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AMD's server share leaps 10 percent mark

A 51 percent jump in market share from the first quarter to the second is first time AMD has crossed into double-digit territory in server chips.

Advanced Micro Devices claimed 11.2 percent of the market for x86 server chips in the second quarter, a major milestone for the company.

Mercury Research figures released by AMD show that the chipmaker saw its market share rise from 7.4 percent in the first quarter to 11.2 percent in the second quarter, a 51 percent jump. Revenue generated by Opteron rose 89 percent from the first quarter to the second, according to AMD.

The market share figure, which will likely be disputed by Intel and possibly contradicted by other market share surveys, represents the first time AMD has crossed into double-digit territory in server chips. Two and a half years ago, before Opteron, AMD had only a nominal presence in this market.

The milestone is important in that server chips sell for more than desktop ones. An increase in sales of Opteron servers also gives AMD an opportunity to sell chips to manufacturers of business desktops and servers. To date, the vast majority of AMD desktop and notebook chips have gone into consumer computers. Though prices of chips sold to these two markets are often similar, the business market remains larger than the consumer market.

Ben Williams, vice president of the commercial business group at AMD, attributed the surge in sales to a number of factors. Sun, Hewlett-Packard and IBM all came out with new Opteron servers in the second quarter, broadening the range of products available. AMD is also becoming more familiar to large companies. More than 75 percent of the Global 100 have now installed Opteron systems--that's up from 35 percent in the third quarter of 2004.

Mercury does not track sales of chips based on RISC architecture (which reduces chip complexity) such as the UltraSparc III from Sun Microsystems. Instead, it tracks x86 chips, made by Intel and AMD. Still, even if RISC chips were added, AMD would likely be in double figures, or close to it. So-called x86 chips, a blip in servers 10 years ago, are the brains inside more than 90 percent of servers sold today.

In the second quarter, AMD saw its revenue from sales of all its microprocessors increase 38 percent over the same period last year, with revenue hitting the $767 million mark. The company attributed the increase to record server and mobile processor sales, a 6 percent higher overall average selling price, and record sales to its largest customers, including Hewlett-Packard and Sun.