AMD Makes Ryzen 7000 More Affordable
Advanced Micro Devices (NASDAQ: AMD) launched the first batch of its Ryzen 7000 PC CPUs back in September. The four initial Ryzen chips are all "X" models, which means they are fully overclockable and focused on providing the most performance possible.
Pricing was a big problem for these new Ryzen chips. Even before Intel's (NASDAQ: INTC) Raptor Lake chips launched in October, a combination of a new platform requiring expensive motherboards and AMD's decision to only support pricier DDR5 memory pushed up the cost to build a system around a Ryzen 7000 series chip.
Once Raptor Lake came on the scene, pricing became an even bigger problem. Intel's new chips won on performance across the board, and they did so at lower prices. It's not surprising, then, that retail prices for AMD's Ryzen 7000 chips have been well below AMD's initial pricing. Even at those lower prices, the value proposition just isn't very strong.
Making Ryzen more affordable
AMD unveiled a handful of "non-X" Ryzen CPUs at CES 2023 earlier this month, lowering the cost of entry for anyone wanting to build a Ryzen 7000-based PC. The Ryzen 5 7600, Ryzen 7 7700, and Ryzen 9 7900 come with lower clock speeds, lower power usage, and smaller price tags. And with AMD's easy-to-use overclocking features, performance can be boosted close to the levels offered by the more expensive "X" chips.
These "non-X" chips are far more power efficient than the "X" variants, and reviewers at Tom's Hardware found that they nearly matched the "X" variants in terms of performance with overclocking enabled. Prices are much lower than AMD's suggested pricing for the "X" variants, but the gap is smaller compared to actual retail pricing.
The mainstream Ryzen 5 7600 is priced at $229, about 23% lower than the $299 price tag on the Ryzen 5 7600X. However, that "X" chip can be bought on Amazon right now for $269, and it's been available for as low as $249 in recent weeks. It's the same story for the high-end Ryzen 9 7900. The new chip is priced at $429, a big discount compared to the $549 price tag on the Ryzen 9 7900X. Recent retail pricing on the 7900X, though, has been closer to $474, according to Tom's Hardware.
These "non-X" chips lower the overall cost of entry, but they still require expensive motherboards and DDR5 memory. Intel's Raptor Lake, on the other hand, supports both DDR4 and DDR5 memory and has more affordable motherboard options. Intel also recently unveiled its own low-power variants of its Raptor Lake chips, which come with lower prices than the full-power variants.
The balance of power remains unchanged
AMD's lower-priced Ryzen 7000 chips don't change much about the PC CPU market. Intel's Raptor Lake still wins on performance, and while the lower pricing and solid performance for AMD's new chips make them more attractive than their "X" peers, Intel still appears to have the edge. Tom's Hardware concluded that these chips could be a good alternative to Intel's chips "if the pricing is right", but it's hard to know where retail prices will settle.
One thing that could help AMD is Intel's plan to raise prices. The company already boosted prices on its last-gen Alder Lake chips, and it may be set to do the same on some of its Raptor Lake chips as well. Intel's pricing actions could make AMD's chips more compelling, although the fact that Intel is confidently raising prices in a tough PC market while AMD's prices have been fluctuating well below list prices is not a good sign for AMD.
AMD does have its 3D V-Cache chips coming out in February, which should challenge Intel on gaming performance but will likely come with some downsides. For the most part, it looks like Intel's Raptor Lake will keep the upper hand.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon.com, and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short January 2025 $45 puts on Intel. The Motley Fool has a disclosure policy.
