Advanced Micro Devices lost less than 1% market share to rival Intel Corp. in the second quarter of the year, according to Mercury Research. The decline was conditioned by higher than expected sales of microprocessors for Xbox console from Microsoft Corp., the research firm believes.

In the Q2 2005 Intel commanded 82.3% shipments of x86 processors, AMD supplied of 16.2% such chips, whereas the rest 1.5% of microprocessors were shipped by Transmeta Corp. and VIA Technologies. By contrast, in the first quarter of the year AMD’s market share was 16.9%, Intel’s share was 81.7%, according to Mercury Research.

The research firm believes that moderate drop in AMD’s market share is conditioned by higher sales of Intel’s processors for Microsoft Xbox, which manufacturing will be ceased shortly. Intel confirmed during the most-recent conference call that it had shipped its Celeron processors for Xbox in quantities higher than usually explaining its fallen gross-margins. However, Intel also noted growing sales of value mobile processors as well as “price pressure” on the Intel Xeon processors.

Share of Advanced Micro Devices in the x86 server processor market grew 51% in the Q2 2005, from 7.4% to 11.2%, according to Mercury’s figures released in late July. This is the first time AMD manages to surpass the 10% barrier in the server market, where the most expensive and lucrative processors are sold.

Earlier in July AMD reported record microprocessor sales and said that the increase in AMD Opteron shipments was conditioned by strong demand for dual-core microprocessors as well as overall acceptance of the AMD64 platform by enterprise customers. Strong dual-core AMD Opteron processor sales contributed to an 89% revenue increase in the company’s server products from the prior quarter.

While being down sequentially, AMD’s market share is up annually: in Q2 2004 AMD’s market share was 15.1%, whereas Intel commanded 82.9% of x86 central processing units (CPUs) shipments.