Intel Dips, AMD Rises In Chip Market

Intel's share of the global microprocessor market dipped in the third quarter and rival Advanced Micro Devices increased its share by an equal amount, as the two chipmakers battled intensely to lure customers with price, a research firm said Wednesday.

In terms of unit shipments, AMD's share of the global market rose 0.4% over the second quarter to 23.5%, while Intel lost the same amount to finish the third quarter with a 76.3% share, IDC said. While the change was small, it was significant. "The two main processor vendors fought each other like boxers in a ring pretty much to a standstill," Shane Rau, director of IDC's PC semiconductor program, told InformationWeek.

An uptick in the overall market was significant for AMD because it marked the second consecutive quarter in which AMD had gained market share against Intel, following several quarters of decline. "It is possible the bleeding is over," Rau said. However, it was too soon to predict whether AMD could reach its peak market share of 26% achieved in the second quarter of 2006.

What has apparently helped AMD is the launch of its first quad-core Opteron server processor, which had been codenamed Barcelona, in September. At about the same time, Intel, which has been shipping quad-core processors for about a year, released a new line of the high-end chips under the Tigerton family name. "It's not a slam dunk for AMD that its market share is going to ratchet back up," Rau said.

Indeed, AMD this month reported a third-quarter loss of $396 million, as its costs rose from a year ago. Revenues increased to $1.63 billion from $1.33 billion. Intel, on the other hand, posted a 43% rise in profits to $1.86 billion. The increase was due to higher sales of processors for notebook computers, the PC market's fastest-growing segment, and to Intel's restructuring efforts.

Nevertheless, the intense competition between the chipmakers led to lower prices that stimulated early demand from manufacturers building PCs for the back-to-school buying season. The lower chip prices were passed along to consumers, which boosted PC sales worldwide.

The overall PC processor market saw a sequential growth of 14.3% in the third quarter to reach a record level, IDC said. The strong showing in shipments had an impact on revenues, which grew 14.8% to $7.95 billion. For the year, IDC predicts revenue of $32.3 billion, an increase of 7.5% over 2006, which Rau called "decent" growth.

Shipments of processors designed for mobile PCs continued to lead the global market, growing 26.6% in the third quarter. The strong performance reflected considerable demand for mobile PCs in the second half of the year, IDC said. Shipments of processors for desktop PCs and for PC servers also grew, increasing by 7.7% and 4.6%, respectively.