Relief at AMD, Intel as price war flags

BOTH AMD and Intel ratcheted up their market share in the third quarter, with figures buoyed by an easing off of the price war which has dominated 2007.

Figures published by market research firm Isuppli showed that during the third quarter, both chipsters managed to claw a bit more share in the global microprocessor market after they decided to hoist the white flag and call off their brutal price war.

Intel took some 78.7 percent of global chip revenue, up 0.3 from the second quarter, but AMD did twice as well, leaping up 0.6 of a percentage point to reach 13.9 percent during the same period.

Their gains spelled a loss for everyone else, with their smaller rivals seeing their collective share of global chip revenues falling from 8.2 percent to 7.4 percent in the same period.

Together, Intel and AMD took almost 93 percent of global chip revenues in the third quarter, up two percent on the same period last year.

In announcing their third quarter figures, both firms said they had benefitted from an easing of prices - a move which Isuppli believes marks the beginning of the end in the X86 microprocessor price war.

They also benefitted from strong PC sales, which amounted to 68.1 million units during the third quarter, up 13.8 percent from the 59.9 million in the same period last year. It was also an 11.1 percent increase on the second quarter, when sales stood at 61.3 million units.

"The combination of strong PC and server demand, combined with stable microprocessor prices led to a prosperous quarter for both Intel and AMD," said Isuppi's principal analyst, Matthew Wilkins.

"Pricing trends were influenced by many variables, including the consistent strength in computing markets, Intel's rapid migration to its new Core 2 architecture microprocessors, and the increasing penetration of multi-core products in the market," he said.

Although the pricing battle may be coming to an end, the war is not yet over says Wilkins, who believes competition between the two will continue to be extremely fierce.

"AMD's launch of Barcelona and Barcelona-derived products gives the company a stronger portfolio with which to compete, and with Intel shipping its products based on its new 45nm manufacturing process, neither company is resting on its laurels," Wilkins noted. µ