- [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)