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AMD edges back, but still lags Intel

Advanced Micro Devices recovers some market share in the fourth quarter, but still falls further behind its chipmaking rival after a difficult year.

Chipmaker Advanced Micro Devices recovered its footing in the global market in the fourth quarter, but still fell further behind rival Intel.

Intel accounted for 84.6 percent of the PC microprocessors shipped worldwide in the fourth quarter, up from its 81.2 percent share in the same quarter last year, according to figures from Mercury Research.

Sunnyvale, Calif.-based AMD, meanwhile, saw its market share drop to 13.8 percent in the fourth quarter from 18 percent in the same period the year before. (Mercury's figures do not include shipments of PowerPC processors used in Apple computers.)

In addition, AMD lost market share for 2002 as a whole compared to 2001, said Dean McCarron, principal analyst at Mercury. However, the final figures for the whole year have not yet been made public. Intel executives said during quarterly conference calls that the company made some of its biggest gains in years in 2002.

"Clearly, the inventory was the dominant factor" in AMD's market-share decline, said McCarron. "The bubble started in (the first quarter) and decimated sales for the next two quarters."

To help reduce an inventory bubble--excess stockpiles of its chips at dealers and PC makers--AMD radically curtailed processor shipments in its third quarter.

One consolation for AMD is that it managed to regain ground lost in that period. The company's market share during that quarter dropped to 11.6 percent, while Intel's rose to 86.8 percent.

Last year, several AMD chips--including the Athlon 2400+, Athlon 2600+, Barton and the Athlon64--were hit by delays. While the delays likely influenced the chipmaker's market share to a limited degree, they took a toll on its revenue.

During the delays, Intel continued to come out with faster chips, allowing it to cut prices on older models--which in turn forced down prices on AMD's product line. Toward the middle of the year, AMD's fastest chips were selling for as much as Intel's cheapest ones, according to various tracking services.

For the year, AMD lost $1.3 billion, close to the total net profit of $1.66 billion achieved over the past 15 years combined.

Small processor manufacturers--a group that includes Transmeta and Via--saw their aggregate market share rise to 1.6 percent in the fourth quarter from 0.8 percent in the same period the year before.