Replies to post #60241 on Advanced Micro Devices Inc (AMD)

[burn2learn]

ULI has less than 2% of AMD market and <1% of total X86 market. They have a way to go! I would agree with a 3 way race between ATI, Nvidia, and SIS. Via could be a very good partner once they get quality down, they do have experience with Integrated graphics and a historical large market share in that area.

[burn2learn]

hey, this is timely. Merril Lynch has a report out on Q205 chipsets based on the Mercury news. Here it is in junk form, I will send to epscontest with in pdf form...much nicer with graphs


Highlights:
• According to data from Mercury Research that were released last Friday, the PC
microprocessor (MPU) shipment in Q2 2005 was flat sequentially at 55.0 million units.
Server and notebook processors grew, but desktop processors declined. We think that
Mercury offers the industry’s best data set for tracking microprocessor unit and revenue.
• Q2 2005 unit shipment fared much better than the five-year average decline of 10.7%,
and was also slightly better than Gartner Dataquest’s estimate of 3% decline in PC unit
shipments. Processor shipments typically show less quarter-to-quarter seasonal
variation than PC shipments.
• Main takeaways are as follows:

Desktop MPU market: Intel gained unit share with the help of an unexpected
surge of Xbox processors. Overall units shipment declined by 2% in the seasonally
soft second quarter. Excluding Xbox processors, Intel’s shipment decline would
have been seasonal. The increase in Xbox sales also dragged down Intel’s ASP. We
think this trend will reverse in Q3. AMD’s revenue share increased slightly due to
improved mix, although its unit declined seasonally.

Mobile MPU Market: Volume up, but no major changes in market share. Overall
unit volume increased 4% sequentially. Both Intel and AMD grew at a similar pace
in Q2. Intel retained its 89% market share in unit terms and 95% in revenue terms.
We expect Intel to maintain or expand that share. AMD began to ship Turion 64
mobile processors in Q2, replacing Athlon mobile processors, but with much higher
ASP.

Server MPU market: AMD’s unit share surges above 10% for the first time.
Overall unit shipments increased 6% sequentially. AMD’s unit shipments grew an
astounding 61% QoQ and reached 11.2% unit share, up from 7.4% in Q1. AMD
also experienced sharp increase in ASP, up 18% QoQ; the initial shipment of dualcore
processors helped. As a result, AMD’s revenue share increased from 8.9% in
Q1 to 15.7% in Q2. We expect AMD to continue to gain share in the server market.

Chipset market: Inventory correction seems over; ATI made headway. Overall
unit increased by 3%, in line with MPU shipment, signaling the end of the inventory
correction that started in Q1. Intel lost 2% unit share due to capacity restriction, but
retained the lead with 66% share. The biggest surprise was ATI which gained more
than 27% share on the AMD64 platform. ATI’s share gain came at the expense of
NVIDIA, whose share in the AMD64 platform dropped 20% points to 35%.
Comment
United States
Semiconductors
25 July 2005
Joseph Osha
Research Analyst, MLPF&S
[phone]
Sidney Ho
Research Analyst, MLPF&S
[phone]
MPU and Chipset Update
Q2 2005 Market Share Dynamics
Reason for Report: MPU Industry Update
Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
Refer to important disclosures on page 5. Analyst Certification on page 4.
Global Securities Research & Economics Group Global Fundamental Equity Research DepRC#30220611 artment
Industry
MPU and Chipset Update – 25 July 2005
(Continued)
Refer to important disclosures on page 5. 2
MPU unit shipments flat QoQ in Q205,
better than historical average
According to just-published data from Mercury Research,
the PC microprocessor (MPU) shipment was flat QoQ at
55.0 million units in Q205. The sequential decline was
better than the five-year average rate of 10.7% decline.
Server and notebook processors grew, but desktop
processors declined. We note that the overall unit decline
was also slightly better than Gartner Dataquest’s estimate
of 3% decline in PC unit shipments. Processor shipments
typically show less quarter-to-quarter seasonal variation
than PC shipments.
Chart 1: MPU Market Segmentation
10
20
30
40
50
60
70
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05E 4Q05E
Total MPU unit (in mil)
Desktop Notebook Server
Source: Mercury Research, Merrill Lynch
In the next few sections, we offer a summary of the latest
MPU data and our key takeaways. We address the overall
market, and then discuss the details of the three submarkets—
desktop, notebook, and server.
In Q2 2005, there were 38.9 million desktop processor
units, 13.4 million notebook processors, and 2.7 million
server processors, as depicted in the chart above.

Intel has 82.3% unit market share
Looking at the total MPU market, Intel’s share increased
in unit terms, but declined in revenue terms. Intel’s unit
share increased from 81.6% in Q1 to 82.3% in Q2 2005,
thanks to an unexpected surge of Xbox processor
shipment. In terms of revenue, Intel’s share declined from
89.7% in Q1 to 89.3% in Q1 2005. AMD is still a distant
second to Intel. AMD’s unit market share declined from
16.9% to 16.2%, but its revenue share grew from 10.0% to
10.5%. VIA, with 1.4% unit share, remains a small player
in the market. Chart 2 illustrates the current market share
profile and our forecast for the coming quarters. We expect
Intel to continue to grow market share in the mobile
business, although we do think that AMD could make
further headway in the server and desktop markets. We
believe AMD will benefit from rising ASP due to
favorable product mix.
Chart 2: Total MPU Market Share
0%
20%
40%
60%
80%
100%
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05E 4Q05E
Total MPU share
Intel AMD VIA Transmeta
Source: Mercury Research, Merrill Lynch

Overall ASP declined due to Xbox sales
The average selling price for microprocessors declined
from $135 in Q1 to $132 in Q2. ASP for Intel declined by
4% to $143 due to higher Xbox sales, while ASP for AMD
increased 6% largely due to favorable product mix. On a
part by part basis, our weekly checks on street pricing
indicate that both Intel and AMD maintained a firm pricing
stance on their volume products during the quarter. We
expect AMD’s ASP to improve gradually throughout 2005
and 2006 as product mix further improves.

Desktop market: Intel led with 79.4% share
Desktop market shipments declined by only 2%
sequentially to 38.9 million units. Intel’s market share
increased by 90bp to 79.4% as it shipped 1.6 million more
Xbox units in Q2 than in Q1. Intel’s unit shipment
declined by 1% QoQ, but excluding Xbox, Intel’s unit
would have declined by 5%, in line with seasonal average.
AMD’s share declined by 100bp to 18.7%, as units
declined by 7%. The transition to K8 is essentially
complete. VIA’s unit shipment was stable, and its unit
share was relatively flat at 1.9%. In terms of revenue share,
Intel gained 50bp to 87.3%, and AMD lost 60bp to 12.3%.
ASP for both Intel and AMD desktop processors declined
by 8%.
Chart 3: Desktop MPU Market Share
0%
20%
40%
60%
80%
100%
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05E 4Q05E
Total Desktop MPU share
Intel AMD VIA
Source: Mercury Research, Merrill Lynch
MPU and Chipset Update – 25 July 2005
Refer to important disclosures on page 5. 3

Notebook market: both Intel and AMD grew
The notebook market increased 4% sequentially to 13.4
million units. Intel grew units by 5% and retained its
market leadership with 89.5% market share. Pentium M
accounted for 60% of Intel’s units shipped. AMD grew
units by 3%, and its unit share decreased slightly to 9.9%.
AMD began to ship Turion 64 processors, and its low-end
Mobile Sempron continued to ramp. Transmeta’s
shipments declined sharply as the prepares to exit the
market. Intel’s ASP went up slightly to $171, and AMD’s
ASP grew 6% to $72. In terms of revenue share, Intel’s
and AMD’s share were flat at 95% and 4%, respectively.
Chart 4: Notebook MPU Market Share
0%
20%
40%
60%
80%
100%
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05E 4Q05E
Total Notebook MPU share
Intel AMD Transmeta
Source: Mercury Research, Merrill Lynch

Server market: AMD exceeded 10% share
Server market shipment in Q2 grew 6% sequentially to
2.65 million units. AMD grew units by an astounding
61%, and its unit share surpassed the 10% mark for the
first time ever, up from 7.4% in Q1 to 11.2% in Q2. Both
Sun Microsystems and Hewlett Packard began to ramp
shipments of server systems that use Opteron processors.
Intel’s unit shipment increased 2% in Q2, but its share
dropped from 92.6% in Q1 to 88.8% in Q2. AMD also
experienced sharp increase in ASP, up 18% QoQ, while
Intel’s ASP declined 2%. As a result, AMD’s revenue
share rose from 8.9% in Q1 to 15.7% in Q2, and Intel’s
revenue share declined from 91.1% in Q1 to 84.3% in Q1.
Chart 5: Server MPU Market Share
0%
20%
40%
60%
80%
100%
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05E 4Q05E
Total Server MPU share
Intel AMD
Source: Mercury Research, Merrill Lynch

Chipset market: Intel led with 66% share
Chipset shipments increased 3% sequentially to 54.0
million units. The increase was better than the flat unit
shipment for MPU units, driven primarily by early orders
for third-quarter system builds. It also signals the end of
the inventory correction that began in Q1. Unit shipment
for Intel-based platform, which accounted for 80% of the
market, increased 3% sequentially. Chipsets for Athlon 64
increased sharply from 4.7 million units in Q1 to 7.1
million units in Q2, while chipsets for Athlon XP declined
from 5.1 million units in Q1 to 2.7 million units in Q2. The
transition should complete by the end of the year.
In Q2, Intel shipped 35.7 million chipset units, up only 1%
QoQ, as it was impacted by capacity restriction in chipset
manufacturing. Its market share dropped from 67.9% in
Q1 to 66.2% in Q2. VIA lost 180bp in unit share to 12.5%,
as its share gain in the Intel platform was unable to offset
its share loss in the AMD platform. SIS’s overall unit share
increased 50bp to 9.1% primarily due to share gain in the
Intel platform. The biggest surprises were ATI and
NVIDIA. ATI made significant headway in the AMD64
platform with its Radeon Xpress 200 chipsets, garnering
27% unit share in that market. ATI’s gain was at the
expense of NVIDIA, whose share in the AMD64 platform
declined 20 points to 35%. ATI’s overall unit share
increased 340bp to 5.9%, surpassing NVIDIA as the fourth
largest chipset supplier. NVIDIA’s overall share dropped
from 6.1% in Q1 to 5.6% in Q2. NVIDIA began shipping
chipsets to the Intel platform in Q2.
Chart 6: Q1 2005 Chipset Market Share
VIA
13%
NVIDIA
5%
SiS
10%
Intel
65%
ATI
6%
ALI
0%
Other
1%
Source: Mercury Research
Stocks mentioned:
Nvidia (NVDA; C-2-9; $25.83
ATI (ATYT; C-1-9; $12.95)
Advanced Micro (AMD; C-1-9; $20.49)
Intel (INTC; C-2-7; $26.75)
VIA Tech (VIATF; C-3-9; NT$25.75)
Sun Microsystems (SUNW; C-2-9; $3.88)
Hewlett Packard (HPQ; B-1-7; $24.18)
Silicon Integrated Systems (SLYMF; C-2-9; NT$18.35)
MPU and Chipset Update – 25 July 2005
Refer to important disclosures on page 5. 4
Analyst Certification
I, Joseph Osha, hereby certify that the views expressed in
this research report accurately reflect my personal views
about the subject securities and issuers. I also certify that
no part of my compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or view
expressed in this research report.
MPU and Chipset Update – 25 July 2005
Refer to important disclosures on page 5. 5
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Buy 1089 40.91% Buy 359 32.97%
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