitive landscape of data center processors by unveiling its new Xeon 6 server processorsThis unveiling marks a pivotal moment for the tech giant as it seeks to integrate artificial intelligence (AI) functionality across its data center offerings, an area that has been increasingly contested by competitors like AMD and ARM HoldingsThe two new processors, known as Xeon 6 6500 and 6700, are part of an expanded product lineup originally introduced in September 2024.

The Xeon 6 series, codenamed “Granite Rapids,” is designed with advanced performance cores, allowing for dozens of independent processing elementsThis architecture is poised to deliver some of the most powerful computing capabilities available within Intel's lineupThe first Xeon 6 chips, particularly the 6900 variant released in September, featured an impressive 128 performance coresIn contrast, the 6500 and 6700 models offer a range of core counts, from 16 to 86 cores, while being more budget-friendly and energy-efficient.

In a pre-launch media briefing, Ronak Singhal, Intel’s Chief Architect, highlighted the strength of the 6500 and 6700 models against AMD's latest x86-based CPU, the 9005, codenamed “Turin.” Singhal emphasized that, despite having fewer cores, the Xeon chips can execute more computations, thus lowering the total cost of ownership (TCO) for customersA slide presented during the briefing suggested that AI performance could be boosted by 50% while using only one-third of the cores compared to AMD’s offering.

Singhal stated, “Even with fewer cores, we’re able to deliver superior performance across a variety of workloads.” These workloads range from general computations, like running databases, to high-performance computing (HPC) needs, and to broad AI applications that include both inference and training of AI models.

Significantly, the Granite Rapids chips incorporate specialized AI-friendly operations through High-Level Matrix Extensions (AMX). These chip instructions enable cores to perform matrix multiplications—essential for AI processing—while still handling traditional computing tasks

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Singhal remarked that the AMX instructions have allowed Xeon processors to attain a stronger foothold among cloud computing giants.

“For instance, visit your favorite cloud service provider and see how they’re utilizing AMX with their end customers,” Singhal advised. “You’ll find discussions on how their end customers rent Xeon instances specifically to leverage AMX, and how it plays a role in several secure computing scenarios.”

The introduction of the Xeon 6500 and 6700 processors aligns with Intel's broader strategy to reclaim its position in the market amid declining performance, particularly in the face of rising sales from AMD and ARMFrom a financial perspective, Intel’s situation has worsened significantly, as evidenced by the fact that for the quarter ending September last year, AMD’s data center revenue surged to $3.5 billion, surpassing Intel's $3.3 billion.

According to TechInsights, the market share for Intel in the x86 server chip segment, largely dominated by Intel and AMD for decades, has plummeted from 96% in the first quarter of 2020 to roughly 65% todayMeanwhile, AMD's market share has soared to about 35% from just 4% previouslyOn the other hand, ARM, which does not manufacture chips but licenses its designs as intellectual property, has witnessed substantial growth in data center usage of its designs, notably with cloud giants like Google relying on ARM-based custom chips such as TPUs and Amazon’s Graviton processors.

Analysts estimate that of ARM's projected $3.6 billion revenue over the past 12 months, roughly 10% came from network and data center applicationsARM expects a 26% revenue growth this year, largely attributed to the increase in data center salesAlthough the exact proportion of ARM's share in total data center processor sales remains uncertain, it is clear that as companies like Google deploy more non-x86 chips, any licensing fees collected by ARM could pose a loss for Intel, and to a lesser degree, AMD.

To combat the influence of AMD and ARM, Intel is positioning its Xeon chips—particularly the fresh offerings of 6500 and 6700—as widely applicable across various enterprise applications

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According to Singhal, Intel aims to reduce TCO compared to alternatives from AMD and ARM, stressing the importance of integrating older infrastructure with new capabilities to manage emerging workloads while also decreasing energy consumption.

However, as pointed out by TechInsights, Intel and its leadership, including CEO Pat Gelsinger, who departed at the end of last year, face continuous pressure to deliver pioneering technological advancementsDuring the press conference, Singhal noted that the successor to the Granite Rapids chips, codenamed Clearwater Forest, is on track for production in the first half of next yearHe affirmed that tests are currently underway in their labs, as well as customer testingStill, reports indicate a delay compared to Clearwater Forest's anticipated debut later this year.

Additionally, TechInsights mentioned that Intel's dedicated AI chips, Gaudi 3, fell short of the company’s internal sales targets last yearThis has led to concerns that Intel is pivoting away from the AI accelerator race, leaving AMD and NVIDIA to dominate the fieldFurthermore, plans for subsequent chip developments, like Falcon Shores, have been put on hiatus, while Intel contemplates launching a new product line called Jaguar Shores, expected in 2027.

In light of these challenges, it is crucial to recognize Intel’s longstanding strength in the data center market, as despite recent adversities, approximately two out of every three servers sold are still powered by Intel processorsThis solid foundation allows Intel to maintain a viable profit margin, enabling competition against AMD in the x86 server CPU market while also securing advantages over ARM CPUs developed by semiconductor manufacturing companies.

Intel saw the introduction of the “Sierra Forest” Xeon 6 processor in June 2024, which is based on an Atom-style core designThis is one of the first products in the Xeon 6 generation and represents a merger of traditional Xeon cores, now termed performance cores (P-cores), into a single socket encompassing the same external feeds and speeds and deriving power from the same I/O chip within the socket

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