Battle between AMD and Intel forces drop in CPU prices

San Jose (CA) - Intel appears to be caught in a string of bad news that just isn’t fading away. Rival AMD may still hold less than 30% of the global processor market, but the firm’s market share gains and increasing competitive pressure apparently are strong enough to put a serious dent into overall processor sales worldwide, according to a report released by the Semiconductor Industry Association (SIA).

While the organization observed that the PC industry is on track on achieving 13 to 15% growth for the year - and one would expect processor sales to climb at a similar rate - year-over-year revenues increased only "nominally" in April, the SIA said. Compared to March, the whole chip industry lost about 0.4% in revenues, but microprocessor sales fell more drastically to 6.1%. Overall unit sales did not appear to drop, which led the SIA to "conclude that there is more competitive pressure" in the field. "It is rather unusual," said SIA spokesperson John Greenagel in a conversation with TG Daily. "I cannot remember that this ever happened before," he said.

The SIA’s report reflects conflicting statements by AMD and Intel about the status of the processor market. While AMD mentioned "strong customer demand for AMD64 single and multi-core processors" as well as "record sales of Opteron processors," Intel reported "lower unit sales for its processors" and confirmed "lower average selling prices" of its CPUs. Intel’s first quarter operating income took a 38% hit (down to $1.7 billion) over last year, while AMD reported a 300% jump to $259 million.

The overall semiconductor industry stays in a path to beat last year’s results. Global semiconductor sales reached a volume of $19.6 billion in April, down 0.4% sequentially and up 8.1% from April of 2005, when global sales came in at $18.1 billion. The SIA said that "overall market growth rate continues to run slightly ahead of the forecast issued last November, which projected growth of 7.9%."

The organization will provide an update to its forecast on 7 June.

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