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HolidayBuyer's Guide
Tech Industry

Intel loses, AMD gains market share

Low-priced chips were the biggest lure to customers during the second quarter, according to new market data.

Low-priced processors dominated PC chip sales during the second quarter, contributing to a loss of market share by Intel, new figures show.

The chipmaking giant's PC processor market share, including shipments of processors for Microsoft's Xbox game console, slid eight-tenths of a percentage point to 82.7 percent in the second quarter, compared with the first quarter, according to the latest figures from Mercury Research.

At the same time, Advanced Micro Devices picked up half a point of market share, rising to 15.5 percent in the second quarter, compared with the first quarter, according to Mercury Research. The remaining 1.8 percent of the second-quarter PC processor market was split between Via Technologies and Transmeta.

More often than not, the market share held by Intel and AMD shifts by less than one percentage point in any given quarter.

Seasonal trends took hold during the second quarter, Mercury Research figures show. Many PC makers opted for cheaper chips such as Intel's lower-speed Pentium 4 chips and AMD's Athlon XP chips, giving AMD the edge, especially in systems destined for emerging PC markets, such as China, India and Eastern Europe, said Dean McCarron, Mercury Research's principal analyst.

Overall, the trend toward low-priced desktop processors seen in the second quarter is fairly normal. The second quarter is often the weakest quarter of the year for PC chip shipments. At the same time, low-priced desktop processors are usually in the greatest demand during that quarter. In addition, there is a general growth trend in emerging markets, which typically purchase lower-priced chips. Combine all these trends and companies like AMD and Via, which offer lower prices than Intel, tend to benefit the most, McCarron said.

"There was a big shift toward lower-end products in the second quarter," McCarron, said. "It's not a big surprise...as the market tends toward both lower sales and lower average prices in the second quarter."

PC processor market share figures include desktop, notebook and server processors. But desktop processors, whose shipments outnumber the other two categories combined, have the biggest effect on market share.

When compared with the second quarter of 2003, the chipmakers' market share positions appear more stable, with AMD's share showing a decline of one-tenth of a percentage point and Intel's an increase of one-tenth of a point. The companies held 82.6 percent and 15.6 percent of the PC processor market, respectively, in the second quarter of 2003, Mercury Research's figures show.

Despite the seasonal trends, overall PC processor units increased significantly on a year-over-year basis during the second quarter of 2003. Higher demand for PCs has been driving up processor unit shipments since the third quarter of 2003, McCarron said.

Despite gaining from low-priced chip sales, AMD has said it would like to keep its Athlon XP chip away from the low-priced processor fray.

AMD has instead introduced a new chip brand, Sempron, to help it attack that market. Although Sempron chips will eventually replace Athlon XPs, their assignment for now is to win AMD more business in low-priced PCs, competing with Intel's Celeron processor. The first Sempron chips, which start at $39, came out in July and will be used in systems from companies including Hewlett-Packard and China's Lenovo Group, AMD has said.