Intel, AMD Hurt by Declining Global PC Sales: IDC

Intel, AMD and Via, the world's three main suppliers of x86 processors for PCs and servers, experienced fourth-quarter falloffs in microprocessor shipments that could continue well into 2009. Despite efforts by Intel's Atom processor and the emerging "netbook" and mininotebook markets to keep the overall chip market buoyed, the sequential PC processor unit shipment decline in the fourth quarter was the worst-ever recorded, according to a new research report issued by IDC.

The pain in the worldwide PC microprocessor market will continue through the first half of 2009, which will continue to have a serious impact on Intel and Advanced Micro Devices, according to a report issued Feb. 11 by IDC.

Overall, PC processor unit shipments declined worldwide by 17 percent quarter-over-quarter, and 11.4 percent year-over-year, in the fourth quarter of 2008. Those numbers represented the worst sequential decline since the research firm started tracking processor shipments in 1996.

The news follows other recent reports that the x86 processor market took a serious hit in late 2008 just as the financial crisis began on Wall Street.

However, the news wasn't all bad for chip manufacturers. Shipments of Intel's Atom processor, primarily used in "netbooks," kept the declines from becoming even more precipitous; without those shipments, the overall markets would have declined 21.7 percent quarter-over-quarter and 21.6 percent year-over-year.

In addition, Intel gained 1.1 percent unit market share in the fourth quarter, while Via Technologies gained 0.4 percent. AMD lost 0.9 percent of its share to competitors.
For 2008 overall, Intel earned 80.3 percent unit market share, a gain of 2.9 percent, while AMD earned 19.2 percent-a loss of 3.1 percent-and Via Technologies earned 0.4 percent.

Nonetheless, the outlook seems bleak for the market for at least the first six months of 2009, according to IDC.

"The decline of the PC processor market in [the fourth quarter] was due to a precipitous drop in end system demand that quickly moved up the PC supply chain through OEMs and contract manufacturers to the processor vendors," Shane Rau, an analyst with IDC, wrote in a research note.

"While the fast reaction of the supply chain will help avoid significant inventories, demand remains so weak that IDC expects sequential processor unit shipment to decline in both [the first and second quarters of 2009]," Rau added.