Intel, AMD and ARM are locked in a battle over market share as the PC industry continues to slow down. These chip makers have been competing with each other for decades, but this time around it’s different. Prices on the latest graphics cards continue to drop despite repeated warnings from Intel that they should be buying instead of investing further into their competition.
The “who makes the chips that are in short supply” is a question that has been asked by many people. Currently, the battle is being fought between PC makers and chipmakers.
Personal computer sales are projected to drop sharply this year after a phenomenal run. Ironically, this makes Intel INTC -1.06 percent and Advanced Micro Devices’ quest for market share even more vital. -3.11 percent AMD
The competition between the two chip manufacturers in PCs dates back decades. But it truly took off in 2018 when AMD began releasing CPUs made on Taiwan Semiconductor Manufacturing, TSM -3.87 percent or TSMC’s most cutting-edge manufacturing lines. This provided AMD’s processors an advantage against Intel’s, which had been trying to update its own manufacturing process. According to Mercury Research, AMD accounted for around 21% of the central processor chips supplied for PCs in the third quarter of 2021, up from 8% only four years previous.
Investors have been primarily focused on the two firms’ competition in the faster-growing data center semiconductor sector. However, PCs continue to provide the bulk of revenue for both companies. And that might be an issue this year, as the mature sector recovers after a big, pandemic-fueled run. According to IDC, PC shipments would increase roughly 12% to 337.6 million units in 2021, after a 13 percent increase the prior year. However, according to the market research organization, sales will stay unchanged this year and climb just 1% in 2023. Even if the pandemic boost remains, the sector produced 265 million units each year on average in the five years leading up to 2020.
At the much-reduced CES trade expo last week, Intel and AMD promoted their next PC CPUs. The new products are primarily aimed at laptops, which account for around three-quarters of the PC market. Intel’s new “Intel 7” manufacturing process will be used for the first laptop CPUs, while AMD’s new Ryzen chips will be made using TSMC’s 6-nanometer technology. Analysts are split on which has the best chance of succeeding. Mark Lipacis of Jefferies believes AMD will continue to eat into Intel’s market share, while Pierre Ferragu of New Street Research believes Intel’s new products will help it “restore competitiveness.”
Neither team can afford to fail on those fronts. AMD’s stock has risen 39 percent in the last year, outpacing several of its chip competitors, and analysts predict the much smaller chip manufacturer to maintain double-digit revenue growth over the next two years, after a 65 percent increase in 2021. Intel, on the other hand, is frantic to halt its share loss due to the necessity to preserve business and cash flows throughout a multiyear—and costly—turnaround strategy to narrow the production gap with TSMC.
Another twist is the likelihood that rival ARM-based processors would gain popularity as a result of the success of Apple’s new Macs, which employ the company’s own CPUs. More than 200 business clients are testing or deploying Microsoft Windows-based devices utilizing Qualcomm’s ARM-based Snapdragon CPUs, according to the company’s own CES presentation. “PC manufacturers need to have a competitive answer to the M1-powered Macs,” Raymond James’ Chris Caso said, “but higher share for ARM processors like Snapdragon would come at the cost of both Intel and AMD’s x86 CPUs.”
One thing is certain: despite stagnating growth, the PC industry will provide plenty of thrills this year.
Dan Gallagher can be reached at [email protected]
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The “chip shortage” is a big problem for the PC market. In response, chip makers are trying to make more efficient chips to help keep up with demand. However, this leaves many consumers worried about how long it will take for them to get their hands on the next generation of processors. Reference: will the chip shortage get worse.
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