A Negative Development for Data Center Investment Demand
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Originally scheduled for 2H21, the release of Intel’s next-generation server processors has been delayed until 1H22, a negative development for data center investment demand in 2H21. Meanwhile, as Intel has announced that it will release a server processor equipped with HBM, HBM-related firms stand to benefit.
Launch of Sapphire Rapids delayed
Originally scheduled for 2H21, the release of Intel’s next-generation server CPU, Sapphire Rapids, has been delayed to 1H22. Sapphire Rapids has been receiving upbeat market expectations as a product that should spearhead demand for data center investment in 2H21. The launch delays represents a negative for demand momentum in 2H21. Intel says that the reason for the delay is to allow time for further product verification. As Sapphire Rapids is the first server processor to support DDR5 memory, the delay also bodes ill for DDR5 process-related firms.
Data center investment has been improving since 2Q21. Data center utilization rates at North American hyperscalers, who had been trimming back their server investments since 2H20, has recently started to increase in order to secure more stable utilization rates. The release of the Ice Lake-SP CPU (uses 10nm process and Whitley platform) in 2Q21 is also contributing positively towards demand.
Intel plans to launch Sapphire Rapids with HBM integration
Meanwhile, Intel has announced that it will release a version of Sapphire Rapids with High Bandwidth Memory (HBM). The release date target is 2H22. HBM is integrated with the processor on the same board via TSV process, so the speed is very high. The bandwidth of DDR4 memory, which is mainly used by existing server CPUs, is below half of bandwidth of GDDR memory with similar specifications used by GPUs. The high speed of GDDR contributes greatly to the GPU, overpowering the CPU in the machine learning chip market.
In response, Intel plans to regain its dominance in the machine learning computing market by integrating HBM, which has twice the bandwidth of GDDR, into the Sapphire Rapids server processor. HBM demand growth is positive for HBM-related back-end process companies. A good example in Korea is Hanmi Semiconductor, which is is manufacturing dual stacking TC bonders for the HBM process and delivering them to memory customers.