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AMD far from 20 percent rule

03 July 2008 | By Mark Osborne | Editor's Blog

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Microprocessor market share data from iSuppli Corp. highlights that Intel and AMD are as far apart as they can be in terms of each company’s share of the MPU business. Intel continues to be in control of around 80 percent of the market with only slight fluctuations at that level for over a year.

Microprocessor market share data from iSuppli Corp. highlights that Intel and AMD are as far apart as they can be in terms of each company’s share of the MPU business. Intel continues to be in control of around 80 percent of the market with only slight fluctuations at that level for over a year.

AMD has come off the lows of only 10 percent in 1Q07 to reach 13 percent in 1Q08, but that’s down slightly from 14 percent in 4Q07.

As is the case with stock prices, the decline is usually faster than the climb, and what a climb AMD has to make to get back to market share position in the 20 percent range.

I mention the 20 percent range, as this is AMD’s own benchmark requirement for the company to operate on a sustainable basis.

As we are now in the second half of the year, it is very doubtful that AMD will reach that level this year (not that they said they would). Returning to profitability - as stated by executives - would also appear to present an uphill struggle unless market share gains pick up momentum as we exit 2008.

If we take AMD’s market share figure for 1Q07 and that of 1Q08, the company has only regained 2 percent share in 12 months. This could indicate that without an increase in share gain momentum, AMD would exit 2009 with 17 percent share and barely get to the 20 percent domain by the end of 2010.

Of course, just six months is a very long time in this business and anything could happen to dispel such a projection. However, without the share gain increasing through the end of 2008, what is AMD going to do in 2009 that creates an even higher share growth to basically reach the 20 percent mark ASAP?

Intel, on the other hand, is sitting pretty and as the chart below emphasises is currently towering above its competitors. The company could easily sit back and relax for the next 12 months, but as we all know that isn’t going to happen. Intel will have fully converted to 45nm HKMG processes in 2009 and both performance levels and costs will have reached a sweet spot.

If 2008 proves to be another tough year for AMD to compete with Intel then 2009 will not be any better. While we should see AMD fully ramp its 45nm technology in 2009, little indicates at the moment that this will do anything other than maintain the status quo.
 
As AMD has once again gone to ground over its ‘asset-smart’ plan, it seems like a decade since the strategy was first mentioned. The longer that situation continues, the greater the need for AMD to come up with a very ‘smart’ plan indeed.

MPU Marketshare

 

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