14 DAY TRIAL // Following the processor price wars with Intel, AMD lost important revenues and because the company had no processor capable of standing head to head with the quad core processors from Intel, AMD lost market shares. The market position lost was almost a crippling blow for the smaller company as AMD has not enough resources to fight back Intel and to proceed further with the research and development for new products.
According to the market research firm Mercury Research cited by the news site News.com, AMD is no longer the beaten up company that made Intel do happy, but it has started to gain back market points lost during the first quarter. Even if the market gain is small, of only 4 percent of the 6 percent it lost, it may represent the beginning of AMD's return.
According to News.com, "Intel shipped 76.3 percent of all x86 chips for the desktop, notebook and server markets in the second quarter, while AMD shipped 22.9 percent. Intel hit 80 percent in the first quarter of this year, but that was an anomaly based on AMD's supply-chain troubles, said Dean McCarron, principal analyst at Mercury Research". It is said that the company's troubles with the supply chain and its inventory are the direct result of a rejection of a large number of computer chips from one of AMD's most important customers. Some say that the above mentioned customer is Dell and, because of its command termination, AMD was left with a large processor inventory that could not be placed through retail channels and partners. In order to get rid of the large processor inventory, AMD had to cut back production for an entire quarter and only during the second quarter the company reached its normal production output again.
"Usually, second-quarter shipments decline compared with the first quarter of the year, but the combination of AMD's return to normal and a strong PC demand resulted in the strongest growth from Q1 to Q2 since 1990, McCarron said. Both Intel and AMD reported strong demand during their earnings conference calls earlier this month". According to Mercury Research, total processor shipments increased by 12.2 percent when "compared with the first quarter, and by 15.2 percent compared with last year's second quarter". The AMD market regain might be the effect of the soon to come Barcelona quad core processors that encouraged customers to believe that AMD is still a company with a future ahead.