Supply chain weakness follows strong 1st half for PC processor vendors

Gordon Peters
Friday, 20 August 2010 01:28

IT Industry - Market

There were more mobile processors and more server processors bought worldwide in the second calendar quarter of this year as purchases of desktop processors remained flat, while global PC microprocessor unit shipments and revenues increased 3.6 percent and 6.2 percent respectively, compared to the first quarter.

In its latest report on the PC processor market, IDC says that vendors had a strong first half, although weakness emerges in the supply chain for the third quarter.

According to IDC, the average sequential change in unit shipments between a calendar year's first quarter and its second quarter is an increase of 1.6 percent, and for revenues, the average sequential change is a decrease of -2.8 percent. “So, these increases represent better performance than usual for a second calendar quarter,” commented Shane Rau, IDC’s director of semiconductors, personal computing research.

"Such a sequential increase in PC processor shipments alone would have been enough to conclude that the first half was strong for the market. However, a modest rise in revenues, too, points directly to a rise in average selling prices. System makers bought more and higher-priced PC processors in 2Q10 than in 1Q10. Digging a little deeper into the numbers shows that they bought more mobile processors and more server processors, while desktop processors remained flat."

Looking at market performance by PC form factor, IDC reports that mobile PC processor unit shipments rose 6.5 percent quarter over quarter, PC server processors rose 6.1 percent quarter over quarter and desktop PC processors declined -0.1 percent quarter over quarter.

On vendors, IDC says that, for the overall worldwide PC microprocessor market in 2Q10, Intel earned 80.7 percent unit market share, a loss of 0.3 percent, while AMD earned 19.0 percent, a gain of 0.2 percent, and VIA Technologies earned 0.3 percent.

In 2Q10 unit share by form factor, IDC also reports that Intel earned 86.1 percent share in the mobile PC processor segment, a loss of -1.7 percent. AMD finished the quarter with 13.7 percent, a gain of 1.6 percent, and VIA earned 0.2 percent. In the PC server/workstation processor segment, Intel finished with 93.5 percent market share, a gain of 3.3 percent and AMD earned 6.5 percent, a loss of 3.3 percent. In the desktop PC processor segment, Intel earned 72.2 percent, a gain of 0.5 percent, AMD earned 27.3 percent, a loss of -0.7 percent, and VIA earned 0.5 percent.

In looking at the market outlet, IDC forecasts worldwide PC processor unit growth in 2010 of 19.8 percent. However, the research firm also cautions that market demand for processors weakened during the second quarter and is expected to remain weak in August.

"Major OEMs cut PC build orders with their contract manufacturers who, in turn, have cut orders for commodity components," said Rau. "While the PC processor vendors re-iterated their solid outlook during their most recent earnings calls, the softness we've seen ultimately makes us concerned for end demand's pull on processors. Likely, the second half of the year will be seasonal given the early build for Intel's Sandy Bridge and AMD's Fusion architecture launches, but lower than the year-over-year growth seen in the first half of the year. 2011 remains a wildcard in terms of sustainable unit growth."