(mysterious music) - [Presenter] Computer
chips probably make you think of this. ("Intel theme music") Since it was founded in 1968, Intel has dominated the chip market. - [Voiceover] This symbol outside means you have the standard inside. - [Presenter] It was the
world's largest chip maker by revenue for 25 years and it's still America's
largest chip company by sales - [Voiceover] Intel. - [Presenter] But then came AMD. In 2022, the longtime
rival took Intel's top spot in market value, breaching a
market cap of over 200 billion. - It was the first time
that ever happened. - [Presenter] In part,
this recent achievement can be traced back to one risky and expensive decision AMD
made that changed the game not just for the company,
but for computing. So how did AMD finally catch up to Intel? July, 1968, Silicon Valley. A small group of engineers founded Intel, a startup dedicated to chips, which are essentially
the brains of a computer. Intel prioritized
development from the start and didn't report any sales
in the first six months. Meanwhile, 20 minutes down
the road and 10 months later, a former coworker of those
engineers founded AMD or Advanced Micro Devices. AMD was making chips that
Intel had already made, focusing more on keeping
up than getting ahead. Then in 1970, Intel came out with this, the first semiconductor memory chip. A year later, it was the best
selling semiconductor device in the world. AMD's hardware didn't sell the same way. - AMD really came up as
kind of an Intel copycat, company that was making
alternatives to Intel chips so like maybe a little bit
cheaper and things like that. So they kind of came in second
in a lot of ways to Intel, especially when it came to
CPUs and the rise of CPUs. - [Presenter] CPUs are
central processing units, basically chips that solve problems. Here's how they work. First, the base, a flat piece of silicon. Silicon is a semiconductor,
which means it's conductive but can be made more conductive
by adding other materials like phosphorus or boron. On that silicon piece, there's
a pathway of transistors which turn currents on and off. These strings of electronic
blips read as one or zero and come together as binary information. That information goes
through this, a core. In simplified terms, the
core takes in a problem and shoots out an answer. Those answers help determine
how to respond to requests like opening a webpage
or sending an email. If the chip is the main brain, the core is like a tiny second brain. By 1971, Intel released the first programmable microprocessor,
another success. The company churned out
new chip after new chip, creating industry standard
after industry standard. - Back in those times, it
was able to put together this combination of marketing itself well and creating some of the
world's best technology to become the powerhouse
that it became back then. - [Presenter] By 1997, Intel
chips served as the brains of 84% of the world's computers. It had 10 times AMD sales, and six times its manufacturing capacity. - [Voiceover] Now anyone can have all the brain power they want. Just look for a PC with
an Intel processor inside. - [Presenter] Going
into the new millennium, AMD's market value lagged behind Intel's. Fast forward to late 2014,
when the company tasked new CEO Lisa Su with turning things around. Before Su's tenure, the
company had fought off rumors it would be sold and laid off workers. So behind the scenes, Su began
working on a new innovation. - I hope you guys have your money ready. We've made plenty of processors. - AMD released a new design for
their high performance chips that beat many of Intel's benchmarks. First, the transistors
were organized in a new way on the chips called Zen Architecture. At the same time, AMD rethought how chips themselves were made. Intel had been focusing
on making a single CPU answer questions really, really fast. AMD decided that for some of its chips, it moved to chiplets. Instead of having one big silicon chip, there were multiple small
chips in the same package, connected together and
acting like one CPU. - That strategy conferred
some key advantages in terms of power
consumption, in terms of cost, but still performed very well
against Intel's products. - This chip redesign
was the pivotal factor that gave AMD an edge. - And that really helped AMD return to more of a leadership
position in the market when these products launched in 2017 - Experts said that comparable AMD CPUs were less expensive and
faster than Intel's. - Our competition is priced
at a thousand dollars. AMD Ryzen 499! - By mid 2018, its market cap had shot up to over 30 billion dollars. Almost exactly five
years after the release of Ryzen in 2022, AMD
passed Intel in market cap for the first time, but it
didn't hold that spot for long. Still... - It reflects the investor sentiment about the future of the two companies. Clearly, investors see
a lot of positive things in the future for AMD, given
its share gains against Intel - [Presenter] Then the sales of PCs, which drive CPU usage, slumped. Shipments in the second quarter of 2022 dropped in the steepest
decline in nine years. In July, Intel posted
its biggest revenue drop in more than a decade. A month later, AMD surpassed
Intel again in market value. - Intel's trying to aggressively correct its technology path and become, you know, the undisputed leader again
in chip manufacturing. - [Presenter] While AMD was
also hit by market forces, its revenue increased by 14%. - AMD is a little bit
more flexible in a sense than Intel because it's smaller and AMD does not have any
manufacturing facilities like Intel does. That kind of gives AMD
some flexibility to adapt to this environment, perhaps
without the kinds of cuts that Intel is making. - But AMD may face even more challenges after the US government
imposed export restrictions on some chips in manufacturing equipment. CEO Lisa Sue said- - [Su] It is minimal impact on
our revenue in the near term. - [Presenter] Intel is building
new factories called fabs to help keep as much of
production as possible in the US. - Where the oil reserves
are defined geopolitics for the last five decades, where the fabs are for
the next five decades is more important. - [Presenter] Whether
AMD will continue to hold its own against Intel will depend on how well its innovations have laid the groundwork for the way forward. (mysterious music)
Intel has ruled the market for central processing units since the 1980s. But rival AMD overtook Intel in market value last year, thanks in part to an expensive bet on chip design.