AMD breaks 20 percent barrier

AMD has claimed its highest market-share position against Intel in years, cracking the elusive 20 percent barrier, ZDNet UK sister site CNET News.com has learned.

Mercury Research plans to announce next week that AMD accounted for 21.4 percent of all x86 desktop, notebook and server processors that were shipped during the fourth quarter of 2005. The chipmaker's share grew from 17.7 percent in the third quarter, on strong gains in all three of those segments.

Mercury Research's principal analyst Dean McCarron confirmed the numbers, which were provided by AMD, but declined to confirm Intel's market share during the fourth quarter until the final numbers are released next week.

However, Intel and AMD accounted for 98.6 percent of the x86 processor market in the third quarter, making Intel's share numbers simple to estimate. Assuming Intel and AMD kept 98.6 percent of the market in the fourth quarter, Intel's market share would have been around 77 percent.

Surging shipments of Opteron server processors have been one of the strongest reasons for AMD's success during 2005. The server market was almost completely absent from the company's strategy the last time they reached 20 percent market share, in 2001. AMD's share of the x86 processors shipped into the server market grew from 12.7 percent to 16.4 percent from the third quarter to the fourth.

The company's growth in the desktop and mobile markets was just as strong in the second half of 2005. AMD's desktop processor share went from 20.4 percent in the third quarter to 24.3 in the fourth, and its mobile share went from 12.2 percent to 15.1 percent.

AMD's gains come after a disappointing fourth quarter from Intel, in which the world's largest chipmaker fell short of its revenue and earnings-per-share targets. Intel cited poor demand for desktop PCs and continuing supply issues related to chipsets for desktops.

But Intel's problems appear to occupy a larger segment of its business, going by the market share figures. The company is well behind AMD when it comes to introducing dual-core server processors, with dual-core Opterons having been available since last April. Intel introduced a dual-core Xeon chip in October, but that chip is considered a placeholder by many analysts until Intel's Dempsey processor makes its debut sometime in the next two months or so.

Intel's strongest position remains the mobile market, which also happens to be the fastest-growing segment of the overall PC market. Its recently introduced Core Duo processor also keeps it ahead of AMD on the technology side, as AMD is not expected to release a dual-core Turion chip until later this year.

Current Analysis released data last week that showed Intel's share of the US retail market fell 11 percentage points to 53.3 percent in the fourth quarter. That number relates to the number of Intel or AMD processors in systems sold into PCs for US retailers, not the total number of desktop, notebook and server processors shipped to system builders and distributors around the world.

AMD's goal for the next several years is to achieve 30 percent market share as it brings a new manufacturing facility online in Germany.

Last year, AMD filed an antitrust lawsuit against Intel claiming that the larger chipmaker was preventing AMD from gaining market share by selectively providing rebates to PC and server companies that agreed to limit or halt their purchases of AMD chips. Intel has denied the charges.

Mercury's McCarron did not have data as to whether AMD's lawsuit has had an effect on the market share figures. He said AMD executives have noted an increase in purchases from government organisations that have dropped Intel-only buying specifications as a result of the antitrust suit, but not from the broader market.