Intel still holds commanding lead in chip market for Q2

Advanced Micro Devices (AMD) lost market share to Intel in the second quarter as AMD's momentum eased coming off a solid first quarter, according to figures from Mercury Research Inc. released Monday.

Intel held an enormous lead over AMD in the number of x86 desktop, mobile and server processors shipped in the second quarter, with 82.5 percent of the market, said Dean McCarron, principal analyst with Mercury Research in Cave Creek, Arizona. AMD shipped 15.7 percent of the processors measured in this study, and the "other" category, made up of Transmeta Corp. and Via Technologies Inc., shipped 1.8 percent.

"The main trend is that AMD had a really good bump in the first quarter that didn't get sustained in the second quarter," McCarron said. In the first quarter, Intel shipped 81.7 percent of the processors measured by the study, and AMD shipped 16.6 percent.

AMD gained a little ground compared to last year's second quarter, when the company shipped 15.6 percent of the processor market, but that quarter was a disastrous one for the company and the industry in general, McCarron said.

An overestimation of second-quarter demand coming off a solid first quarter in 2002 resulted in too much inventory when demand collapsed in the second quarter. AMD was left with an inventory glut that it spent much of the rest of 2002 attempting to move through the channel. The company had purged those excess chips as of the first quarter of 2003, McCarron said.

Overall, mobile products were the strongest segment of the market, McCarron said. In fact, mobile processors were the only segment of the market that gained ground, while everything else was down in the quarter across all companies in the industry, he said.

The market declined 3 percent from the first quarter to the second quarter, which is a little worse than usually observed under seasonal patterns, McCarron said. But the second half of the year is expected to get better, taking into account the seasonal strength of the back-to-school shopping season and the holiday shopping season, he said.

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