As Advanced Micro Devices transits its lineup to more competitive AMD Phenom and AMD Phenom II microprocessors, its market share will have chances to increase as availability of AMD-supporting infrastructure will grow, a media report claim citing opinion of motherboard makers.
According to mainboard producers quoted anonymously by DigiTimes web-site, AMD’s share of the platforms in channel market will grow to 30% in the first half of 2009 thanks to increasing demand towards AMD Phenom II central processing units (CPUs). The higher share of supporting infrastructure has all chances to directly translate into higher unit share of AMD’s microprocessors on the market. Moreover, since new chips of the company are more competitive against Intel Corp.’s products than predecessors, higher amount of available mainboards may boost AMD’s earnings as well as average selling prices amid global financial crisis and gloomy outlook.
Market tracker Mercury Research estimates that back in Q4 2008 Intel commanded 74% of the desktop CPU market 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.
Although AM3-based motherboard has already appeared in the channel, the high prices of DDR3 memory modules are limiting its growth, the sources said. Therefore AM2+-based motherboard currently is still the mainstream product for AMD since they support both AM2+ and AM3 microprocessors. That said, the adoption rate of the new AM3 infrastructure completely depends on DDR3 memory pricing as well as introduction of higher-performance microprocessors for AM3 by Advanced Micro Devices.
The world’s second largest maker of microprocessors will also have to ensure that it manufactures enough microprocessors to serve the market. Recently AMD said that in order to cut costs the company is reducing its output, therefore, if the estimates by AMD do not meet estimates of motherboard suppliers, the adoption rate of the company’s newer products may slowdown.
“We are reducing our manufacturing output to keep inventories down, while completing our transition to 45nm technology and developing 32nm technology consistent with our plans,” said Derrick Meyer, chief executive officer and president of Advanced Micro Devices, during the most recent conference call with financial analysts.
In the fourth quarter of 2008, AMD reported a net loss of $1.424 billion, or $2.34 per share. For continuing operations, fourth quarter 2008 loss was $1.414 billion, or $2.32 per share, and the operating loss was $1.274 billion. For the year ended December 27, 2008, AMD achieved revenue of $5.808 billion. Fiscal 2008 net loss was $3.098 billion. AMD reported revenue of $5.858 billion and a net loss of $3.379 billion for fiscal 2007.
Analysts from IDC and Mercury Research predict further declines in CPU market in the first half of 2009.