Intel's chips are down. Its problems are even worse than you've heard

AMD and others are making huge inroads into Intel's bread-and-butter business of making the world's most cutting-edge central processing units

- Christopher Mims

You may think you know how much Intel is struggling, but the reality is worse. The once-mighty American innovation powerhouse is losing market share in multiple areas that are critical to its profitability. Its many competitors include not just the AI juggernaut Nvidia but smaller rivals and even previously stalwart allies like Microsoft.

One flashing warning sign: In the latest quarter reported by both companies, Intel's perennial also-ran, AMD, actually eclipsed Intel's revenue for chips that go into data centers. This is a stunning reversal: In 2022, Intel's data-center revenue was three times that of AMD. AMD and others are making huge inroads into Intel's bread-and-butter business of making the world's most cutting-edge chips, known as CPUs, short for central processing units.

Even worse, more and more of the chips that go into data centers are GPUs, short for graphics processing units, and Intel has minuscule market share of these high-end chips. GPUs are used for training and delivering AI.

By focusing on the all-important metric of performance per unit of energy pumped into their chips, AMD went from almost no market share in servers to its current ascendant position, says AMD Chief Technology Officer Mark Papermaster. As data centers become ever more rapacious for energy, this emphasis on efficiency has become a key advantage for AMD.

Notably, Intel still has about 75% of the market for CPUs that go into data centers. The disconnect between that figure and the company's share of revenue from selling a wider array of chips for data centers only serves to illustrate the core problem driving its reversal of fortunes.