AMD Grows Thanks to Notebook APU Traction

Advanced Micro Devices continues to chip away at the sector gorilla after Mercury Research said that its share of the worldwide x86 processor market rose in the third quarter over the same period last year.

However it also found that AMD lost ground to Intel when comparing the second and third quarters in 2011.

Desktop Decline

In the third quarter, AMD’s market share stood at 18.8 percent, a jump over the 18.3 percent it held in the third quarter of 2010. Intel’s share dropped slightly, from 80.9 percent in the third quarter last year to 80.6 percent in Q3 2011, according to Mercury’s numbers, which were released 1 November.

However, when looking at share from the second to the third quarter, Intel saw its share rise from 79.9 percent in the second quarter, while AMD’s fell from 19.4 percent.

Via Technologies saw its market share drop by 0.2 percentage points, to 0.6 percent.

According to Mercury analyst Dean McCarron, the key driver behind the third-quarter numbers was AMD’s weakness in desktop chip shipments. The company’s desktop performance was caused by supply constraints on its newest Fusion chips and its decision to focus most of its energies on another market.

“AMD chose to dedicate most of its supply of new processors to the mobile market, resulting in very high growth for mobile at the expense of desktop shipments,” McCarron wrote in his report. “This, in turn, lead to lower growth for AMD’s desktop components compared to Intel, and resulted in a share gain for Intel in the desktop segment and overall. AMD gained share in the mobile market due to extremely high growth.”

AMD at the 2011 Consumer Electronics Show in January released the first chips in its Fusion strategy, which puts Radeon graphics technology onto the same chip as the CPU. Since that time, AMD has expanded the reach of the Fusion chips – which the company calls APUs, or accelerated processing units – to include products for low-power notebooks, mainstream desktops and notebooks and embedded devices.

Forecast Cut

AMD executives have said the adoption ramp of some of these chips have been the fastest in company history. However, the chip vendor hit a snag in the third quarter, when executives announced they were reducing their quarterly financial forecast due to manufacturing problems with partner Globalfoundries that limited the supplied of 32-nanometer “Llano” chips for mainstream PCs.

However, despite the problems, AMD turned a profit in the third quarter, and CEO Rory Read said the company was seeing particularly strong traction with it notebook APUs.

That was reflected in Mercury’s numbers. McCarron said that for the first time, AMD’s mobile chip shipments were more than desktop product shipments. Intel made that transition in the third quarter of 2008, he said.

Also in January, Intel launched its “Sandy Bridge” chip architecture, which – like AMD’s Fusion APUs – offers the CPU and graphics capabilities integrated on the same chip. And like their AMD counterparts, Intel executives have said that the ramp of the Sandy Bridge chips has been the fastest of any product in Intel history.

It’s also an indication that, despite reduced projections among some analysts, the PC market is still strong and will continue to grow, they’ve said.

According to Mercury’s numbers, PC processor unit shipments and revenues in the third quarter set a record, with revenues growing to more than $11 billion (£6.9bn) for the first time. In addition, the average selling price hit $107 (£67), the highest since the first quarter of 2007, when it also was at $107.

However, overall PC chip growth was about 6 percent, which is half of the average rate for the third quarter. The fourth quarter looks to weak, according to Mercury, with only slight growth forecasted.