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AMD gained market share in Q4, lost it again in Q1
Analysts from Lehman Brothers and iSuppli have dissected Q4 2007 and Q1 numbers to discern that while AMD gained market share slightly in the December quarter, the company lost it again in the March quarter, with lingering problems due to lack of competitive products and Barcelona delays.
By Ann Steffora Mutschler, Senior Editor -- Electronic News, 4/22/2008
Although the struggles at Advanced Micro Devices Inc (AMD) have dominated recent headlines, market researchers at El Segundo, Calif.-based iSuppli Corp today reported that the MPU challenger actually managed to turn around its fortunes slightly in Q4 2007, gaining some share in the market for all types of microprocessors.
In the global microprocessor market—consisting of X86, RISC, and other types of general-purpose devices—AMD grew its market share by 0.3% sequentially in Q4 from Q3 , whereas iSuppli said rival Intel Corp increased its revenue by 0.2% sequentially.
On a year-over-year basis, however, it is a different story. In comparing Intel’s Q4 2007 to Q4 2006, the chip giant grew its market share by 3.1%, while AMD lost 1.5% of share.
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Also, global unit shipments of PCs in Q4 rose by 14.2% year-over-year. This strong demand, combined with increased sales of higher-end microprocessors, helped to sustain ASPs, he said.
ISuppli also observed that Intel and AMD accounted for an increasing share of total microprocessor market revenues and when combined, the two companies accounted for 93% of overall microprocessor revenues in Q4 2007, up 1.6% from Q4 2006. On an annual basis, the two accounted for just over 92% of market revenue in 2007, a gain of 1.4% points from 2006.
AMD’s struggles in 2007
As if anyone could forget, iSuppli reminded that 2007 was a challenging year for AMD, as its market share declined by 2.9% from 2006, while Intel’s total microprocessor market share rose by 4.3%.
“The delay in the introduction of AMD’s Barcelona native quad-core microprocessors was a factor in the company’s performance for the year. Barcelona represents a clear area of competitive advantage for AMD compared to Intel, which still does not have a native quad-core microprocessor. However, the Barcelona delay has reduced the timeframe during which AMD can press that advantage,” Wilkins said.
Native quad-core refers to placing all four microprocessor cores on a single chip, as opposed to portioning them onto two separate die. Intel is expected to launch its own native quad-core microprocessors at the end of this year, Wilkins also said, with plans to release a six-core version of its Xeon microprocessor this year.
AMD’s recent problems came home to roost earlier this month with the announcement that the company plans to lay off 10% of its global workforce.
“The major events in the 2008 microprocessor market included the slowdown of the price war between Intel and AMD, healthy growth in PC sales and particularly surging demand for notebooks. In 2008, AMD’s Barcelona should hit its stride, setting the stage for a ‘battle royale’ against Intel’s native quad-core Nehalem parts at the end of the year. However iSuppli is maintaining a cautious view for 2008 while we wait and see how the credit crisis affects consumer spending and end-equipment markets such as PCs,” Wilkins concluded.
Looking to Q1, Lehman Brothers’ semiconductor research analyst Tim Luke said in a research note this morning that, as expected, Intel gained revenue and unit share across all segments versus AMD in Q1, according to a report from Mercury Research.
Microprocessor Q1 units were down 8% sequentially with Intel’s units showing a 5% sequential decline, while AMD’s units declined 18% sequentially – the latter of which was hurt by lack of competitive products particularly in servers and notebooks.
In notebooks, Lehman said AMD’s units declined 24% sequentially while Intel’s units were down a mere 1% quarter-over-quarter. AMD’s server units were down 16% quarter-over-quarter versus down 3% sequentially for Intel.
In terms of unit share, Intel’s microprocessor unit share improved to 79% in Q1 vs. 77% in Q4, and gained 3.5% unit share in notebooks in Q1, increasing its share to 86% vs. 82% in Q4 2007. For servers, Intel’s unit share rose to 87% and 74% in desktops.
Overall microprocessor revenues are estimated to be down 8% quarter-over-quarter in Q1 versus a seasonal decline of 7% quarter-over-quarter.
Intel's MPU revenues were down 7% sequentially, while AMD’s declined 17% on the same comparison.
From a revenue share perspective, AMD’s Barcelona slippage resulted in the company’s server revenue share declining from 11% in Q4 2007 to 9% in Q1. In notebooks and desktops, AMD lost 1% share each, and now has 10% revenue share in notebooks versus 90% for Intel; and 18% revenue share in desktops versus 82% for Intel, Lehman reported.
In conclusion, Lehman’s Luke wrote, “We are encouraged by Intel’s strong execution and new product roadmap notably in the server and notebook arenas. We look for crisp execution on ramp on new Montevina (notebook in Q2) and Nehalem (server in Q4) releases. Faster ramp to lower geometries (45- and 32-nm) help maintain performance lead vs. rival AMD. ... We recognize that macro uncertainties may linger and impact sentiment and, therefore, aim to closely monitor outlook. However, we remain impressed by solid share gains across all segments driven by Intel’s superior product portfolio.”
In terms of AMD, Luke said there is concern that high debt levels and a somewhat stretched balance sheet especially in midst of macro uncertainty make the firm more cautious, especially given AMD’s high exposure to consumer segment. “Thus, while encouraged near term by pending server ramp (with Barcelona), ongoing losses and balance sheet metrics restrain our long-term rating at present.”
