How Significant Is AMD’s GPU Executive Joining Intel?

by Trefis Team
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The head of AMD‘s (NYSE:AMD) graphics business unit, Raja Kudori, recently joined Intel’s (NASDAQ:INTC) newly formed Core and Visual Computing group, which will focus on developing high end graphics solutions. This is something that Intel has not focused on traditionally, as it relied on its partnership with AMD to created integrated graphics units for its chipsets. However, this move indicates a few things. First, Intel is getting serious about the high-end graphics market, which has traditionally been dominated by Nvidia and AMD. Further, it has recognized the growing number of GPU applications, especially in the artificial intelligence market, or more specifically, deep learning. Additionally, Intel knows that if it doesn’t act soon, Nvidia can become a big threat in the data center market where Intel dominates. Take a look at our interactive breakdown of key reasons behind Intel’s move for more details. Our price estimate for Intel stands at $41, which is nearly 10% below the current market price.

Intel’s Client Computing Group’s Growth Has Slowed Down; Intel Needed To Think About Future

Intel’s Client Computing Group’s revenue has declined in recent years, except for the mild recovery in 2016 and 2017 where an increase in prices helped. This can be primarily attributed to global PC sales declining from 350 million in 2012 to an estimated 250 million in 2017. It should be noted that Intel hasn’t lost share to AMD.  Nevertheless, considering that its largest business segment is seeing a slowdown in growth, Intel is likely motivated to make new investments. The GPU market presents one such opportunity.

Future Lies In GPU Applications In Data Center Market; Investing In GPUs Makes Sense

Intel has been doing fairly well in the server market. Its Data Center Group revenue grew nearly 54% between 2012 and 2016. Until last year, the company held nearly 98%-99% of the server processor market. However, Nvidia’s GPUs are performing better in deep learning applications in data centers. Deep learning is likely to see massive growth going forward, and Intel is looking to take advantage of the trend with GPU investments.

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