AMD Plans to Achieve 30% Market Share at Any Cost

AMD Lowers Revenue Guidance, but Remains Committed to 30% Market Share Plan

by Anton Shilov
03/06/2007 | 09:18 PM

Advanced Micro Devices, the world’s second largest provider of x86 chips who commanded 25.3% of shipments back in Q4 2006, said at conference that it would lower its sales guidance for the first quarter of fiscal 2007. However, the company remains committed to its goal of achieving 30% and above market share.

 

Speaking to investors at the Morgan Stanley Technology Conference in San Francisco, Hector Ruiz, chief executive of AMD, said chipmaker would not meet its first-quarter sales guidance of between $1.6 billion and $1.7 billion, according to report by Forbes. However, Mr. Ruiz reiterated his company’s long-term goal to own 30% of the market “to break the monopoly”.

“The environment is very competitive, very competitive. We need to break the monopoly, and for that we’ve got to get above 30% [market share],” Mr. Ruiz said.

Back in 2005 the chief executive of AMD already noted that his company’s long-term target is about 30% of the x86 chip market.

Intel Corp. controlled 74.4% of the x86 chip market in Q4 2006, AMD owned 25.3% of the market and the remaining 0.3% were shared between companies like Transmeta Corp. and Via Technologies, the preliminary figures from a study by Mercury Research reveal. For Sunnyvale, California-based chipmaker this was a 2% sequential gain and 3.9% annual increase in market share.

Despite of market share gains in the desktop and mobile market as well as shipments increases across the board, in Q4 2006 Intel continued to regain market share in the lucrative server market. In the last quarter of 2006, Intel shipped 77.7% of central processing units for servers, up from 76.3% in Q3 and 74.1% in Q2. AMD’s share in Q4 slipped to 22.3%, down from 23.7% in the prior quarter.

Back in Q4 over 50% of Intel’s processors shipped were either dual-core or quad-core, whereas the share of dual-core processors in AMD’s shipments was 30% - 33%. For Intel it means that a huge – perhaps, 40% or even higher – portion of sales still consists of single-core NetBurst micro-architecture-based processors and a large share of NetBurst dual-core offerings, meaning that rapid ramp up of the Core 2 micro-architecture on the desktop market causes price waterfall, which catalyzes AMD to drop the prices on both single- and dual-core chips and to transit more of its chips to dual-core technology.