17 Gifts at All-Time Lows Gifts Under $30 ChatGPT, a Mindblowing AI Chatbot Neuralink Investigation Kirstie Alley Dies New Deadline for Real ID RSV Facts Space Tomatoes
Want CNET to notify you of price drops and the latest stories?
No, thank you

Intel loses market share in own backyard

Chipmaker loses share to AMD worldwide, but fourth-quarter losses run especially deep in the U.S. retail market.

Intel lost significant share to Advanced Micro Devices in the U.S. retail market in the fourth quarter, according to figures released Wednesday by Current Analysis.

Intel executives said Tuesday that they expected to lose about one point of market share to AMD during a disappointing fourth quarter. That figure refers to worldwide sales of microprocessors during the quarter, an Intel spokesman confirmed. Among U.S. retail PCs, however, the results were more striking.

Intel's share of the U.S. retail PC market fell by 11 percentage points, from 64.4 percent in the fourth quarter of 2004 to 53.3 percent, said Sam Bhavnani, a senior analyst at Current Analysis. Current Analysis' market share numbers measure U.S. retail sales only, and therefore exclude figures from Dell, which uses its Web site to sell directly to consumers. Dell, the top PC vendor in the U.S., exclusively uses Intel's processors in its PCs. (Sales by online retailers were excluded from the market share analysis as well).

Sales of Intel-based desktop PCs fell 22.3 percent during the fourth quarter, according to Current Analysis. As a result, sales of AMD-based desktops took the lead during the pivotal fourth-quarter holiday shopping season. AMD chips were found in 52.5 percent of desktop PCs sold in U.S. retail stores during that period.

Intel partially blamed poor demand for desktops for its fourth-quarter earnings results that were below expectations. But desktop shipments grew 13.4 percent among U.S. retail customers during the quarter, Bhavnani said. Last month, IDC predicted the entire U.S. PC market would grow only 8.3 percent during 2006.

Intel Chief Financial Officer Andy Bryant also noted that Intel's yearlong supply problems with desktop chipsets extended into the fourth quarter, hurting sales of Intel-based desktops and allowing AMD-based systems to make inroads at Intel's expense.

Notebook PCs have been the fastest-growing segment of the PC market for several quarters, and Intel has a sizable advantage over AMD in that segment. But its lead shrank during the fourth quarter as the percentage of AMD-based notebooks increased from 22.3 percent in the fourth quarter of 2004 to 30.5 percent in the fourth quarter of 2005. Shipments of AMD-based notebooks doubled compared with the previous year, while shipments of Intel-based notebooks increased by 34 percent in the U.S., Bhavnani said.

AMD is expected to report its own fourth-quarter earnings Wednesday afternoon. The results are eagerly awaited by analysts; investors are wondering if Intel's problems are its own, or if the three-year boom in the PC market has finally run its course.

"In posting the weakest Q4 revenue result and Q1 outlook since the bursting of the bubble, Intel has made it clear how much competitive ground the company has lost to AMD. The extent of the losses has exceeded our expectations," Merrill Lynch analyst Joe Osha wrote in a research note on Wednesday.

Intel's stock closed down 11.5 percent, or $2.91, to $22.60 on Wednesday trading on the Nasdaq. AMD's stock ended the day up 1.5 percent, or 51 cents, at $33.37.