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Title:Server CPU: AMD vs. Intel positive for Taiwan¡¯s server supply chains
Download File:Server CPU -- Taiwan beneficiaries of Intel vs. AMD 191122 -- sinopac.pdf 
 
Summary:AMD vs. Intel positive for Taiwan¡¯s server supply chains ¨C Our top picks are TSMC (2330 TT), Wiwynn (6669 TT)

AMD is taking the fight to Intel in the server CPU space: The server CPU market has a similar output value as the notebook (NB) CPU market (~US$18bn) and enjoys strong demand from multi-core computing applications. Intel has a dominant market share in the space, but AMD has resolved a major impediment¡ªits lagging process technology¡ªby leveraging IC foundry TSMC (2330 TT)¡¯s 7nm advanced process for its EPYC 2 processors launched in 2019, giving it a strong weapon to compete with Intel.

Intel will use 10nm process for server CPU in 2020: Intel¡¯s Ice Lake, slated to launch in 3Q20, will be Intel¡¯s first server CPU to use 10nm process technology, essentially matching AMD in that Intel¡¯s 10nm has transistor density equivalent to TSMC¡¯s 7nm process and supports PCIe 4.0. Intel¡¯s highest native core counts will increase again. AMD plans to launch EPYC 3 in 2020 to optimize performance, but it will still employ 7nm process. We think Intel¡¯s and AMD¡¯s process technology will be about equal in 2020. In 2021, as Intel¡¯s Sapphire Rapid under the Eagle Stream platform will deploy a different CPU packaging method that will help boost the core counts, the product will compete with AMD¡¯s in cloud data center application scenes requiring ultra-multi-core counts, including AI and deep learning.

Server vendors¡¯ resources and system integration are geared toward Intel: AMD¡¯s EPYC 2 is a performance upgrade vs. EPYC 1 due to improved design and process technology. Performance is important, but so are compatibility and stability, especially for server CPUs. Given Intel¡¯s multiyear dominance, server brands¡¯ and ODMs¡¯ resources are geared to developing and maintaining Intel-related products. Brand vendors and ODMs will develop new products based on AMD¡¯s EPYC 2 as it has higher CP ratio than all of Intel¡¯s CPU products, but Intel has tools (e.g. price cuts) to defend its market share.

Whitley to spark replacement demand in 2021, data center operators to drive growth: We project server market growth at 1.0%/5.5%/4.3% YoY for 2020/2021/2022 with Intel¡¯s Whitley launch in 2020F sparking replacement demand. Investors should focus on companies with relatively high sales exposure to data center operators, as we expect demand from data center operators (40% of server market) to show a 10.0% CAGR (SinoPac forecast 2020-2022) vs. slower demand from enterprises (60% of server market). TSMC and Wiwynn are our top picks (highlights start on page 16).

Wiwynn (6669 TT) and TSMC (2330 TT) are our top picks for the server theme
  
Date:2019/11/22
Author:TaiwanResearch.com
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