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Processor chip market soars due to growing demand for smartphones and tablets

Intel still dominates despite decline in market share
Wed Nov 27 2013, 11:40
A picture of an AMD chip in close-up

PROCESSOR CHIP SALES will increase by almost quarter this year thanks to the growing demand for mobile devices such as smartphones and tablets, analyst outfit IHS has predicted.

The research firm forecast that worldwide processor shipments will reach 1.5 billion units by the end of this year, up from 1.21 billion in 2012.

"The first half of the year, in particular, yielded solid growth, up 27 percent in the first quarter on an annual basis, and up 24 percent in the second quarter," IHS said. "Meanwhile, expansion in the third quarter is anticipated at 19 percent, while growth in the fourth-quarter is forecast to come in at 24 percent."

The processors IHS counted in its report include traditional chips in machines like desktop PCs and servers, as well as standalone application processors and system on chip (SoC) processors used in notebook computers, smartphones and tablets.

The main expansion has been seen in mobile, with processor shipments for tablets up from 38.3 million units in the second quarter of 2012 to 53.5 million units for the same period this year, a 40 percent increase. Growth in processor shipments for smartphones was just behind that of tablets, up 38 percent from 147.9 million units to 204.2 million.

"In tablets, the rise of low-cost devices made in China boosted shipments for Chinese processor vendors such as Allwinner and Rockchip," IHS said. "The vendors played significant roles not only in the undifferentiated white-box tablet market but also in top-tier levels as they sold to major brands like Hewlett-Packard and Lenovo."

As you'd expect, the news isn't so good for chips shipped for traditional PCs and laptops, with the PC category being the only segment in the chip market to see a decline in every quarter, down from all the same periods in 2012. Trends show how PC shipments have struggled this year against more popular devices like mobile handsets and tablets.

"In the second quarter [...] processor shipments for PCs amounted to 84.3 million units, down from 89.9 million a year ago at the same time," IHS said.

According to the analyst firm, AMD managed to increase its market share in processor shipments for PCs during the second quarter compared to the first, while market leader Intel saw shipments decline. However, Intel remained the dominant force in PC processors, retaining an 84 percent overall share of the market.

Last week, Intel vowed to focus on the mobile market, admitting that it missed an opportunity in smartphones and tablets by sticking with the declining PC market.

Speaking at the firm's annual investor relations day on Thursday, Intel chairman Andy Bryant said Intel was "paying the price" for not recognising the market shift from PC towards tablets, which allowed rivals to get a foothold in the mobile sector.

Intel CEO Brian Krzanich said the chipmaker will focus on and respond to industry trends as opposed to trying to control where the market is going.

"We will embrace where the market moves, that's one of the big changes that's occurring," Krzanich said, suggesting that the declining PC business will become the springboard for Intel's expansion into new technologies. µ

 

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