Why AMD & Intel Manufacture and Sell CPUs Exclusively?

The realm of technology is rather quirky and quaint.  There are hundreds of companies trying to out-do one another, despite stringent intellectual property rights and failsafe patent laws.  Yet, there are some niches that don’t seem to be wavering – and they are for behemoths like Intel and AMD.

 

For decades now those two companies have ruled the CPU market unrivalled and unchallenged.  Intel is the undisputed market leader in chips, they have a substantially bigger share than AMD, with a larger market cap and revenue stream.

 

This is a time when Apple and Samsung are battling it out, Dell and HP struggling to outthink one another and new companies are continually shattering existing market caps. It seems almost impossible that Intel and AMD are the only ones who have a degree of dominance in consumer CPUs and servers, among other things.

There are a few reasons why other companies cannot lay claim to such omnipresence and omnipotence – and it’s not through lack of trying.

 

RESEARCH & DEVELOPMENT

An important factor that ensured Intel and AMD are able to stay ahead of the competition is their research and development.  Advances in technology, better materials, efficient performance and greater reliability are the cornerstones of this dynamite duo.

Their chipsets and other components are used in every computer, server, tablet and smartphone.  There is no way any other company could develop better hardware or explore other options.

Intel

 

 

 

 

 

 

The only thing that evolves technology is research – and that needs money.

Intel spends billions of dollars per annum in R & D.  In 2015, they spent more than 12 billion USD.  Records show that on average Intel have spent at least 5 billion USD every year in recent memory.  And yet the 12 billion spent in 2015 accounted for only a fifth of their total revenue.  In comparison, the expenditure on R & D in the rest of the United States in total was 60 million.

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What other company could afford to spend so much money on R & D in any given year for chips or chipsets?  AMD doesn’t outlay as much but they do spend a sizable chunk of their revenue on processors and chips.  This is why they have managed to retain their 10 to 15% market cap.  Intel retains the other 85 to 90%.

 

UNVIABLE FOR COMPETITORS

Let us consider the teaming up of IBM and Motorola with Apple some years ago.  They wanted to develop the PowerPC chip.  After its development, Apple wanted them to be exclusive to their own computers, including Macs and Macbooks.

 

At the time (2006) Apple sold around 5 million computers that year.  Compare that to the 200 million chips that Intel sold the same year.  Today that figure is even larger with about 300 million sales or more.

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Even Apple’s sales added to IBM’s market cap couldn’t have matched Intel.  As a result, the funding for the research and development had to be curtailed.  In this race for pole position limited funds, stunted research and lackluster development does not win the championship and become market leader.

 

COMPETITIVENESS, FOCUS & RELIABILITY

James, from Elive Technical Support says “Beyond American companies, many Asian tech giants and even startups have tried making chips like the x86 and the Ryzen.  None of them managed to stir up a storm or even a gust of wind for that matter”.  VIA Technologies in Taiwan and Cyrix with its x86 are still attempting to make chips for computers.  There was National but that later got integrated with Texas Instruments.

 

All these companies could not compete with Intel.  They simply fall at the first gate when up against the reliability and focus of Intel and AMD.

 

Competitiveness and reliability are key.  It is what sets Intel and AMD ahead of the herd.  You would search hard to find a case of this perfect pair having manufacturing problems or having to initiate a recall.

 

Their processors are pretty much flawless and even if the motherboards, memories, hard drives or other components go kaput, the processors remain workable.  That is the kind of durability techies seek out.

AMD Chip

The element of cross-compatibility in Intel and AMD chips is legend.  They can be used with almost any configuration of PC and any brand.  They can work with any operating system supporting every app or program.  Other companies’ attempts have simply fallen short of this amazing adaptability.

 

And that is the real reason why Intel and AMD remain ahead of everyone else.

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