Mercury Research: AMD Held Steady in -07

Intel maintained its dominant position in the x86 market, but AMD's quad-core technology missteps didn't dramatically cut its market share.

Despite a number of significant setbacks with its quad-core microprocessors, Advanced Micro Devices maintained most of its share of the worldwide x86 market in 2007, thanks to shipments of its mobile processors, according to a Jan. 24 report from Mercury Research.

Although AMD held its ground, Intel retained its dominant position in the x86 market, accounting for 77.1 percent of all processor shipments in 2007, compared to 74.5 percent in 2006. AMD lost less than 1 percent of its market share and accounted for 22.1 percent of worldwide shipments, according to Mercury.

Through most of 2007, the x86 processor market was driven by shipments of mobile chips, said Dean McCarron, an analyst with Mercury Research and author of the report. Within that market, McCarron said shipments of mobile processors will outstrip shipments of desktop chips for the first time ever by the second quarter of this year.

In the past 12 months, the average sale price of most x86 chips has stabilized, signaling the end of the brutal price war between AMD and Intel. The report also showed that both commercial users and consumers were able to buy PCs with significant microprocessor performance for less money than in previous years. The fierce competition between Intel and AMD, in both price and technology, benefited users in the long run, McCarron said.

"I think the report showed that neither company [Intel and AMD] are going away or rolling over anytime soon, even when one or the other appears vulnerable," McCarron said. "There is a guaranteed market out there and the competitive pricing between the two companies has been good for the market."

While Some reports are calling for a slowing of the processor market in 2008 due to a sluggish U.S. economy, which could also affect the PC and server markets, McCarron said his report found chip shipments were stable. If the U.S. economy does slow, the chip makers will look overseas for more revenue, McCarron said.

While AMD had its troubles with quad-core processors for servers and desktops in 2007, McCarron said many of the company's problems were "overblown." AMD still managed to ship a large amount of server chips in the fourth quarter of 2007, he said.

During that quarter, AMD's market share was 23 percent, about a 9 percent decline from the fourth quarter of 2006. Intel increased its fourth-quarter market share to 76.3 percent, an increase of 2.6 percent compared to 2006.

In a market fluke, Intel did not take away market share from AMD in 2007, but actually took share away from Via, the Taiwanese chip maker that makes processors for the low-end of the market, said McCarron.

In 2006, Via saw an unusual spike in chip shipments that disappeared in 2007, with Intel filling the void.

In 2008, McCarron said Via could prove to be a wildcard in the x86 market. This week, the company introduced a new 64-bit, x86 processor called Isaiah, which will compete against Intel's Silverthorne processor for MIDs (mobile Internet devices) and ultramobile PCs and its Diamondville processor for low-cost PCs such as its own Classmate PC.

Intel, Via and AMD are all looking to ship more of these low-watt chips for portable devices, especially in the emerging markets of Eastern Europe and Asia.

"Right now, that's the segment of the market that is poised for the highest growth in the next year," McCarron said.