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AMD Regaining Market Share

Performance both impressive and much needed

September 11, 2007 - AMD gained more market share than expected in Q2, iSuppli says. The chip manufacturer gained 2.5 percentage points compared to the first quarter to take a 13.4 percent share of overall microprocessor revenue.

Meanwhile, Intel in the second quarter suffered a 2 percentage point decrease in revenue share, giving it a still-commanding 78.8 percent portion of the market. This was a far greater than the preliminary 0.5 percentage point increase for Intel and the 0.5 percent increase for AMD iSuppli estimated in July.

AMD's performance in the second quarter of 2007 was both impressive and much needed, as the company managed to halt the three-quarter market share advance of archrival Intel, said Matthew Wilkins, principal analyst for compute platforms research at iSuppli.

AMD's second-quarter advance brought to an end a period of decline for the company that saw its market share dwindle by nearly 6 points from 16.8 percent in the third quarter of 2006 to 10.9 percent in the first quarter of 2007.

AMD's rise in the second quarter was due to increased shipments for notebook, desktop, and server microprocessors, despite a decline in the overall microprocessor Average Selling Prices (ASPs). Intel too suffered a decline in its microprocessor ASPs, which spurred the decrease in its revenue share during the quarter.

Company Q2 2007 Q1 2007 Q2 2006 Q2 2007 sequential growth Q2 2007 year-over-year growth
Intel 78.8% 80.8% 73.4% -2.1% 5.4%
AMD 13.4% 10.9% 16.4% 2.5% -3.1%
Others 7.8% 8.3% 10.2% -0.4% -2.3%

Price War

Conditions in the microprocessor market now are dominated by severe pricing pressure. This pressure originally arose at about the time when Intel launched its new microprocessor line in 2006. AMD and Intel are continuing to react to each others' pricing. Because of this, the aggressive pricing environment is expected to continue throughout 2007, Wilkins said.

While AMD and Intel have been battered by the price war, this is nothing compared to what smaller players are experiencing. The combined position of Intel and AMD shows how these two companies have steadily eaten up share from the other microprocessor suppliers to the tune of 2.3 percentage points during 12 months, Wilkins said. This feat is all the more impressive considering our rankings are revenue-based, and that we have seen PC microprocessors under huge pricing pressure in the past 12 months.

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