AMD wins 2006 revenue battle with Intel, iSuppli says

By Colleen Taylor -- Electronic News, 3/15/2007

The showdown between leading chip supplier Intel Corp. and rival Advanced Micro Devices Inc. (AMD)  dominated the semiconductor landscape in 2006, and, according to one market research firm, AMD came out on top.

While Intel suffered a revenue decline while AMD nearly doubled its sales, according to iSuppli Corp.'s final 2006 market-share ranking.

"For U.S. microprocessor giant Intel, 2006 was the worst of times, as its global semiconductor revenue dropped by 11.1 percent from 2005," Dale Ford, VP of market intelligence for iSuppli, said in a statement. "The revenue decline, which was due to Intel's bleak performance in its core PC microprocessor and flash-memory businesses, erased nearly all of the company's sales gains from its strong year in 2005. Intel's 2006 revenue of $31.5 billion was less than half a percentage point higher than its sales in 2004.

"For Intel's smaller U.S. rival, AMD, 2006 was the best of times as it achieved a whopping 91.6 percent increase in revenue for the year, partly due to a major acquisition, but also because of strong gains in microprocessor market share," Ford added in the statement.

This robust increase in revenue caused AMD's ranking to rise to eighth place in 2006, up seven positions from the 15th rank in 2005.

Intel's microprocessor and flash-memory businesses struggled in 2006. The businesses together accounted for 83 percent of total company revenue last year, but Intel's combined microprocessor and flash revenue in 2006 fell to its lowest level since 2003 as Intel faced rising competitive pressure in those markets, the firm’s data showed. The revenue decline resulted in Intel's market share falling to 12.1 percent, its lowest level since before 2000, iSuppli said.

Meanwhile, in 2006 AMD gained PC microprocessor market share at Intel's expense. AMD's PC microprocessor revenue rose by 35.5 percent in 2006 and its market share in that product segment increased to 16.1 percent, up 5 percentage points from 11.1 percent in 2005. iSuppli said that AMD's revenue also was boosted substantially by its acquisition of graphics chip seller ATI Technologies in 2006.

According to iSuppli, the big winner in the battle between Intel and AMD, however, was the semiconductor industry as a whole. The performances of Intel and AMD came during a year when global semiconductor industry revenue rose by 9.3 percent to reach $260.2 billion, up from $237.98 billion in 2005. This is slightly higher than the 9 percent growth iSuppli predicted in its preliminary market share estimate released in early December.