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The global economic crisis has not only slowed sales growth of microprocessors, but actually decreased sales of central processing units (CPUs) in the fourth quarter of 2008, according to the most recent data from Mercury Research. More alarming, average selling prices (ASPs) of processors started to get down in Q4 2008, which puts both leading chip suppliers into danger.

CPU Market Down Dramatically

According to Mercury Research, there were 75.4 million x86 central processing units shipped in Q4 2008, down 8.8% year-over-year. Sales of desktop chips declined by 18% quarter-over-quarter, whereas shipments of mobile and server processors were down 25% quarter-over-quarter as both consumers and businesses started to reduce spending. The declines are projected to continue in Q1 2009.

“Clearly the processor market has been impacted by the worldwide recession and financial crisis,” Dean McCarron, principal analyst at Mercury Research, said in an interview with eWeek web-site.

Intel Corp., the world’s largest maker of x86 chips, gained 0.9% of the market sequentially and controlled 82.1% of shipments in Q4 2008 as AMD’s market share declined by 0.7% to 17%, while Via Technologies’ portion of the market shrank to 0.9%.

AMD’s ASP per CPU was $60 in Q4 2008, down from $63 per unit a quarter before. Meanwhile, Intel managed to add $1 to its average selling price per unit and its ASP was $100 in the fourth quarter.

Despite Crisis, Intel Manages to Push Higher Performance Models

On the desktop part of the market, the alignment of forces remained practically the same compared to Q3 2008: Intel commanded 74% followed by AMD with 24.7% and Via with 1.3%. In total, about 35.6 million of desktop processors were supplied in Q4 by all three makers, which is 18% decline from the previous quarter, data from Mercury Research claims.

Since AMD considers desktop market its stronghold, the company has done a tremendous amount of work to keep average selling prices as well as market share flat here. According to estimates, AMD’s desktop CPU ASP was $50 per unit, which is a good news considering the fact that the company only began to ship its new-generation Phenom II processors very late in the quarter.

Still, Intel has done a better job in promoting its high-performance desktop processors: the ASP was $94, up from $80 in the prior quarter and 88% higher compared to that of the arch-rival.

Sales of Mobile CPUs Surpass Sales of Desktop Processors

On the market of mobile processors – thanks to generally more competitive lineup as well as Intel Atom processor – Intel managed to boost its unit market share to rather unprecedented 89.4%. AMD controlled roughly 10% of the mobile CPU market, whereas Via shipped 0.6% - 0.7% of chips.

It is remarkable that for the very first time mobile processors managed to leave desktop chips behind in terms of units: about 37.1 million of microprocessors aimed at portables were shipped during the quarter, 1.5 million more than for desktop computers. The outcome was largely conditioned by the rapid drop in sales of advanced microprocessors amid rising popularity of Intel Atom chips.

“Without the presence of Atom and strong netbook sales in Intel's business, the market share results would have appeared largely unchanged,” Mr. McCarron said in his brief interview.

The mobile microprocessor market is becoming very important these days, no surprise that it became a battleground for AMD and Intel during the quarter. The companies did not only started price-war in the entry-level segment, but Intel also had to reduce prices on certain more advanced mainstream processors to support demand level and volumes.

AMD had to gradually lower the prices of its processors aimed at mobile computers in the fourth quarter. As a consequence, its mobile CPU ASP reduced to $53 from $62 in Q3 2008. Intel’s ASPs were also down to $78 from $87 in the previous quarter.

AMD’s Server’s Market Share Slides, But ASP Goes Up

Even though AMD began shipments of its quad-core AMD Opteron processors based on improved code-named Shanghai design early in Q4 and by mid-November its leading partners began to ship their systems with the new chip inside, AMD’s server market share also declined by 2.4% quarter-over-quarter.

Based on figures from Mercury Research, among 2.74 million of server processors 88.6% came from Intel and only 11.4% were supplied by AMD.

Still, there is a good news for AMD: its server CPU average selling price increased dramatically from $348 in Q3 to $433 in Q4 2008. Meanwhile, Intel’s server ASP also rose from $448 to $470 sequentially.

First Quarter of 2009 Expected to Be a Nightmare

“Leading indicators are that the first quarter will be much worse than the seasonal average decline of 7.4%, with our forecast currently at 15% for the first quarter based on market conditions in mid-January,” Mr. McCarron predicted.

Still, there are some good new too: according to Mercury Research figures obtained by X-bit labs, AMD will be able to boost its overall ASP to $62, meanwhile Intel’s ASP will be down by just $1 and will be $99 per CPU.

Tags: AMD, , Intel


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