Intel Slashes Prices on 128-Core Server Flagship Model

Intel has significantly reduced the prices of its top-tier server processors to remain competitive against AMD's offerings. The company, which recently adjusted its pricing recommendations for server CPUs, has seen substantial discounts on its flagship model, the Xeon 6980P, featuring 128 cores.

Earlier this year, Intel lowered the recommended retail price of the Xeon 6980P from $17,800 to $12,460 before taxes, translating to approximately EUR10,675 or EUR12,700 when including a 19% VAT. However, retailers have been offering the processor for even less, with prices dropping to around EUR6,279, effectively halving the original price.

This pricing shift was highlighted by Wccftech, which drew attention to similar low prices in the United States. While some models with fewer CPU cores have not seen as drastic reductions, the substantial savings on the Xeon 6980P indicate a strategic move by Intel to maintain its market presence.

Intel's server processors are typically not marketed directly to end customers and are available only as tray models without a manufacturer warranty. Server manufacturers often receive bulk discounts for purchasing significant quantities of processors.

The impact of these price cuts is reflected in Intel's financial results. In the latest quarter, the company reported revenues of $3.94 billion from its server division, yielding an operating profit of $633 million. This resulted in an operating margin of 16.1%. In comparison, a decade ago, Intel's server division reported an operating profit of approximately $1.8 billion with a similar revenue level, achieving a much higher margin of 47.9%.

AMD's increasing market share poses a challenge for Intel. Recently, AMD estimated its revenue share of x86 server processors at 41%, with a unit share of 27.3%. This suggests that AMD is earning significantly more per CPU compared to Intel.

AMD's Epyc 9755, which also boasts 128 performance cores, is available at competitive prices, starting at around EUR4,493.44 from lesser-known vendors and ranging between EUR6,632 and over EUR9,000 from reputable retailers.

AMD's advantage in operating margins can be attributed to its design, which incorporates up to 12 smaller chiplets, resulting in higher production yields and lower costs. In contrast, Intel's Granite Rapids CPUs utilize three larger chiplets, limiting cost-saving opportunities.

In summary, Intel's aggressive pricing strategy on its Xeon 6980P is a clear response to competitive pressures from AMD, signifying a pivotal moment in the server CPU market.