Why AMD CPU is cheaper than Intel CPU ?


👤 Diwas Poudel    🕒 Jul 7 2021    📁 Fix    📜 0 comment

The microprocessor is one of the important components of any electronic device. It is considered to be the brain of the electronic device. In the field of microprocessors, AMD and Intel are the two best PC microprocessors. Before discussing why AMD is cheaper than Intel? Let's look at them one by one.

Intel 
Intel stands for "Integrated Electronics".It is an American multinational technology company whose headquartered in Santa Clara, Califonia. Intel developed its own processor from the start to date. First Intel Microprocessor is Intel 4004, introduced in 1971.

Some of the popular intel processors are Intel Core i9, Intel Core i7, Intel Core i3, Xeon, Celeron, Intel Atom, Coffee Lake, Tiger Lake, Itanium, etc.

AMD
AMD stands for Advanced Micro Devices. It is also an American multinational semiconductor manufacturing company founded in 1969 whose headquartered is in Santa Clara, California. Initially, they manufactured their own processor, and later it is outsourced to TSMA companies. The first AMD microprocessor was Am9080, introduced in 1975

Some of the popular AMD processors are Epyc, Zen 2, AMD FX, Opteron, Athlon, AMD Phenom, Sempron, etc.

amd_vs_intel_processor

AMD Processor Price and Intel Processor Price with similar Specification

CPU
Cores/ Threads
Base Frequency
Turbo Boost Frequency
MSRP
Ryzen 5 3600X 6/12 3.80 GHz Up to 4.40 GHz ~ $249
Intel i7 8700K 6/12 3.70 GHz Up to 4.70 GHz ~ $370
 
Ryzen 7 3700X 8/16 3.60 GHz up to 4.40 GHz ~ $329
Intel i9-9900K 8/16 3.60 GHz up to 5.00 GHz ~ $499
 
Ryzen 9 3900X 12/24  3.80 GHz up to 4.60 GHz ~ $499
Intel i9-9920X 12/24 3.50 GHz up to 4.40 GHz ~ $1199

source1, source2

MSRP stands for the manufacturer's suggested retail price. It is a price suggested by the manufacturer to sell at Point Of Sale.

If we look at price constraints with similar specifications, the AMD processor seems to be a lot cheaper than Intel Processor. Eg. Ryzen 7 3700X costs around $329 which are greater than $100 than similar Intel multi-threaded CPU like Intel i9-9900K.Let's look at some of the reasons why AMD is cheaper than Intel Processor.

The reason are based on the following factors.

Reason

  • Ecosystem
  • Negative Sentiment in People / Customer
  • Business Model
  • Introduction of Modular Approach of Processor Design
  • Quick Adoption of Better Nano Processor
  • Core to Core Comparision
  • Desired Profit Margin
  • Location

Let's explain them.

Ecosystem

Intel is one of the oldest processor manufacturers in the PC world. It has been the market leader for a long time.AMD is also another competitor but as a whole, it is still behind then Intel and somehow new to the large market.

So, to compete and bit Intel, AMD has to introduce new things and strategies that every business does to exists like Cheap price strategy, introduction to better quality, etc. So, AMD decreases the price of its processor.AMD started target low-budget people developing low-budget processors and low-range chipsets(source). So, a large number of people can buy a computer with an AMD processor. They have sold more of their product and generate marginal profit which overall summing to a large amount.

cpu benchmarket market share processor amd intel
data represent CPUs in use rather than CPUs purchase. (source)

We can clearly see, AMD processor market share started rising from First Quarter, 2017 with the introduction of Ryzen Microprocessor architecture by providing high-end processors at an affordable price and its use and purchase started rising rapidly.

Negative Sentiment and Undervalued among People

From the beginning, the AMD processor is not performing well as compared to intel. The customer already knew this. So, developing trust among the people was difficult. So, to exist in the market they have to decrease their processor cost.

Suppose you are going to buy the computer and the seller shows you a computer with Intel and AMD processor then if you do not know about AMD processor then definitely you will buy Computer with Intel Processor same is happening everywhere.

Intel has better brand value and they are able to sell the same specs product for more price and AMD has to compromise on this. But Nowadays, AMD processor is also competing in a better way with Intel.

Business Model

Intel from the beginning develops its processor and chipsets. They have involved their resources in all phases like design, fabrication, implementation, and sales. On other hand, AMD uses a fabless business model where they outsource the production of chips to other partners. AMD tie-up with TSMC, for the production of the chip. AMD only focuses on the design and period of components. So, they are able to focus on core business with smaller teams and become more agile.

It should be noted that TSMC(Taiwan Semiconductor Manufacturing Company) is mature in the field of manufacturing chipsets and processors. They are also the manufacturer for Nvidia, Qualcomm, Apple, Broadcom, Mediatek, etc.

So, using a fabless business model reduces R/D cost which helps AMD processors to become cheaper.

Introduction of Modular Approach of Processor Design

Intel uses a Monolithic approach to the CPU design. Where it has all cores, graphics, I/O on a single die. It is easier to put 2 to 4 cores into a die.

Whereas AMD uses Chiplets Approach. It is a modular approach in which modular mini dies are combined into one CPU package.

Actually, the manufacturing process of the CPU is not perfect. It is manufactured on silicon wafers and some defects may occur in the wafer. In the intel system, they remove and throw away those defective parts to make all cores to be functional which increases cost.
This cost increases exponentially with an increase in the number of cores.

AMD processor also uses wafer and also defects occurs in AMD processor die but if defects occur then AMD combine them to lower-end products.

Same Chip Design Process For Processors

The current Approach of AMD seems to use the same chip design excluding APUs and mobile potentially). This means the highest-end epyc will have the same CCD(Core compute die) as of lower-end ryzen. As a result, the R / D costs for AMD are lower and much cheaper due to less manufacturing design.

On the other hand, Intel will create a number of different architecture configurations. They invest more in R/D design, production, etc. Therefore. So it's going to be costly.

Location

TSMC manufacture AMD which is Taiwan based company and Intel is based in the USA. So, production costs will be relatively lows in TSMC than in Intel.

Desired Profit Margin

This might not be true but in my view, Intel has kept more profit margin than AMD because Intel has a large workforce as compared to Intel and also comparatively spend a huge amount of money on advertisement.

Quick Adoption of Better Nano-Processor

AMD is quickly adopting a new processor design process (thanks to TSMC) and able to shift much of its processor to 7nm technology whereas Intel is struggling for implementing 10 nm manufacturing. AMD is providing more cores, more threads, better threading performance than Intel at a relatively equal price range and even in more price cuts.