PC Chip Market Better, But Recovery Still A Ways Off

Market leader Intel lost share while rival Advanced Micro Devices gained by nearly an equal amount in the first quarter, IDC says.
Global PC microprocessor shipments in the first quarter fell for the second quarter in a row, but there were indications that the recession-driven decline is slowing, a research firm said Tuesday.

By vendor, market leader Intel lost share while rival Advanced Micro Devices gained by nearly an equal amount, IDC said. However, Intel's decline was driven by lower demand from customers, while AMD's increase was attributed to the chipmaker lowering prices. For AMD to show that it's taking market share away from Intel, the gains would have to stretch at least to another quarter, IDC analyst Shane Rau said.

In the overall market, the good news is there were no surprises. Shipments in the quarter were down nearly 11% from the fourth quarter and 13% from the same period a year ago. The quarter-to-quarter decline was only "slightly worse" than the typical seasonal drop, and a lot less than from the third to fourth quarters in 2008, which saw a 17% drop.

However, IDC warned that the positives do not indicate a sooner-than-expected recovery. "By no means are we out of the woods yet," Rau told InformationWeek. "The best we can say about Q1 is the decline was less than in Q4, but it was still bad."

The latest numbers have not changed IDC's prediction of a market recovery in the second half of 2010. A recovery means a return to annual growth. As to when the market would again reach pre-recession levels, that isn't expected until 2011 or beyond, Rau said.

An important indicator as to the condition of the chip market will be in the third quarter when PC makers prepare for the back-to-school season, Rau said. lf processor sales go up in June, versus July, then that's an indication that manufacturers are expecting a decent season. "If the [computer] build takes place early, than it's a good sign," Rau said.

The PC market has been hit hard by the recession, with IDC projecting overall shipments this year to fall by 4.5% from 2008. The one market segment expected to grow is netbooks, which are mini-laptops optimized for Web browsing and costing as little as $300. The low cost is the main attraction for cash-strapped consumers.

However, the netbook market didn't bring good news for Intel in the first quarter. Shipments of the chipmaker's netbook-bound Atom processor fell by 33% from the fourth quarter, as manufacturers awash with inventory bought less. Atom chips accounted for 21% of Intel's mobile PC processor shipments in the first quarter and 6.5% of the company's revenue in mobile chips.

Overall, Intel had a 77.3% market share, a loss of 4.7%, while AMD earned 22.3%, a gain of 4.6%. Third-place VIA Technologies had a 0.4% market share.

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