AMD Q2 2019 CPU Market Share: The Calm Before the 7nm Storm

The final processor market share unit report for the second quarter of 2019 has finally arrived. Hopes are high, and AMD fans and the stock market are bullish after the launch of AMD's 7nm CPUs. AMD's Ryzen 3000-series processors are ultra-competitive with Intel's desktop lineup, and the launch of AMD's 7nm EPYC Rome data center processors, which provide as-yet-unseen levels of performance, seemingly lay waste to the value proposition of Intel's Xeon lineup.

Intel's response has been, well, no response at all. It recently published its August CPU price list, its first update in months, and the reaction to AMD's 7nm assault is listed in full clarity in the right-hand side of the list. Intel is apparently sticking firm to its tray pricing and hasn't reduced pricing for any of its CPUs. However, this list outlines recommended pricing and not what we see at retail, so how much connection the list has to reality is debatable. For instance, the graphics-less Intel Core i9-9900KF has for several weeks been retailing at $449, which is well below its tray pricing of $488, and has dipped as low as $420.

Intel gives OEMs, Tier 1 customers and retailers incentives to encourage sales, but on its public-facing price list, it doesn't appear that the rumored 10-15% price reductions are coming to fruition. At least not yet.

Oddly enough, that's actually good news if you already own an Intel processor, as they tend to keep their resale value much better than AMD's processors. Building hype for each launch of new processors, which AMD has certainly mastered, can come at the expense of sales on existing models as customers hold off purchases for the newer chips. It's a tenuous balancing act, and we've become accustomed to drastic price cuts on AMD's existing processors as the company gears up for each new launch. That trend doesn't seem to be receding with the launch of Ryzen 3000-series, and while AMD can offset lowered sales with drastic price cuts, it ultimately has an impact. We certainly see some of that curtailed demand for previous-gen chips in the latest market share report.

AMD is poised to upset Intel's dominance in multiple markets with the advantage of a smaller 7nm manufacturing process paired with the new Zen 2 microarchitecture, but the latest market share report covers the run-up to the 7nm era, so the new Zen 2-powered chips haven't made a significant mark yet. The Ryzen 3000-series processors began shipping early in Q2, but these numbers are very early in the ramp.

We'll have to wait until next quarter to see the impact of AMD's 7nm chips, but let's take a look at where the company is now in desktop PC, server, mobile and overall market share. 

Where Not to Look

There are several resources that many reference for market share, but most aren't accurate. Take the horribly-named Passmark "market share" report that has absolutely zero correlation to actual market share numbers. That 'report' is misleading.

We also see references to the Steam Hardware Survey. While that serves as a decent litmus test for the gaming market specifically, the database has been plagued by wild swings and changes to the measurement methodology. We don't know much (if anything) about the methodology, and Valve hasn't responded to our repeated inquiries.

Some European retailers, like Mindfactory, share sales data, but it's important to remember that those figures encompass one specific region that is definitely an AMD stronghold. It's also hard to make projections based on Intel and AMD's financial results. For instance, AMD lumps its GPU and CPU revenue numbers together, making it impossible to reverse engineer.

We turn to Mercury Research for hard numbers. The firm has been providing market analysis since 1994 and graciously shares some market analysis with us. The company also offers much more in-depth reports for its customers, which includes all of the major semiconductor vendors. We've included founder Dean McCarron's analysis for each market segment.

AMD Desktop Unit Market Share

Desktop share didn't change this quarter, but AMD has gained 4.8 points of share on year from both Intel and VIA, entirely due to Ryzen's growth. The flat share is due to both Intel and AMD having proportional lower shipments in the second quarter for differing reasons. Intel had supply constraints on low-end CPUs, and AMD was transitioning from Ryzen 2000 to Ryzen 3000 products and transitions usually cause a small dip as inventory is burned off and the new products ramp up. - Dean McCarron, Mercury Research

AMD now has 17.1% unit share of the desktop CPU market. If we examine AMD's desktop PC CPU unit share on a quarterly basis (QoQ) we can see that the company's sales were flat. But seasonality applies, and currently, there is plenty of disruption in the market due to the impact of the ongoing U.S.-China trade war. Compared to last year (YoY), AMD has registered a solid 4.8% gain in desktop unit share.

We expect these numbers to pick up quickly as Ryzen 3000-series penetrates the market. For now, some of the higher-end models, like the 12-core 24-thread Ryzen 9 3900X, have been plagued by shortages at retail, but that situation seems to be improving as AMD ramps up production. In either case, the processor jumps to the #1 spot on Amazon's best-selling CPU list every time it becomes available, so there appears to be plenty of pent-up demand.

AMD also has yet to refresh its high-volume Ryzen 3 series of processors with the 7nm goodness, and with Intel's shortage of low-end CPUs lingering far longer than anyone anticipated, those lower-end models could touch off some additional market share gains.

AMD Server Unit Market Share

AMD bases its server share projections on IDC's forecasts but only accounts for the single- and dual-socket market, which eliminates four-socket (and beyond) servers, networking infrastructure and Xeon D's (edge). As such, Mercury's numbers differ from the numbers cited by AMD, which predict a ~5% market share. Here is AMD's comment on the matter: "Mercury Research captures all x86 server class processors in their server unit estimate, regardless of device (server, network or storage), whereas the estimated 1P [single-socket] and 2P [two-socket] TAM [Total Addressable Market] provided by IDC only includes traditional servers."

AMD gained 0.5 points of share in server this quarter, and is up 2 points on year. Last quarter, AMD's share declined due to lower shipments following the Q4 blowout quarter where they doubled them, but a slight increase in both Naples and pre-shipments of Rome this quarter lead to a small amount of growth. Intel's server business declined further after a large drop last quarter. While I haven't included growth or units details, on-year growth for server CPUs is the worst in a decade due to low cloud demand and a very steep drop in enterprise/government business. - McCarron

We don't have as much historical data from Mercury for the server segment but can see that AMD has improved its share 0.5% QoQ and 2% YoY. These small gains should accelerate with the arrival of AMD's EPYC Rome processors, which appear to beat Intel's Xeon lineup in some of the most important aspects, like power consumption, multi-threaded performance and price.

The Rome processors just began shipping, so the impact hasn't appeared in the market share numbers yet. It's also rational to expect that many large customers, like cloud service providers and hyperscalers, have held off purchasing the previous-gen Naples processors due to the massive improvement with the Rome models. Some analysts predict that AMD could reach as high as 15% server market share by the end of 2020.  

There are also signs that hyperscalers are now ramping up their orders for data center gear, but those purchases tend to be 'lumpy' and can vary drastically.

AMD Mobile Unit Share

AMD gained mobile share this quarter. Share is up 1 point on quarter and 5.3 points on year. This is mostly due to an expansion of their entry-level CPUs (Stoney Ridge and Carizzo-L cores) in Chromebook and the low end of the PC market, where Intel has having supply constraints last quarter. This quarter, Intel resolved much of the supply concerns in mobile Celeron, so both AMD and Intel had pretty large increases in mobile CPU shipments at the low end. AMD's was greater, so they gained share. Some of AMD's gains were also due to Picasso core CPUs (Ryzen 5 3500U and Ryzen 7 3500U), which have ramped volume very strongly in the past two quarters. - McCarron

AMD continues to capitalize on its steady supply of low-end mobile processors while Intel still struggles to fulfill orders, due to its nagging shortage of 14nm production capacity. Intel's situation is improving, but it's fair to assume that AMD has established a stronger footing in the low-end, especially in Chromebooks, that will continue to pay off over the coming year.

AMD Total Unit Market Share

AMD's total share gain is 1.4 points on quarter and 1.5 points on year, this is much lower than their client share gains, due to AMD's semi-custom business shrinking on-year as the current console cycle nears its end of life. As well, Intel has had very strong on-year and on-quarter growth in Internet of Things CPUs, which has slowed the overall share gain by AMD. - McCarron

AMD's share of the entire processor market improved 1.5% on both a quarterly and yearly basis, but as McCarron noted, AMD's semi-custom business is suffering, due to Microsoft and Sony's aging consoles. We expect that segment to improve when the highly anticipated new consoles come to market.

AMD also doesn't have a robust penetration into the IoT segment, which allows Intel to ship more of its silicon into that market.

Thoughts

Intel seems to be sticking to its pricing model for its forward-facing price lists, but it's rational to expect that it is going to have to budge during back-room negotiations with its larger customers, particularly in regards to its Xeon lineup.

Intel is also wisely focusing its 10nm Ice Lake chips on the laptop market, which currently comprises more than 60% of the overall client processor market. Intel has built a strong moat in this area, and initiatives like Project Athena will help the company keep many of the OEMs in the fold, particularly for higher-end laptops, which is an area that AMD has yet to penetrate fully in spite of its debut of its own H-Series processors.

The impact of the 7nm Ryzen 3000 and EPYC Rome processors will become apparent next quarter, but it's important to remember that AMD is still in the process of ramping production and each percentage point of market share represents billions of dollars. For now, this is a game of inches, but those inches equate to a much-needed cash infusion for AMD that it can use to further its R&D, marketing spend, and go-to-market activities. AMD is competing against Intel, which is a firmly-entrenched competitor that benefits from its incumbency. Look to Intel's multi-billion dollar MDF fund, which it uses to deliver incentives to its partners, as evidence of the stiff headwinds AMD faces as it claws its way back into taking meaningful share.

Once AMD has full availability of all of its 7nm processors, we can expect more robust penetration across all segments.