Notebook Processor Shipments Helped Propel Intel in Q3

The latest report on the worldwide x86 microprocessor market from Mercury Research shows that Intel dominated the chip market in the third quarter due to shipments of its processors for notebooks. The report also showed that the overall x86 processor market had a better-than-expected quarter despite the ongoing financial crisis, although the market for chips from Intel, AMD and Via did slow down in September.

Intel dominated the world's market for x86 microprocessors in the third quarter of 2008 thanks to increased shipments of notebook processors, according to an Oct. 23 report from Mercury Research.

Overall, the worldwide shipments of x86 processors increased 13 percent in the third quarter of 2008 compared with the same period last year. Normally, the third quarter sees processor shipments increase about 10 percent on average. While the increase in chip shipments is a piece of good news as the financial crisis continues, the Mercury report did indicate that shipments began to slow down in September.

It was in September that the financial crisis came into focus as a series of problems led to trouble at Freddie Mac (the Federal Home Loan Mortgage Corp.), Fannie Mae and Lehman Brothers. The impact of the financial crisis might mean that companies cut back on their purchases of hardware, such as PCs and server, which will then impact Intel and Advanced Micro Devices.

"We're starting to see a weakening in servers already," Dean McCarron, an analyst at Mercury, wrote in an e-mail to eWEEK. "My own forecast is pretty pessimistic about the overall market in the fourth quarter, so I would say I expect the impact right now, and it'll show up in the [fourth-quarter] results in January."

In addition to the impact of the financial crisis on the chip market, the Mercury report found that, for the first time, shipments of mobile processors for laptops outstripped shipments of processors for desktops.

Analyst firms, along with Intel and AMD, have anticipated this crossover for some time due to the increasing importance and popularity of notebooks in the consumer market as well as the enterprise. Revenue from mobile chips already outpaces revenue from desktop processors.

Some IT watchers believed the notebook crossover would happen sometime in 2009. McCarron believed that the changeover would happen in the fourth quarter of this year.

"I expected it in the [fourth quarter of 2008], so it's one quarter ahead of my forecast," McCarron wrote in the e-mail. McCarron added that the financial crisis will have less of an impact on the notebook market due to its continued growth. In addition, Intel's Atom processor has helped drive down the average selling price of laptops, which means buyers can still get a bargain at least in the lower end of the notebook market.

For the quarter, mobile shipments increased 27 percent, according to Mercury.

In the third quarter, Intel's market share reached 81.2 percent, compared with the 76.2 percent market share the chip giant held during the same period in 2007. AMD's market share slipped from 23 percent in 2007 to 17.7 percent this year.

For AMD, the period from the third quarter of 2007 until the third quarter of 2008 repressed the time it struggled to bring its quad-core Opteron processor to market. In the last few months, the company has managed to get chips out to its customers, and McCarron found the company did increase it share of the server market.

AMD and Intel each have major announcements planned before the end of the year.

AMD will launch its 45-nanometer "Shanghai" chip in the coming weeks, which should help improve its standing in the server market, especially with high-end, multisocket systems. In November, Intel plans to roll out the first of its chips based on the company's new Nehalem microarchitecture. The first processor, the Intel Core i7, is designed for high-end PC and gaming machines.

While Intel and AMD dominate the x86 market, Via, a small company that makes low-watt, low-cost processors mainly for notebooks, claimed 1 percent of the market in third quarter.