Advanced Micro Devices has been gaining sales momentum over the past year and is continuing to gain market share, but only a portion of that share is coming from Intel. The rest has come by growing the market, according to market research firm iSuppli.
In addition, AMD (NYSE: AMD) is doing better on the server side with its new multi-core Opteron processors and has reserved the slide there as well, says financial analyst Broadpoint.Amtech.
iSuppli found that AMD’s overall market share has been slowly increasing all year. In the fourth quarter of 2008, it stood at 10.5 percent. In the third quarter of 2009, it was 11.9 percent, and for the fourth quarter it was 12.1 percent.
Intel (NASDAQ: INTC), however, only lost 1 percent market share in that year-over-year period, while AMD gained 1.6 percentage points. That means AMD is growing its own markets, not just taking share from Intel. The remaining 7.3 percent market share falls into the category of “Others” and includes Sun Microsystems, IBM (Power), ARM and other smaller niche makers.
Matthew Wilkins, principal analyst for computer platforms at iSuppli, noted that PC Average Selling Prices (ASPs) dropped significantly throughout 2009, especially for notebooks, but the two firms barely shifted in market share.
“So, the fact that AMD and Intel virtually maintained their market share at the annual level shows that neither supplier was overly punished by the dropping ASPs. It also indicates that neither was able to capitalize on the situation very effectively,” he said in a statement.
Opteron seen faring better
Broadpoint.Amtech analyst Doug Freedman issued a research note saying he sees AMD doing well with the new Magny-Cours eight- and 12-core Opteron 6000 lines which he said “dovetails” with Intel’s new high-end Nehalem-EX launched on Tuesday.
Freedman cites a number of advantages for AMD: lower cost; a 119 percent performance increase over its predecessors; bringing four-socket processors down in cost to the range of a two-socket design; faster ROI and improved memory capacity and performance.
“While we still believe INTC is going to be the preferred choice in 4P, AMD may entice IT managers with performance, memory capacity and ROI for target applications. We note that early reviews (Anandtech) favor INTC in virtualization settings that require 20+ applications, while AMD’s sweet spot will be mid-single-digits number of applications that run heavier workloads,” he wrote in a research note.
Magny-Cours could improve AMD’s ASP mix and help lift the company’s overall server ASPs, according to Freedman. This in turn would improve AMD’s quarterly earnings and margins, particularly in the second half of the year. Broadpoint’s initial projection of server revenues in the range of $690 million, or around 10 percent of AMD sales, might be too conservative now.
AMD will announce fist-quarter financial results after market close on Thursday, April 15. This will be the first quarter where it deconsolidates Globalfoundries’ operations and will account for its ownership interest in the former fab company based on the equity method. Due to this change, there will be a one-time gain or loss based on changing how the company values its stake in Globalfoundries. However, the company said this will not impact AMD’s cash holdings, it’s simply an accounting valuation on the balance sheet.