AMD moves into Intel’s turf

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Intel’s stranglehold on the computer microprocessor market was loosened further by its biggest rival, Advanced Micro Devices, in the first quarter as it reported market-share gains in a new generation of chips.

AMD opened the technology hardware earnings season on an optimistic note for the industry, with profits well ahead of Wall Street’s expectations at 38 cents a share, compared with an analyst consensus of 30 cents gathered by Thomson Financial.

But its comments did not augur well for erstwhile bellwether Intel, which reports next week along with other major US chipmakers Texas Instruments, Qualcomm and Freescale.

“AMD had another great quarter,” said Bob Rivet, chief financial officer. “Building on our positive momentum, we believe we once again gained dollar market share based on strong customer demand for AMD64 single and multi-core processors.”

The move to computing that addresses 64-bit instead of 32-bit memory and from single-core to dual-core processors has been driving sales for Intel and AMD, which share the market for the dominant “x86” family of microprocessors.

In a Merrill Lynch report released last week entitled “Looking into the Q2 Abyss”, semiconductor analyst Joe Osha said Intel’s results next Wednesday would “probably be the worst set of results and forecasts that the company has delivered since the bursting of the bubble”.

He cited excess inventory, pricing pressures and AMD’s long-held lead in processor technology for servers as raising short-term and long-term doubts about Intel’s ability to regain the dominance it once enjoyed.

AMD shares closed 3 per cent higher at $35.42 in New York and were flat in after-hours trading. Intel’s fell 0.2 per cent to hit a 52-week low of $19.12.

Intel still supplies the processors in four out of every five PCs made globally but AMD’s market share has increased significantly of late – rising from 11.9 per cent to 15.3 per cent from the third to fourth quarters of 2005.

Last month, Intel issued a first-quarter sales warning, in part blaming further market share loss.

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