Mercury Research: AMD Rebounds in Q2

After a rocky start, Advanced Micro Devices rebounded in the second quarter to gain back 4 percent of the market share that it lost earlier this year, according to the latest report from Mercury Research.

The report, which measures the number of x86 processors shipped during the quarter, found AMDs market share stood at 22.9 percent for the second quarter of 2007, compared to 18.7 percent in the first quarter.

Intel remained the dominant leader in the x86 processors market with a 76.3 percent market share in the second quarter. In the first quarter, the Santa Clara, Calif. company held an 80.5 percent share. In the second quarter of 2006, Intel held a 72.9 percent market share compared to AMDs 21.6 percent share, according to July 30 report from Mercury.

Overall, the chip market had a strong second quarter. All three major segments—mobile, desktop and server—saw double digit growth. The desktops market had a particularly good showing.

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The PC segment of the market was up 12.2 percent compared to the first quarter of the year and climbed 15.2 percent compared to the second quarter of 2006, according to the report.

Click here for a look at chip market revenue in the second quarter.

The overall growth of the x86 market could be traced to several factors, including an unusually strong consumer market, said Dean McCarron, founder and principal analyst for Mercury Research, and the author of the report.

The second reason for the strong showing in the quarter is that processor shipments to the chip makers channel partners were much greater than anticipated. While sales to emerging markets, such as China, were strong, other reasons for this uptake remain unclear.

"The market demand in general was pretty strong and to be honest, no one understands why this particular second quarter was this strong," McCarron said. "All the indications were for a low forecast and this quarter just blew those forecasts away."

For AMD, the second quarter helped put its inventory back in order. McCarron explained that the Sunnyvale, Calif., company appears to have overestimated demand in the fourth quarter of 2006 and shipped more processors to OEMs and channel partners than were needed.

In the first quarter of 2007, these OEMs and channel partners used the leftover processors and did not order additional chips from AMD. By the second quarter, the company restored its balance and shipments matched demand, which helped boost AMDs market share back up.

AMD and Intel have plans for the high-end market in the second half of this year. Click here to read more.

"Basically, AMD had an overstated share in the fourth quarter and an understated share of the market in the first quarter," McCarron said.

For the third quarter, McCarron said that early indicators show that processor shipments will be strong again, especially in the notebooks market. Since the uptake of new processors in the server market is a bit slower than in the PC market, McCarron said it remains unclear how that part of the market will perform in the coming months.

Still, AMD and Intel are scheduled to unveil several high-end offerings in the third quarter.

AMD is scheduled to ship its quad-core Opteron processor, dubbed "Barcelona," and Intel will follow with its "Caneland" platform for MP servers.

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