Baidu is the largest search engine operator in China. More than half-a-billion Chinese people make 580 million search queries on Baidu every day. Baidu needs more processors to host this demand on its servers. Tencent is the world’s largest games publisher and it has a massive need for processors for its cloud/server infrastructure network. Tencent Cloud is now also the third biggest IaaS (Infastructure-as-as-Service) provider in China. Jingdong or JD.com is the second-largest e-commerce company in China. JD.com is also a cloud platform service provider.
These three Chinese conglomerates are already enough to probably boost AMD’s market share in global x86 server processor sales. As of last year, Intel enjoyed 99% share in x86 server processor sales. EPYC being adopted by three of China’s largest server farm/data center operators could improve AMD’s 1% share.
Going forward, AMD’s chances to return to annual net profitability could improve if it can regain 10% of the x86 server processor industry. Back in 2006, AMD enjoyed 26% market share in x86 server processors. Missteps of AMD over the last decade allowed Intel steal 25% share. The huge debt load that AMD had to suffer over its grossly overpaid purchase of ATI Technologies in 2006 meant it did not have enough R&D budget to keep its x86 processors competitive enough against Intel’s products.
The data center business is Intel’s most lucrative division. Better margins are possible in selling pricey server processors than on consumer CPUs like Core i3 or Core i5. Pricey Xeon server processors are partly why Intel enjoys a much higher operating margin than AMD.