IDC warns of PC chip slowdown after sales hit record in Q4

Intel holds a 76.7 per cent market share, AMD 23.1 per cent

For the second quarter in a row, the global PC processor market hit a record number of unit shipments in the fourth quarter of 2007, according to IDC. At the same time, the market research company predicts that a slowing economy will likely lead to declining sales in the first months of 2008.

"While processor shipments typically decline about 6 per cent to 7 per cent between the fourth quarter and the first quarter, economic concerns in the US and the effects on corporate and consumer systems purchases could mean a stronger sequential decline in 1Q08," IDC analyst, Shane Rau, noted in a statement. "However, the weakness in the U.S. dollar effectively means a price discount for overseas markets that are driving PC unit demand, so this could have a mitigating effect."

IDC reported on Tuesday that PC microprocessor shipments grew 8.5 per cent sequentially in Q4. Growth in overall unit shipments and stable average selling prices stimulated overall market revenue to grow 9.6 per cent sequentially to $8.7 billion, according to IDC.

"Overall market pricing was very stable in the quarter," Rau said. "Since server and mobile processors carry a premium over desktop processors and they grew more than desktop processors, they buoyed the market average price. The fact that the high-end and mainstream segments within all form factor segments grew faster than the value segments kept pricing even firmer."

Rau noted that the price war that chip manufacturing rivals such as Intel and Advanced Micro Devices waged for much of past year -- especially during the second quarter -- affected the quarterly results. The low prices drew in more buyers, he said.

Market share numbers didn't change significantly for the major players in the chip market.

IDC reported that on an overall unit basis, Intel held a 76.7 per cent market share, up 0.4 per cent. AMD earned 23.1 per cent, down 0.4 per cent in comparison with the previous quarter. The share numbers are identical to those reported in the second quarter of 2007.

Market-share numbers also didn't change much according to design. In the mobile processor segment, Intel's grew by just 1.1 per cent to 81.9 per cent, while AMD's share fell the same amount to 17.8 per cent. In the PC server processor segment, Intel's fourth-quarter share fell less than 1 per cent to 85.4 per cent, while AMD's grew by 0.6 per cent to 14.6 per cent. Intel held a 72.1 per cent share and AMD a 27.7 per cent share of the desktop PC processor market, virtually the same as the previous quarter.

Last month, market research firm, iSuppli, reported that China's semiconductor market was on track to grow 15 per cent in 2007. China's semiconductor revenue was expected to reach $52 billion in 2007, up from $45 billion in 2006, according to the iSuppli report.

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Sharon Gaudin

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