AMD's latest processors have brought the fight to Intel across nearly every segment of the PC market. It isn't surprising then that recent reports have become increasingly bullish about AMD's prospects, especially as Intel struggles with an ongoing shortage of 14nm processors. We got our hands on some market data that outlines how much progress AMD has made and also found some interesting comments in an IDC report.
The recent analyst predictions about AMD's growth span from reasonable expectations to incredibly optimistic reports that push the boundaries of the rational. A report from DigiTimes last week citing "industry sources" and claiming AMD could gain up to 30 percent of the market share by the fourth quarter of 2018 falls into the latter category. The report says the gains will come on the back of AMD's as-yet-unreleased 7nm processors, but there's reason to be skeptical: AMD is still pumping 14nm and 12nm Ryzen products from GlobalFoundries’ fabs, while 7nm CPUs won't arrive in volume from TSMC's fabs until next year.
We've been keeping tabs on AMD's desktop unit share using market research data from Mercury Research, a trusted firm in the semiconductor industry. The numbers below reflect AMD's share of the overall desktop unit share and exclude IoT sales.
|AMD Desktop Unit Share||9.1%||9.9%||11.4%||11.1%||10.9%||12.0%||12.2%||12.3%|
According to Mercury Research, AMD's share has grown to 12.3 percent in 2Q18. That means that Intel owns 87.7 percent of the desktop PC share. Much of AMD's recent growth has been in its average selling price as the company's customers refresh older processors with newer, more expensive models. That's important to improve profitability. This year, AMD has also turned its attention to gaining more share of the lucrative OEM platforms that comprise the largest portion of the desktop market.
We won't have desktop market share numbers for Q3 for another month, but we spoke with Mercury Research's Dean McCarron about AMD's chances of attaining 30 percent of the market by the end of Q4. McCarron cautioned that he doesn't forecast future market share, but he did provide some interesting perspective:
"[...] for a 30 percent AMD desktop share to happen in Q4, AMD's volumes would need to either be 250 percent higher in the quarter than they were last year, or Intel's shipments would need to decline 65 percent, or some combination of the two. Since 2000, the largest on-year decline Intel has experienced for any quarter was -24 percent, and the largest on-year increase AMD has experienced was +57 percent. If somehow moves at these historic extremes simultaneously happened in Q4, AMD's share would fall in the low 20 percent range, well short of 30 percent. Should a 30 percent AMD share materialize next quarter, it would be an unprecedented statistical outlier within the history of the processor market and carry with it far-reaching consequences."
McCarron's statements are telling. In order to reach 30 percent share, either AMD would have to more than triple its year-on-year volume, or Intel shipments would have to decline 65 percent in a very short amount of time.
But the market is fluid. According to Intel, its shortage of 14nm processors comes courtesy of record demand, but the general consensus is that the 10nm delay has wreaked havoc on Intel's production scheduling. In either case, Intel is selling every piece of silicon it spins in its fabs. That makes it unlikely that the company would lose such a large amount of share in a short amount of time, even after accounting for the first growth we've seen in the desktop PC market since 2011.
It's natural to expect AMD to pick up some sales from Intel's production missteps, though, particularly as the companies face off during the yearly holiday battle. However, a report from industry soothsayer IDC last week says that AMD hasn't materially gained from Intel's production challenges, at least not yet:
"IDC believes that Intel's main PC processor competitor, AMD, has not been significantly affected by the shortage of Intel processors. AMD is ramping its second-generation Ryzen desktop PC processors, but IDC hasn't yet seen sign of a massive upswing in AMD processor shipments due to PC OEMs looking for PC processor supply."
The report cites several factors, such as Intel's massive modem win for the iPhone lineup and record demand, as catalysts for Intel's production shortfall, but says that OEMs aren't having issues securing Core i3, i5 and i7 models for PCs. But lower-end Pentium, Celeron and Atom-branded processors are in short supply for OEMs as Intel focuses on producing the higher-margin Xeon and mainstream desktop processors.
OEMs can source high-end Core models, but we've tracked a steady increase in pricing over the last several weeks in the retail market and scarce availability of Intel's premium K-series models, particularly in foreign markets. That makes it likely that AMD will enjoy some success against Intel in the DIY market during the 14nm shortage.
It's natural to expect AMD's growth rate to accelerate if it can roll out 7nm CPUs for the desktop before Intel can release 10nm products. AMD has also brought a new lineup of low-cost Athlon processors with integrated graphics to market, which is a key to securing more OEM orders in the high-volume budget PC space.
For now, industry watchers haven't seen a massive uptick in AMD's share in relation to Intel's shortages, and we've yet to see AMD's pricing increase, but that could change quickly as we move into the holiday season. AMD had a bang-up holiday season last year, and we expect it will have similar, if not better, success this year as Intel suffers from high pricing and scarce availability. We'll have the numbers for AMD's Q3 share in a month, but we'll have to wait until the beginning of next year to see how the holiday season pans out.