Comprehensive by Semiconductor Industry Landscape (ID: ICVIEWS)

x86 is starting to strike back.

It takes a significant market disruption for fierce competitors like Intel and AMD to unite and work towards a common goal, but that's exactly what happened after the establishment of the x86 Ecosystem Advisory Group.

These two companies have dominated the client and server markets with their x86-based microprocessors for over 25 years, but an increasing number of competitors are launching Arm-based processor designs, posing a challenge to their dominance. As a result, the shared market for both companies is shrinking.

Photo of Intel CEO Pat Gelsinger and AMD Chairman and CEO Lisa Su at Lenovo's Innovation Technology Conference

To combat the threat from alternative architectures and ensure that x86 remains the "mainstream architecture," Intel and AMD have announced the formation of the x86 Ecosystem Advisory Group. Intel stated that the group aims to enhance compatibility, simplify software development, and meet evolving customer needs by enabling greater customization and scalability across hardware and software platforms.

The Rise of Arm

When Amazon Web Services (AWS) launched its Arm-based Graviton processors in 2018, it revolutionized the cloud server processor market.

AWS originally developed Graviton to control its roadmap, a way for the profit-focused company to reclaim profits it believed it was losing to Intel and AMD.

AWS's Graviton was the first mainstream alternative to x86 server processors since the 1990s. Following AWS's successful launch of Graviton, other major cloud service providers (CSPs) such as Microsoft Azure, Google Cloud, and Alibaba Cloud also announced the introduction of Arm-based custom processors.

The motivation is simple: reduce dependence on third-party chip manufacturers, improve performance for unique cloud workloads, increase overall efficiency, and reduce the cost of computing infrastructure.

Although top CSPs are deploying Arm-based processors, there are currently no reliable estimates of deployment scale. However, it is certain that every Arm-based processor deployment represents a lost sale for AMD or Intel.

Meanwhile, Apple replaced Intel-based products with its own Arm-based processors. The success of its M-series processors, offering a combination of price, performance, and battery life, has disrupted the laptop industry.

Qualcomm, noticing Apple's success, capitalized on the opportunity to offer its Snapdragon components for laptops to the eager Microsoft Windows community. Today, almost every major OEM offers Snapdragon-based products in its portfolio, dealing another blow to AMD and Intel's businesses.

x86 Ecosystem Advisory Group

Led by Intel and AMD, the x86 Ecosystem Advisory Group brings together tech companies across the industry to ensure the continued development of the x86 computing architecture. The group will focus on expanding the x86 ecosystem by enhancing cross-platform compatibility, simplifying software development, and enabling more efficient collaboration between hardware and software communities.

Founding members of the organization also include industry giants such as Google Cloud, Dell, Lenovo, and HP Enterprise. The group will focus on ensuring consistent implementation of key x86 features and enhancing the overall user experience. This collaboration also highlights the importance of x86 across various fields, from cloud computing to enterprise IT, and the group hopes it will remain the preferred architecture for diverse workloads.

This new initiative aims to simplify architecture guidelines, simplify software development, and ensure that new x86 features and functionalities can be efficiently integrated across platforms. By nurturing a more unified ecosystem, Intel and AMD hope to protect their dominance in enterprise computing, encourage cross-sector innovation, and ensure a higher degree of interoperability between the two companies' processors.

Analyst Perspective

The new x86 Ecosystem Advisory Group represents a robust defensive measure taken by AMD and Intel in response to shrinking markets for their client and server processors.

While neither processor vendors nor cloud service providers have disclosed the size of the cloud server processor market, it is estimated to be worth approximately $126.19 billion in 2024 and projected to grow at a CAGR of 4.3% to reach $155.76 billion by 2029. As of early 2024, it is estimated that around 60% of AWS EC2 instances are powered by Graviton processors. As other CSPs follow Amazon's lead, the overall market for x86 processors is shrinking.

While Arm-based laptops have yet to significantly encroach on Intel and AMD's businesses, this trend is on the horizon. The client computing processor market is projected to be worth $115 billion in 2023, with a CAGR of 4.5% anticipated, reaching approximately $120.18 billion by 2030.

This new collaboration between the two competitors demonstrates a mutual recognition that the future of the industry lies in shared innovation, and a unified x86 ecosystem will continue to lead the way in the next wave of technological advancements.

The challenge for AMD and Intel is that Arm and its rapidly expanding list of licensees also aspire to dominance. The market can shift rapidly in unexpected directions, as evidenced by Arm's adoption in the cloud.

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