The replacement demand boom for Intel's Purley Xeon server processors may not appear until the end of 2018 or even the first half of 2019 due mainly to expensive prices affecting the acceptability of the new processors to server clients, according to server supply chain sources.
The sources said that the Purley server processor platform, launched in July 2017, was originally expected to experience a golden cross in replacing Intel's Grantley platform in the second quarter of 2018, but low market acceptability has undermined the penetration rate for the new-generation platform. Some observers estimate Purley may achieve a penetration rate of 70% by the end of 2018 at the earliest.
As the most important platform variant in the recent three years, the Purley Xeon scalable server platform features many innovative technologies including Intel advanced vector extensions 512 (AVX-512), mesh architecture, optane SSD and omni-patch fabric, which can satisfy the different needs by industries in developing AR/VR, AI and autonomous driving applications, the sources indicated.
Inventec president Maurice Wu said if Intel can lower prices for Purley server processors, the penetration rate will pick up at a fast pace, reasoning that customers have delayed purchases of the processors mainly because of the pricing factor.
Industry sources said that datacenter operators are now the largest users of servers, and tend to make massive purchases of up to hundreds of servers at one time. They are therefore more concerned about server processor prices and would rather adopt existing processors.
The sources continued that enterprise customers are more interested than datacenter operators in adopting higher-performance Purley server processors, but their replacement speed is relatively slow.
But it would be a wishful thinking for server makers to expect Intel to cut prices on Purley for sales promotion, the sources commented, as Intel now controls over 90% of the global market supply of server chips, with no rival suppliers seen able to challenge it. Although Qualcomm has rolled out ARM-based server chipset solutions seeking to break Intel's dominance in the sector, the leading smartphone chipset vendor has reportedly planned to downsize its server chip business unit or even unload the unit.
Article translated by Willis Ke
