AMD is increasing the price of its EPYC server processors by a significant margin due to supply uncertainties caused by global chip shortages, a new report suggests.
Written by Jordan Klein, MD of Mizuho Securities, the report states that AMD is increasing the price of its EPYC processors by 10-30%, although some large cloud customers have received a reprieve.
“Given the very limited supply of wafers, AMD does not provide customers with real visibility into expected CPU/GPU shipments,” the report states. "So when they ship a product every month, they jack up the price and make it a 'take it or leave it' deal."
The rise of AMD EPYC
While Intel remains the most dominant player in the server processor market, AMD has made significant gains in recent years, thanks to a newly established performance advantage. The report estimates that the company ended last year with a 20-25% market share.
The current generation of EPYC chips, codenamed Milan, offer unmatched performance in raw power, power efficiency, and performance density. This combination of qualities means that EPYC is fast becoming the preferred choice in enterprise, cloud and HPC.
Meanwhile, in November, AMD previewed the next-generation EPYC chips (called Genoa), which will be the first to use TSMC's 5nm process technology. AMD says the Geneo chips will offer twice the density, twice the power efficiency and 1,25 times the performance of its Milan series.
According to Dolly Wu, vice president of server vendor Inspur Systems, the performance advantage over Intel Xeon and the strong product roadmap mean AMD customers have no choice but to bite the bullet when price increases are introduced.
However, while the strength of the market position may have something to do with the price increases, this is not just a case of scamming. AMD is under a number of external pressures caused by chip shortages, ranging from higher manufacturing costs to supply constraints and other bottlenecks, all of which affect profitability.
When our sister site, Tom's Hardware, asked for confirmation of the price increases, AMD said that its policy was never to comment on customer prices. TechRadar Pro then asked about factors that could influence prices this year, but the company again declined to comment.