Raymond James calls it desperate. It does not matter what Intel does, some analysts will hate it. ------------------------------- 6:07 PM Intel Rises on Data Center Chips: ‘Very Compelling,’ Says RBC; ‘Desperate,’ Says Raymond James By Tiernan Ray
It was a busy day for enterprise data technology. In addition to EMC (EMC) unveiling a raft of new product, Intel (INTC) held an event at its headquarters to discuss updates to its server chip technologies, hosted by its data center chief, Diane Bryant.
Intel announced a new low-power, task-specific chip for so-called microservers that are increasingly gaining favor in Web computing facilities to perform particular tasks such as file or database management. The “C2000,” chip, Intel said, which can run as low as 6 watts and has 64-bit memory addressing, is the first Intel chip to use the “Silvermont” processor core that Intel is also using for its “Atom” line of chips for mobile phones and tablets, in contrast to traditional power-hungry chips built around Intel’s “Core” microprocessor architecture for mainstream servers and desktops. Intel is going up against similar products from Advanced Micro Devices (AMD). As with AMD, Intel boasts the “system-on-a-chip” nature of the semiconductors, with customers being able to choose from a mix of functional blocks that, when combined, give the chip a distinct set if capabilities for different tasks.
Intel also unveiled chips that can be built into servers to conduct Ethernet networking, replacing dedicated switching hardware; and fiber-optic transceiver products to link server computers together for high-speed data transfer.
The response of bulls and bears was split in fairly stark fashion between those who believe Intel demonstrates substantial progress against AMD and the rest of the ARM Holdings (ARM) licensees, including Nvidia (NVDA), and those who believe Intel is running scared in the face of the ARM threat.
Doug Freedman of RBC Capital Markets reiterated an Outperform rating and a $29 price target on the shares, writing, “INTC’s new Atom low-power C2000, successor to S1200, is a very compelling offering in that it not only offers up to 6x performance/ watt (vs. S1200), but will enable newer markets leveraging prior SoC efforts in mobile (smartphone/tablet).
Thus INTC stands to pick-up ground in new markets with attractive ROI on more customized solutions [...] Performance vs. select S1200 parts are expected to be up to 7x faster, offering up to 6x higher performance per watt. The product is expected to be a best-in-class solution vs. competitive ARM solutions in the marketplace [...] We were encouraged to hear that the gross margin impact is expected to be “a wash”. To us, this implies that the margins are at least comparable to performance-based parts, and potentially better due to 22nm and cost efficiencies realized as a result of leveraging mobile resources.”
From the bear camp, Hans Mosesmann of Raymond James, reiterating an Underperform rating, wrote that “Intel introduced today an impressive number of Atom-based processor, switch, memory, and optical connectivity products/technologies for the datacenter in a move that highlights, in our view, Intel’s sense of urgency to defend its server processor supremacy.”
It is hard to fathom Intel making this big of a splash had ARM not released its 64-bit v8 architecture (for licensing) nearly two years ago with the subsequent strong design interest. Intel was at pains to explain that microservers, as a category, are small but the opportunity for adjacent markets is big. Translation: we are worried about the ARM threat and are willing to cannibalize existing low-end, highly profitable XEONs to make sure this does not happen.”
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