Intel Corp. plans to launch its long-awaited server chip Cascade Lake on April 2, a move that analysts predict will jump-start data-service revenue in the second half of 2019.
While Intel had previously indicated the new Xeon family server chip would be released this year, boosting recently flagging sales, the exact timing of the release was unknown. Intel officials confirmed the release date to S&P Global Market Intelligence. Server makers will also announce the availability of servers using those chips at Intel's April 2 event in San Francisco.
Server chip sales slowed down in fourth quarter 2018 and are expected to decline slightly in the current period. Revenue from Intel's Data Center Group, which includes server chips, totaled $23 billion in 2018, growing by 21% compared to 2017. Intel's total revenue for 2018 was $70.85 billion.
The new chips will be used in cloud and artificial intelligence, which need fast servers, said Dan Olds, a partner at technology consulting firm OrionX. In an OrionX survey of 328 companies, fewer than 7% were using artificial intelligence technologies.
The chips will also be targeted at cloud providers such as Google LLC, Amazon.com Inc. and Microsoft Corp. that are already buying Intel chips for artificial intelligence via the cloud, Olds said.
 Intel Xeon chips Source: Intel |
The cloud is the single largest business in Intel's data-center portfolio, and that will continue to grow, said Navin Shenoy, executive vice president and general manager for the Data Center Group, speaking at the Morgan Stanley Technology, Media & Telecom Conference on Feb. 26.
While the chip goes on sale at the beginning of the second quarter, sales revenue is not expected to see a significant boost until the second half of the year, for a variety of reasons. Trade tensions are weighing on business decisions about server chip purchases, and companies also want to make sure products are thoroughly evaluated for potential security issues, said Jim McGregor, principal analyst at Tirias Research, a tech-focused firm.
"A lot of people are getting skittish about the economy. That's pushing off purchases," McGregor said.
Intel competitor Advanced Micro Devices Inc. is due to debut a server chip called Epyc 2 later this year that could affect Cascade Lake's shipments, McGregor said. AMD chips are less expensive but highly competitive in terms of price and performance, he said. Customers are also considering server chips based on Arm Holdings Ltd. designs.
Intel is expecting flat revenue growth in fiscal 2019, totaling $71.5 billion, compared to 2018. But the data-centric business — which includes data centers, internet of things, and storage — will be a bright spot for Intel in the future, said equity research analyst Angelo Zino of CFRA Equity Research in a March 16 research note.
"Despite our view for decelerating growth, we positively view data-center opportunities, driven by cloud and communications service providers," Zino wrote.