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Intel Holds Firm to Chip Market Lead

AMD overcame inventory problems to regain market share, but still lags behind Intel, a new study shows.

Tom Krazit, IDG News Service

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Once again, Intel held a commanding lead in desktop, notebook, and server processors shipped into the worldwide market during the fourth quarter, according to a Mercury Research study. But Advanced Micro Devices picked up some points as it ironed out the inventory problems that affected its market share in the second half of 2002.

Intel shipped 84.6 percent of processors based on the x86 instruction set in the fourth quarter, down 2.2 percent from the third quarter but up from 81.2 percent in the fourth quarter of 2001. AMD grabbed a 13.8 percent share, up 2.2 percent from the third quarter but down from 18 percent in the fourth quarter of 2001.

Via Technologies and Transmeta accounted for the rest of the shipments, with Via comfortably in third place, said Dean McCarron, principal analyst at Mercury Research in Cave Creek, Arizona.

AMD's Estimates

AMD's overestimation of processor demand in the first half of 2002 led to a severe inventory glut by the middle of the year, McCarron said. The Sunnyvale, California, company was forced to cut back on production in the third quarter to let the market soak up the excess chips in supply channels, he said.

However, system builders normalized their inventory levels in the fourth quarter, and the current results do a better job of indicating which processors are being used in systems, McCarron said.

AMD's midrange processors, such as the Athlon XP 2000+, accounted for most of AMD's activity in the fourth quarter, McCarron said. Hewlett-Packard and EMachines sell systems with the 2000+ and the Athlon XP 2200+, he said.

Demand for Intel's products was spread out across speed grades, which makes sense with the sheer number of processors the Santa Clara, California, company offers, McCarron said. Intel offers both Pentium 4 and Celeron processors for the desktop, while AMD has just about completely phased out its low-cost Duron processors.

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