Intel Launches Next-Gen Xeon and Gaudi 3 Chips to Regain Market Share

Intel Launches Next-Gen Xeon and Gaudi 3 Chips to Regain Market Share

Intel introduced its latest Xeon server processors on Tuesday, aiming to regain data center market share. The company also unveiled its Gaudi 3 artificial intelligence accelerator chips, priced significantly lower than competitors’ offerings.

The sixth-generation Xeon chips are vital for Intel, which has been gradually losing data center market share to Advanced Micro Devices (AMD). According to Mercury Research, Intel’s share of the data center market for x86 chips has dropped by 5.6 percentage points over the past year to 76.4%, with AMD now holding 23.6%.

Issues with Intel’s manufacturing process have enabled AMD to gain business by using Taiwan Semiconductor Manufacturing Co to produce its chips. The new Xeon 6 server processors are available in two versions: a more powerful model and an “efficiency” model that Intel suggests as a replacement for older-generation chips.

The efficiency model requires about 67% fewer server racks to achieve the same computing power as the second-generation chips, making it ideal for media, websites, and database calculations. “Simply put, performance up, power down,” Intel Chief Executive Pat Gelsinger said at the Computex trade fair in Taipei, where he presented the new server processors.

The performance model is designed for complex AI computations and other high-demand tasks. The “efficiency” Xeon chip is available now, while the “performance” model will be released in the third quarter. Additional variations are planned for next year. The sixth-generation chip’s release was delayed by a year due to a change in the manufacturing process.

During a briefing call, Intel revealed that a Gaudi 3 accelerator kit, including eight AI chips, costs about $125,000, while the previous generation Gaudi 2 is priced at $65,000. Speaking in Taipei, Gelsinger described the prices as “pretty compelling,” especially compared to competitors. “In other words, it crushes the competition.”

AMD and Nvidia do not disclose their chip prices. A comparable HGX server system with eight Nvidia H100 AI chips can exceed $300,000, according to custom server vendor Thinkmate. Intel highlighted the Gaudi 3 AI chip in April, positioning it as a cheaper and viable alternative to Nvidia’s H100 chips.

Additionally, Intel announced on Tuesday that its next-generation laptop chip, Lunar Lake, uses 40% less power and features a more powerful AI processor. This chip will ship in the third quarter.

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