AMD shakes up list of top 10 semiconductor makers

But Intel still dominates the chip supplier market

For the first time, Advanced Micro Devices made the top 10 list of worldwide chip suppliers because of strong semiconductor sales in the third quarter of this year.

IC Insights, a research firm, this week released its ranking of the top semiconductor suppliers for the third quarter. While Intel continued to dominate the list, rival AMD surprised analysts by making its first appearance at No. 10, despite its ongoing price war with Intel.

"It's the first time AMD has even been in the top 10 ranking," said IC Insights Vice President Trevor Yancey. He noted that AMD reached No. 13 with US$5.6 billion in chip sales last year, its previous best ranking on the list.

Yancey called AMD's move onto the list a "big shakeup."

In the third quarter this year, AMD generated US$1.6 billion in revenue, just behind Sony's US$1.78 billion, according to IC Insights. On the other end of the top 10 scale, Intel's third-quarter revenue of US$9.2 billion was far ahead of second-place finisher Samsung, which brought in US$5.38 billion.

"This means their business is doing quite well this year, competing head to head with Intel," said Yancey. "It gives you the feeling AMD is closing the gap with Intel."

AMD is making those advances in the middle of long-running price war with Intel, Yancey noted, adding that he expects average 2007 microprocessor prices to be 10 percent less than 2006. That decline is on top of a 15 percent drop in prices from 2005 to 2006, he added.

This price war has been affecting both companies but seems to be hitting AMD the hardest these days.

In a recent interview with Computerworld, Shane Rau, an analyst at IDC, said that Intel first felt the effects of the competition and struggled between 2003 and 2005. Intel responded last year with a reorganization that included selling off several divisions and updating product lines, curbing AMD's momentum and allowing Intel to grab back some of its lost market share, Rau said.

Rau said that while AMD is still losing money, the company is closer to breaking even than it has been in several quarters.

Charles King, an analyst at Pund-IT, said that despite the lower-selling prices, AMD has been selling a lot of chips, and that's what boosted the company onto the list.

"Even with Intel roaring back in the X36 space, there are still workloads where [AMD's] Opteron gives you more bang for the buck," said King, noting that Opteron excels in clustered high-performance computing applications. "AMD has suffered some this year... but that hasn't stopped them from selling a lot of products."

Another surprise on the top 10 semiconductor suppliers list was that Toshiba, which moved up from No. 5 last year to No. 3 in the third quarter this year, posted a 40 percent semiconductor sales increase.

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Sharon Gaudin

Computerworld

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