AMD Expects CPU Business to Become More Profitable, Seeks for 25% of Market

AMD Reiterates Market Expansion Plans, Vows Higher CPU Margins

by Anton Shilov
03/16/2005 | 10:03 AM

In an interview with Taiwanese press AMD’s chief Hector Ruiz reiterated the company’s intention to have 25% market share and also said the chipmaker’s margin on central processing units products will reach 15% in the near future, which may indicate growing popularity of the company’s products in the high-end market segments.

 

“The CPU business now generates operating margins of 12% and we aim to record an overall operating margin of 15% in the near future. We also aim to continue expanding our dominance in the global CPU market in the coming five years,” AMD’s president and CEO Hector Ruiz is reported to have said, according to DigiTimes web-site.

While AMD’s market share has been gradually increasing since early 2003, the company’s lion’s share of the shipments seems to be cost-effective products, such as low-speed Athlon XP and all Sempron processors. Selling entry-level microprocessors indisputably drives margins down despite of the fact that AMD is known for relatively high yields of its mainstream processors. But now it seems that the company is gaining popularity in market segments where the chips cost more, which is likely to drive its margins upwards.

“We aim to continue to expand our market share once we reach the 25% target. We definitely will team up with partners, when necessary. But so far we have just reached a cooperation agreement with Chartered Semiconductor Manufacturing,” Mr. Ruiz told Asian media.

Intel saw its market share inch up to 82.2% in the fourth quarter of 2004, up from 82% in the previous quarter. Meanwhile, the market share for rival Advanced Micro Devices climbed to 16.6%, up from 16%, according to Mercury Research.

Currently it is unclear which markets AMD plans to penetrate heavily with its products. The company’s processors are not available widely in business desktops as well as notebooks, but are rather popular in consumer desktops, including entry-level, mainstream and high-end machines. The company also has cost-effective products to address emerging markets as well as high-end chips for servers.