By Max A. Cherney and Stephen Nellis
TAIPEI/SAN FRANCISCO – Intel on Tuesday launched its next generation of Xeon server processors in a bid to regain market share in data centers, and revealed that its Gaudi 3 artificial intelligence accelerator chips would be sold at a price much lower than that of its competitors’ products.
The sixth-generation Xeon chips are crucial for Intel, which has been steadily losing market share in data centers to Advanced Micro Devices (AMD).
Intel’s share of the x86 chip market in data centers fell 5.6 percentage points over the past year to 76.4%, with AMD now holding 23.6%, data shows from Mercury Research.
Difficulties in Intel’s manufacturing process allowed AMD to resume operations, with the latter using Taiwan Semiconductor Manufacturing Co (TSMC) to make its chips.
Xeon 6 server processors come in two main versions, a larger, more powerful version and an “efficient” model touted by Intel as a replacement for older generation chips.
To achieve the same level of computing power as its second-generation chips, they will now require approximately 67% fewer server racks with the efficiency model, designed to serve media, websites and perform basic calculations of data.
“Simply put, improved performance, power down,” Intel Chief Executive Officer Pat Gelsinger said at the Computex trade show in Taipei, where he demonstrated the server.
The most powerful performance model is designed to run the calculations needed to generate answers from complex AI models and other tasks requiring increased power.
The “efficiency” Xeon chip is available Tuesday, with the “performance” model arriving in the third quarter. Intel plans to launch additional variants next year. The sixth-generation chip was delayed by a year because the company wanted to use a different manufacturing process.
In a press conference with reporters, Intel said that a Gaudi 3 accelerator kit, which includes eight AI chips, sells for about $125,000, and that the previous generation Gaudi 2 had a list price of $65,000.
Speaking in Taipei, Gelsinger said the prices looked “pretty good”, especially compared to competitors.
“In other words, it crushes the competition.”
AMD and Nvidia do not discuss the price of their chips. A comparable HGX server system with eight Nvidia H100 AI chips can cost more than $300,000, according to custom server vendor Thinkmate.
Intel revealed details of the Gaudi 3 AI chip in April and positioned it as a significantly cheaper and viable alternative to Nvidia’s H100 chips.
Also Tuesday, Intel said its next-generation laptop chip, called Lunar Lake, uses 40% less power and contains a more powerful AI processor. Intel said it would ship the chip in the third quarter.
Gelsinger said he was “just thrilled” to see so many new PCs using Lunar Lake.
“It will power the largest number of next-generation AI PCs in the industry,” he added. “We are committed to PC AI.”
He also thanked TSMC, which he said played a critical role in implementing many of the core technologies for Lunar Lake.
As for more advanced releases to come, Gelsinger said Arrow Lake will be introduced next year, followed in 2025 by Panther Lake.
(Reporting by Max Cherney in Taipei and Stephen Nellis in San Francisco; Additional reporting by Ben Blanchard; Editing by Sonali Paul and Rashmi Aich)
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