Intel gain sends AMD downwards

Intel took its largest share of the chip market for four years during the third quarter - leaving rival AMD travelling backwards.

Despite the growing divide between the two firms, analysts say AMD is likely to bounce back as chip inventories return to normal.

Intel accounted for 86.8 per cent of the PC processors shipped worldwide in the third quarter, a 7.6 per cent leap from its market share in the third quarter of 2001, and four per cent more than its market share last quarter, according to figures from Mercury Research. That's the largest it market share has been in four years, according to Intel.

By contrast, AMD saw its market share in the third quarter drop to 11.6 per cent. The company experienced a market share of 20 per cent in the same quarter the year before and 15.6 per cent in the second quarter of 2002.

AMD's slide came as PC companies and distributors postponed purchases in a move to burn off excess inventory of chips bought in the first half of the year, according to Dean McCarron, principal analyst at Mercury. The inventory bubble has since dissipated, so these companies are likely begin buying more chips from the manufacturer.

"There is no question that they burned off an immense amount of inventory," McCarron said.

Shipments of chipsets compatible with AMD processors actually rose slightly in the third quarter. In the end, the ratio of Intel-to-AMD computers sold to consumers and businesses likely stayed roughly the same as in the second quarter.

The recent activity in chipset sales may also indicate that the PC market is regaining its forward momentum after two years of declines. PC and motherboard makers typically stock up on chipsets a few months in advance of expected sales of complete systems to consumers.

"All the indications are that October has been a good month," said McCarron, who quickly cautioned that these manufacturers could simply be stocking up on chipsets.

IDC and Gartner both reported that third-quarter shipments increased from the same period the year before, the first quarterly increase in more than a year.

Michael Kanellos writes for News.com