Intel Vs. AMD: Battle For Market Share

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Khaveen Investments
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Summary

  • 2018 was a great year for both Intel and AMD, particularly in the CPU market.
  • AMD's top-line increased 23% as they gained market share from Intel, while Intel themselves managed a 13% revenue increase by inflating their CPU prices on the market.
  • My forecast of the CPU market share between these two rivals for the next 4 years indicates their monopoly of the market may be ending.
  • I identified a significant threat to the traditional x86 CPU market in the rise of ARM-based processors which are rapidly creeping into the market.

Intel vs AMD Market Share

Intel Corporation (NASDAQ: NASDAQ:INTC) and Advanced Micro Devices (NASDAQ: NASDAQ:AMD) both operate in the semiconductor industry competing against each other in the microprocessor market. While Intel dominates this market, AMD remains its significant rival and is rapidly gaining market share.

In 2018, Intel announced the delay in volume release of CPUs based on its 10nm production process. Originally set for a late 2018 launch, supply issues have pushed this back to late 2019. Intel also announced it was putting its H310 chipset on hiatus as it couldn’t manufacture enough 14nm silicon to cope with demand. Due to these shortages, Intel dramatically increased the prices of its CPUs. This resulted in the CPU market share of Intel falling drastically in areas that were heavily hit by low supply and huge price hikes. Although this served its purpose of boosting profits, AMD was able to gain a huge chunk of unit market share from Intel.

Intel AMD Market Share

Source: AMD 2018 10-Q

When full-year 2018 results were released by AMD and Intel, we finally got confirmation of AMD's significant rise in market share. The company gained share in all three CPU segments of server, desktop and notebook. AMD gained 2.8% share in desktop to reach 15.8% market share. Looking at the server market, AMD sits with a 3.2% market share which was a 2.4% increase Y/Y. Finally, in the notebook market, AMD saw its fortunes rise to 12.1% market share comprising a 5.3% gain.

Intel: The Leader

Despite significant strides by AMD, Intel is the unquestioned leader in the microprocessor market. Looking at their CPU revenue segments, the sheer size of Intel becomes very apparent compared to AMD.

2018 Revenue

Platform CPU Segment Breakdown Intel AMD
Desktop $ 12,220 $ 946
Notebook $ 20,930 $ 1,218
Server $ 21,155 $ 312

This article was written by

Khaveen Investments profile picture
5.52K Followers
Khaveen Investments is a Global Macro Quantamental Hedge Fund managing a tactical asset-allocated portfolio of globally diversified investments. We have interests in 100+ investments across multiple asset classes, countries, sectors and industries. Our investment approach takes both a top-down and bottom-up approach encompassing macro-economic, fundamental, quantitative and technical analysis. We serve accredited investors throughout the globe, which include HNW individuals, SMEs, associations, and institutions. Our investment managers have decades of investment experience between them, with research expertise in emerging technologies such as Artificial Intelligence, Cloud Computing, 5G, Autonomous & ElectricVehicles, FinTech, Augmented & Virtual Reality and the Internet of Things.www.khaveen.com

Disclosure: I am/we are long AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: No information in this publication is intended as investment, tax, accounting, or legal advice, or as an offer/solicitation to sell or buy. Material provided in this publication is for educational purposes only, and was prepared from sources and data believed to be reliable, but I do not guarantee its accuracy or completeness.

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