Advanced Micro Devices’ (NYSE:AMD) server processor market share is slipping. In 2010, AMD’s market share dropped to 7% while Intel’s (NASDAQ:INTC) share rose to 93%. The silver lining is overall growth in the server processor market – IDC is forecasting 10% growth in PC microprocessor shipments in 2011.  AMD is also banking on its Bulldozer CPU core processor, set for launch in Q3 2011, which takes a unique approach to computing that goes beyond Intel’s Hyper-Threading technology. If AMD can learn from its past mistakes, like the launch delay of its Barcelona chip in 2008, and focus on its 8-core and 12-core microprocessors, it could see upside to its server processor share.
While we anticipate AMD’s server processor share will increase to 12% by the end of our forecast period, Trefis members predict the share will rise towards 17%, implying 12% upside to our price estimate for AMD stock.
We currently have a price estimate of $9.63 for AMD’s stock, about 5% above market price.
(Chart created by using Trefis' app)
Server Processor Market Continues to Grow
Exponetial data growth necessitates greater server performance. The proliferation of connected devices along with shift of video to online platforms, rise of social networking sites and social networking games will fuel the data growth. According to an IDC forecast, x86 server processor unit shipments grew 28% in 2010, and PC microprocessor unit shipments, including server processors, could grow 10% in 2011.
While Intel gained 3% market share in 2010 (reaching 93%), AMD dropped 3% in market share to 7%.  While there is a stark difference between the market shares of Intel and AMD, competition between the two remains intense. When AMD launched its 8-core and 12-core Opteron 6100 series microprocessors, Intel countered with its own 8-core Xeon 7500.
Can Bulldozer Turn Fortunes for AMD?
With every attempt by AMD to introduce newer products with improved technology, Intel has countered strongly, effectively preventing AMD from re-capturing market share. AMD’s latest move, the soon-to-be-launched Bulldozer server chips, claims to have a unique approach to computing that goes beyond Intel’s Hyper-Threading technology, resulting in more speed at a lower level of power consumption.
As cloud computing takes hold, AMD believes that its server processors will be better positioned than Intel to serve computing needs (see Is Intel’s Position Atop the Server Processor Hill in Danger?).
- Worldwide PC Microprocessor Unit Shipments Flat Year-Over-Year in the Fourth Quarter 2010, IDC Press Release, 24 Feb 2011