When it comes to buying a Windows-based laptop or PC, consumers are faced with only two real choices for the maker of the CPU (the central processing unit or "brains" of the computer): Intel Corp (INTC​​) or Advanced Micro Devices Inc. (AMD). Both companies were founded over 50 years ago in what has become the Silicon Valley part of California.

Yet, in half a century, no other major player has been able to dominate the semiconductor market segment the way these two companies have. We'll take a look at the history of competition between Intel and AMD and try to explain why AMD has been, and remains, Intel's only real competitor.

Key Takeaways

  • Intel Corp (INTC) and Advanced Micro Devices Inc. (AMD) have been competitors in the microprocessor industry for over 50 years.
  • For much of that time, Intel dominated this segment of the industry, leaving AMD a distant second in terms of market share.
  • In March 2017, AMD introduced its highly successful Ryzen microprocessor architecture, which quickly surpassed Intel in sales as an affordable alternative to higher-end CPUs.
  • While other companies have attempted to break into the Windows-based microprocessor market, none have equaled the success of Intel and AMD.

AMD and Intel: A Brief History

Intel was co-founded in mid-1968 by Gordon Moore, known for formulating Moore's Law, and by Robert Noyce, who helped invent the silicon integrated circuit. Both men were former employees of Fairchild Semiconductor, an early and influential pioneer in integrated circuit technology.

AMD was founded a few months later in 1969, also by former employees of Fairchild Semiconductor. The two companies have, therefore, a shared lineage and similar origins. Since then, they have been fierce competitors, both trying to one-up each other with the latest technology and most powerful processors to run the world's computers.

Industry Giants Compete

Soon after developing its x86 chipset and its initial public offering (IPO) in 1971, Intel became the dominant player in the microprocessor industry. As of August 2021, Intel's market capitalization is $213 billion, compared to AMD's market cap of $127 billion.

For much of its history, AMD has been the persistent underdog to Intel in the semiconductor space. Intel has tended to dominate all sectors of the CPU market, including high-end performance processors. AMD focused on lower-cost, budget-friendly middle- and low-range chipsets. For many years, Intel chips had the reputation of being more stable and easy to use for the average computer user. Meanwhile, sophisticated users who knew their way around a circuit board were able to tinker with AMD's chips, which could be overclocked (a method for getting a CPU to run at a faster speed).

For many years it seemed like AMD was destined to play second fiddle to Intel in microprocessor market share. Up until about 2016, AMD controlled around one-quarter of the CPU market, while Intel dominated more than 70%.

AMD Cutting into Intel's Market Share

In March 2017, AMD introduced its highly successful Ryzen microprocessor, positioning it as a more affordable alternative to high-end CPUs and a product capable of challenging the best of Intel's chips. The Ryzen microprocessor was a completely new design capable of breaking overclocking records while still being affordable for the budget-conscious consumer.

The speedy, high-performing Ryzen boosted AMD's sales. In 2019, AMD had 23% of the CPU market share, and by Q3 2021, the company had nearly 40% of the total CPU market. For desktop computers, AMD had 32% of the market in 2019, and as of 2021, the market share is 50/50 between Intel and AMD. Although AMD still lags behind Intel, the company's products are gaining market share.

Outside Competition Has Come and Gone

The reader could get the impression that Intel and AMD are the only computer processor manufacturers that matter. While this may be true for Windows-based computers, it is not true in general.

Texas Instruments Inc. (TXN), Qualcomm Inc. (QCOM​), and Broadcom Inc. (AVGO​) all make central processors. However, these companies have specialized in other segments of the consumer electronics market and have shied away from PCs. For example, these manufacturers supply the brains for many of the world's smartphones and tablets. Apple Inc.'s (AAPL) iPhone has used processors designed by Samsung and Taiwan Semiconductor (TSM). Meanwhile, Intel and AMD have focused on the PC and PC gaming markets (including video graphics cards or GPUs).

Historically, there was vibrant competition in the PC chip space, competing directly with Intel's x86 architecture. These companies have all since gone out of business or were forced out of the CPU market. Cyrix was one such company that began by marketing so-called co-processors combined with Intel 286 and 386 CPUs. Cyrix eventually started designing their own chipsets to compete with those primary processors in the early 1990s, grabbing up to 10% of the market share.

Unfortunately, Cyrix consistently found itself late to market behind upgrades offered by Intel and AMD and could not compete on raw performance. The company was sold to National Semiconductor in 1997 and stopped making x86 chips altogether soon after. VIA Technologies purchased some of the intellectual property of Cyrix from National Semiconductor in an attempt to break into the x86 market but also failed to gain any traction.

In the late 1990s, Integrated Device Technology (IDTI​) introduced the WinChip, a low-power alternative to compete with x86 platforms. Intended for office use, the WinChip failed to perform when carrying out floating-point calculations and subsequently failed. IDT went on to specialize in chips meant for communication and radio frequency identification (RFID) applications. Only AMD and Intel remained as of the early 2000s by a substantial measure.

The Future

Intel and Advanced Micro Devices are continuously investing in technological enhancements of their products. Although both companies have several developmental projects, below are some of the key upgrades and enhancements expected in the future.

Intel

In August 2019, Intel responded to AMD's Ryzen technology by releasing its improved 10th generation Core processor, based on its new microarchitecture codenamed Ice Lake.

In 2020, Intel announced its 11th Gen Intel Core S-Series desktop, and H35 Laptop processors are designed to provide higher performance for desktop and laptop users. The high-performance is designed for gaming and heavy-duty creative production, such as video creation and editing.

In 2021, Intel launched its 3rd Gen Intel Xeon Scalable processors, which according to the company, delivers nearly 53% higher performance than its previous version. The processors have wide applications, including life sciences, financial services, and the manufacturing industry. According to Intel, the latest 3rd Gen Xeon processors "will power the next generation of supercomputers and high-performance computing systems."

In July of 2021, Intel announced a partnership with Microsoft Corporation to deliver enhanced mobile experiences on Windows-powered PCs. Intel also announced that leading cloud service providers, including Baidu, Alibaba, and Oracle, are offering services to their clients using Intel's latest 3rd Gen Intel Xeon Scalable (“Ice Lake”) processors. The company expects to earn an estimated $77 billion in full-year revenue by the end of 2021.

AMD

In May of 2021, AMD announced the company will introduce new gaming experiences to the automotive and mobile markets by partnering with industry leaders. For example, Tesla uses AMD Ryzen Embedded Processors and AMD RDNA 2 based GPUs to power the company's infotainment system in the Model S and Model X vehicles.

AMD announced that stockholders approved its $35 billion acquisition of Xilinx, which has complementary products to AMD. However, the acquisition would expand AMD's customer base, particularly in the defense and auto industries. The acquisition is expected to close by the end of 2021, pending regulatory approval and approval from the shareholders of AMD and Xilinx.

As a result, AMD expects full-year revenue growth of 60% and a gross profit margin of 48% in 2021 due to strong growth across all businesses.

The Bottom Line

In all likelihood, the two companies will continue to duke it out into the future, swapping places on the leader board as each one pushes the limits of innovation. If the past 50 years are an indication of what the future holds, Intel and AMD will doggedly pursue advancements in processor performance to the delight of gamers and computer users worldwide.