Intel ‘Nehalem’ Xeon arrival set to give AMD a tough time

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Intel has released its latest Xeon processor for servers and workstations with more than 70 customer announcing support for the energy efficient chip.

The new chip is based on its "Nehalem" design, introduced for desktop PCs last November as the Core i7.

Analysts said the new processors may help Intel cement its position in the server market, just as Cisco readies a push into this lucrative area.

"The server business is very competitive," said Douglas Davis, vice president of the digital enterprise group and general manager for Intel's embedded and communications group.

Xeon "will drive a set of requirements for the data centre infrastructure."

Manufacturers and analysts say one of the next battles in the chip industry revolves around the amount of energy required to run data centres. A chip that performs better without drawing more power or producing more heat could be key.

Intel is designing a wide range of Nehalem-based microprocessors targeting servers, workstations, regular desktops and mobile devices.

Dell and Lenovo had announced servers using the chips last week, while HP rolled out its new line of Proliant servers using the Xeon processor 5500 series along with its new Z-Series workstations.

Other users and supporters of the Xeon family will include software developers Oracle, Microsoft, and SAP, Intel said.

"It is a pretty substantial shift, competition-wise and technology-wise," David Kanter, an analyst with Real World Technologies, said prior to Intel's official release.

Server shipments slid 12 per cent in 2008's fourth quarter, their sharpest decline since the dotcom bubble burst seven years ago, and are unlikely to rebound significantly until late 2009 or early 2010, according to research house IDC.

The Nehalem competes with arch-rival Advanced Micro Device's Opteron, first released in 2003.

Nehalem design employs circuitry 45 nanometers wide, 30 per cent smaller than previous chips using a 65-nanometer process. This means it can operate more quickly on the same amount of power.

Nehalem "will be very attractive to data centres," Kanter said. "Having the memory controller in the microprocessor is a huge benefit for servers."

Kanter said that Intel's on-chip memory controller could double the efficiency of its previous chips.

Intel's Nehalem and AMD's Opteron both have a memory controller on the chip, four cores, and can handle multiple instructions at once, but Kanter did not think AMD's Opteron could compete in the longer run.

As an example, Kanter said Intel has developed a way of sending two instructions to each core rather than just one and it can turn off cores when they are not needed.

"AMD in the 90s was the value alternative to Intel," he said. They sort of dropped the ball on product leadership and Intel's retaking the lead. AMD's going to be in the value position again."

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