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AMD gains back some share, but still down

With its inventory problems quashed, AMD gained back some share amid strong demand across the board for PC and server chips.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
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Tom Krazit
2 min read

AMD has managed to push past the effects of a disastrous inventory problem last quarter, but not all the way.

Mercury Research reports that AMD gained back four of the six points of market share it lost in the first quarter after an inventory screwup. Intel shipped 76.3 percent of all x86 chips for the desktop, notebook and server markets in the second quarter, while AMD shipped 22.9 percent. Intel hit 80 percent in the first quarter of this year, but that was an anomaly based on AMD's supply-chain troubles, said Dean McCarron, principal analyst at Mercury Research.

AMD blamed its poor fourth-quarter performance, in part, on an inventory issue in which one of its customers (believed to be Dell) punted on a large order of AMD chips. All of a sudden, the company was stuck with excess inventory that it couldn't get rid of through channel partners, who had already gone ahead and made a date with Intel for that quarter after watching AMD flirt with Dell.

As a result, AMD had to cut production in the first quarter, but it was back to normal output this quarter, McCarron said. That wasn't enough, however, to get back to where it was in the fourth quarter before all the problems hit.

Usually, second-quarter shipments decline compared with the first quarter of the year, but the combination of AMD's return to normal and a strong PC demand resulted in the strongest growth from Q1 to Q2 since 1990, McCarron said. Both Intel and AMD reported strong demand during their earnings conference calls earlier this month.

Overall, shipments increased by 12.2 percent compared with the first quarter, and by 15.2 percent compared with last year's second quarter. Mercury Research's numbers reflect chips that are shipped out to customers by Intel and AMD, not the percentage of chips inside the systems that eventually make their way to end users.