Intel has been cutting a number of non-core data center businesses over the past year or so. Examples of these have been things like the Intel Optane $559M Impairment with Q2 2022 Wind-Down or the Intel Q4 2022 Barefoot switching business. Rumors on the street are the next business it could be looking to exit is its server business. We have heard the rumor a few times over the past weeks, and selling its server business makes a lot of sense. We reached out to Intel, and it confirmed that it is exiting the business and selling it to MiTAC (parent of Tyan.)
Intel Exiting its Longtime Server Business
We asked Intel to comment on the rumor. We thought we would not hear anything until the next earnings release. Intel’s statement to us confirmed the rumor:
In line with Intel’s continued efforts to prioritize investments in its IDM 2.0 strategy, we have made the difficult decision to exit our Data Center Solutions Group (DSG). As part of this plan, MiTAC, an edge-to-cloud IT solutions provider and longstanding ODM partner of DSG, will have the right to manufacture and sell products based on our designs. We are focused on ensuring the DSG team and its stakeholders are supported during this transition. (Source: Intel Spokesperson to STH)
This is not a rumor, it is happening.
For those who are unaware, Intel makes servers and fairly decent servers at that. If you head over to the STH forums, there are a number of folks using the systems when they are sold as new overstock, which was very popular in the Xeon E5 era. In fact, STH previously ran on several Intel R2208 systems leading to 2014-2015 era pieces like The Intel AXXRMM4LITE / RMM4_LITE for iKVM features on Intel branded servers or 4 solutions tested: Adding SFF NVMe to your current system.
Intel made the servers usually with chassis sourced from Chenbro. There were options for NVMe before we had full NVMe servers, replaceable iKVM BMCs which are making a comeback due to geopolitical challenges, and even GPU and accelerator support when that was uncommon in standard 2U servers. Intel even made systems for its Intel Xeon Platinum 9200 series with features like liquid cooling options.
These types of systems were the ones that we would use for early STH testing pre-release as well. In this generation with our 4th Gen Intel Xeon Scalable Sapphire Rapids Leaps Forward launch piece we featured Supermicro servers, but there was a change. The pre-production platform Intel sent to test in Hands-on Benchmarking with Intel Sapphire Rapids Xeon Accelerators last year was not an Intel system. Instead, it was a system built by QCT (and very similar to the AMD EPYC Genoa counterpart.) Something felt like it changed at Intel when we did not get an “Intel Server System” before the launch.
Intel sells its server systems outside of the US. Years ago (mid-2010’s) when I asked about this Intel told me they were popular in places like South America, but not necessarily a large competitor in the US market. These Intel PCSD systems also underpin server families like Intel’s Data Center Blocks and Data Center Systems (e.g. those certified for VMware, Microsoft Azure Stack, and Nutanix.) At one point, Intel was driving the DCB and DCS message hard, but that messaging has fallen off in the past several quarters.
Many of our readers probably do not know that Intel makes servers, yet 5+ years ago, millions of STH readers were getting content served via them.
Selling servers is not Intel’s core business. Its core business is a components or subsystems business, much like AMD or the NVIDIA DGX/HGX business we featured yesterday. Intel’s servers are great, they often have very forward-looking features and served us well. At the same time, designing and building server chips is hard with perhaps the number of players being counted on one hand. Making a motherboard is one where there are a few dozen players. Cables are largely standardized in the industry and there are dozens of chassis manufacturers. Intel’s core, high-margin business here is selling silicon, not sheet metal.
This business has had less marketing push behind it than the Barefoot business. Judging by the lack of activity and rumors on the street we felt like this was going to happen. Now we have confirmation directly from Intel.