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Gartner: Intel To Regain Market Share Losses

Despite its sales slump in 2006, analysts suggest the No. 1 chipmaker has momentum this year with new processors and manufacturing plants announced.
Intel had a rough 2006, giving up market share to rival Advanced Micro Devices, but the No. 1 chipmaker is expected to regain those losses this year, a market research firm said Wednesday.

Intel in 2006 saw its worldwide revenue decline 12%, losing share to AMD for most of the year in the server and consumer markets, Gartner said. Also affecting Intel's revenues was an across-the-board price war with AMD that hurt the larger chipmaker the most.

Late in the year, however, Intel started to recover from its missteps following the release of its Core 2 Duo for desktops and notebooks, and its Xeon 5100 series for servers, the research firm said. In addition, Intel in November released quad-core chips for workstations and servers, a product line AMD won't have until the middle of this year. "Gartner analysts expect Intel to recapture losses in market share in 2007 with their new product offerings," the firm said in a statement.

The heated competition is sure to bring better prices to companies buying processors from the two rivals. The reason is the amount of product the companies plan to manufacture, Jim McGregor, analyst for In-Stat, said. Intel will run four manufacturing plants this year, and AMD is bringing a second online, as well as outsourcing additional manufacturing to Chartered Semiconductors.

With a slowing economy expected, it's unlikely there will be enough servers, desktops and notebooks made to use up the supply. "I would fully expect to see price cuts later on this year," McGregor told InformationWeek.

Worldwide revenue for the semiconductor market in general rose 10.2 percent last year to $262.7 billion from $238.3 billion in 2005, Gartner said. Slowing growth rates in traditional markets, such as PC processors, were offset by strong demand for dynamic RAM (DRAM) memory chips, and processors used in wireless communications.

The top five vendors last year in descending order were Intel, Samsung Electronics, Texas Instruments and Infineon Technologies, which tied for third; Toshiba, and STMicroelectronics, Gartner said. AMD was 14th in the overall ranking.