Intel's gross margin is 60%. And That is including consumers and lower end product like Pentium. I am willing to bet their Server product are at least 70%+ margin. Which means a lot of room for AMD to strike.
The problem is, what if Intel react and lower their Margin. Hence their Mobile and DC First for 10nm. Having said that, lowering Margin is easier said then done. There will be immense pressure from shareholders and investors.
It will be interesting to see how this story unfold. Of course GF is also working on 7nm ( similar to Intel 10nm ), but Intel's 10nm still has a year lead.
I don't know about the PC Pentium chip, but on laptop Celerons and Pentiums Intel must have like 100%-150% margin.
Those are not Core chips anymore (since post-Haswell). They are Atom chips, which Intel used to make for $30-$50, which the company is now selling for $100-$150.
Making such rip-off chips is one of the reasons why they merged the mobile business and the PC business, so they can show higher profitability "overall" for the division (especially since Intel used to subsidize the mobile chips, in order to compete).
Intel's process advantage used to be more like 3 years. It's now down to 1 year. This happened for two reasons: the other foundries reached FinFET, too (Intel was 2 years ahead just from FinFET alone before), and Moore's Law slowed down first for Intel, allowing the rest to catch-up (and it's now slowing down for them, too).
However, even with Intel's one year advantage, AMD could use Intel's chip building strategy to best it. What do I mean? I'm talking about how Intel will build server chips first on 10nm, and PC and laptop chips later.
If AMD starts building 7nm laptop APUs ASAP before Intel puts out its 10nm laptop chips, AMD could actually be seen as the "better option" overall in laptops (not just in value, in which they will be the winner anyway, but in pure performance).
Intel has also signaled in other ways (other than the 10nm strategy) that it will start fading out of the PC market to focus on "more profitable" server/machine learning markets, because there's not much for it to gain from the shrinking or at best stagnant PC market where it has 90% market share. However, AMD could grow from 10% or whatever it has now to at least 50% in the next 5-7 years, if it plays its cards right.
The only question is how interested they are in the PC market, too, because they may also chase the more profitable server/machine learning markets first. I'm not going to say with confidence that this is a mistake. They may need to focus on that at least partially to become profitable (which they haven't been for years), but I think it would be a better strategic move for AMD and for its image, if it started "conquering" the PC market first, before worrying about "what's the more profitable strategy."
If I were at AMD, I would probably worry more about Qualcomm in the PC market for the next few years (unless Windows on ARM is still a catastrophe, but I have a feeling it won't be, and that regular users in emerging markets won't notice a difference at that Celeron/Pentium level of performance). And the reason for that is that I suspect that even with AMD's sever cost-cutting over the past few years, Qualcomm's ARM chips may still be more profitable to build at a higher margin, which may mean that Qualcomm's chips could offer better value in budget laptops than either AMD or Intel. But that should be revealed to us in the next year or two at most.
And that's still a huge understatement. Intel's strategy for long term viability (that is, investing a ton on fab research) depends on those huge margins.
The problem is, what if Intel react and lower their Margin. Hence their Mobile and DC First for 10nm. Having said that, lowering Margin is easier said then done. There will be immense pressure from shareholders and investors.
It will be interesting to see how this story unfold. Of course GF is also working on 7nm ( similar to Intel 10nm ), but Intel's 10nm still has a year lead.