AMD vs. Intel CPU Market Share: 7nm Makes Landfall as Price War Begins
Mercury Research, a CPU market analyst firm, released its market share report today, which highlights AMD's recent gains against Intel. The last quarterly share report did not include sales from AMD's Ryzen 3000 processors, but this report reflects 7nm processor sales as the company continues to claw back market share from Intel.
The report highlights that AMD grew in all segments, including desktop PCs, mobile, server, and the overall x86 market, fueled by the rise of AMD's Ryzen 3000 processors that offer a more advanced manufacturing process than Intel's 14nm chips. That affords density, power, performance, and pricing advantages.
(Image credit: AMD)
AMD's competitive pricing is the primary crowbar the company uses as it pries its way back into the market, particularly as its stoic rival has remained firm with its own pricing. But Intel's inaction on the pricing front came to an end last month.
Intel responded to AMD's Ryzen 3000 lineup by slashing gen-on-gen pricing for its Cascade Lake-X refresh processors in half, a practice the company has avoided in the past to preserve the value of its previous-gen processors, not to mention brand equity. Those cuts are even coming to previous-gen models, too.
Intel's price cuts are the opening salvo of what is now a price war between the bitter rivals, and it appears that the company is digging in its heels for a protracted battle.
Intel alluded to pricing pressure from AMD during its last earnings call, saying it would impact the average selling prices of its chips and would result in lowered margins. Further, Intel CFO George Davis implied during an interview with Barron's this week that the company is digging in its heels for the long haul, saying "What we’ve said though, the delay in 10 nanometer means that we’re going to be a little bit disadvantaged on unit cost for a period of time." Davis then noted the company expects to return to margin growth and expansion in 2023 when it overcomes the late ramp to 10nm.
That implies Intel is ready to dig in its heels until 2023, at least on the pricing front, so it's rational to expect lower pricing on its upcoming 10th-Gen Comet Lake processors, too.
AMD will face more pressure from Intel as its rival opens its wallet to fight back, but the company made solid gains this quarter as its 7nm processors flowed into the market.
However, we can expect these gains to accelerate in future quarters: Shortages, and the resulting price hikes, hamstrung AMD in the immediate months after the Ryzen 3000 launch. The company's difficulty satiating demand even led to the postponement of its highly-anticipated Ryzen 9 3950X launch.
In an interview at the Bernstein summit this morning, AMD CTO Mark Papermaster shed some light on the situation. Papermaster said the company met with unanticipated demand for high-end products and reiterated that TSMC supply shortages weren't the root of the problem. In response to a question about the shortages, Papermaster responded that the problem boiled down to binning for higher-performance CPU models. That means AMD wasn't yielding enough high-end chips from each wafer to satisfy demand for its fastest chips, but the company says it has adjusted to ensure supply.
That means we could see better supply in the coming months. Let's see what AMD's gains looked like while it was wrestling with its shortage.
AMD Desktop Market Unit Share
| 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q2019 | 2Q19 | 3Q19 | |
| AMD Desktop Unit Share | 9.1% | 9.9% | 11.4% | 11.1% | 10.9% | 12.0% | 12.2% | 12.3% | 13% | 15.8% | 17.1% | 17.1% | 18% |
| Quarter over Quarter (QoQ) pp | +0.8 | +1.5 | -0.3 | -0.2 | +1.1 | +0.2 | +0.1 | +0.7 | +2.8 | +1.3 | Flat | +0.9 | |
| Year over Year (YoY) pp | +1.8 | +2.1 | +0.8 | +1.2 | +2.1 | +3.8 | +4.9 | +4.8 | +5 |
Notably, all of the following numbers exclude the IoT segment.
AMD now has 18% unit share of the desktop CPU market. The company gained 0.9 percentage points compared to last quarter and has jumped an impressive five percentage points on the year.AMD's premium Ryzen 9 3900X now appears to be readily available at retail, which should improve AMD's sales next quarter. The company also has both its 7nm Ryzen 9 3950X and Threadripper 3000 processors landing this month, which should touch off a wave of upgrade sales.
AMD also has yet to refresh its high-volume Ryzen 3 series of processors with the 7nm process, and with Intel's shortage of low-end CPUs lingering far longer than anyone anticipated, those lower-end models could touch off some additional share gains.
AMD Server Unit Market Share
AMD bases its server share projections on IDC's forecasts but only accounts for the single- and dual-socket market, which eliminates four-socket (and beyond) servers, networking infrastructure and Xeon D's (edge). As such, Mercury's numbers differ from the numbers cited by AMD, which predict a ~5% market share. Here is AMD's comment on the matter: "Mercury Research captures all x86 server class processors in their server unit estimate, regardless of device (server, network or storage), whereas the estimated 1P [single-socket] and 2P [two-socket] TAM [Total Addressable Market] provided by IDC only includes traditional servers."
| 4Q17 | 2Q18 | 3Q18 | 4Q18 | 1Q2019 | 2Q19 | 3Q19 | |
| AMD Server Unit Share | 0.8% | 1.4% | 1.6% | 3.2% | 2.9% | 3.4% | 4.3% |
| Quarter over Quarter / Year over Year (pp) | +0.2 / - | +1.6 / 2.4 | -0.3 / - | +0.5 / +2.0 | +0.9 / +2.7 |
AMD's gains in the server market amount to 0.9 percentage points quarter-over-quarter and 2.7 percentage points year-over-year. That gain in share amounts to 4.3% of server share. AMD's Lisa Su noted during the company's last earnings call that the EPYC Rome shipments lead to a 50% quarterly increase in server CPU sales, but it is unclear how much of those gains are included in this report.
AMD continues to see strong uptake in hyperscale data centers, but its penetration into cloud service providers is the most promising, as it reduces up-front investments from potential customers and eliminates much of the technical support overhead. The company also reported that it is experiencing stronger uptake in enterprise deployments and with OEMs, but it will take some time for the company to chew away a large amount of share in Intel's high-margin bastion.
Considering Papermaster's comments that the company initially had issues yielding enough high-performance die for high-end parts, and Su's comments during the earnings call that the EPYC Rome processors are selling more higher-end SKUs than before, it is possible there was some initial supply constraint.
Su said during the company's earnings call that AMD expects server revenue to grow in the double-digits for next quarter, and for the company to achieve double-digit server CPU share by mid-next year.
AMD Mobile Unit Share
| 2Q18 | 3Q18 | 1Q2019 | 2Q19 | 3Q19 | |
| AMD Mobile Unit Share | 8.8% | 10.9% | 13.1% | 14.1% | 14.7% |
| Quarter over Quarter / Year over Year (pp) | +1.0 / +5.3 | +0.7 / +3.8 |
Although supply is improving, Intel continues to be plagued by shortages on the low end. It's important to remember that mobile comprises roughly 2/3 of the client market, so success here is key.
AMD's Lisa Su noted recently that the company has its Ryzen 4000 Mobile processors coming in early 2020, but it is important to remember that those chips are the equivalent of the Ryzen 3000 mainstream chips. That means they'll wield the same 7nm process for the Zen 2 execution cores, but the jury is out whether they will have Navi or Vega graphics units. In either case, these chips will afford the advantages of 7nm, like lower power consumption, that will address some of the relatively poor battery performance of AMD-powered laptops, like the recent Microsoft Surface Laptop 3. That should help the company increase its share in the upper echelons of the laptop market. Intel is focused on keeping a steady supply of its 10nm Ice Lake chips for OEMs, so AMD will face some challenges.
AMD Total Unit Market Share
| 3Q19 | PP Change QoQ / YoY | |
| AMD Client | 15.8% | +0.8 / +4.2 |
| AMD Overall x86 | 14.6% | +0.7 / +4 |
| 2Q18 | 3Q18 | 1Q2019 | 2Q19 | 3Q19 | |
| AMD Total Unit Share | 15.6% | 15.6% | 17.1% | ? | |
| Quarter over Quarter / Year over Year (pp) | +1.5 / + 1.5 | ? |
The overall market share statistics we were given did not reconcile with the previous numbers we've shared (second table), so we don't have as much historical data. We've reached out to find out if the measurement criteria has changed and will add those additional numbers when they become available.
In either case, AMD now has 15.8% of the client market, and 14.6% of the overall x86 market. That's a year-over-year increase of 4.2 and 4 percentage points, respectively.
Thoughts
It appears that AMD is headed in the right direction on all fronts, though Intel's dominant market position makes for slow progress. In the near term, Intel is ready to exploit its advantage of incumbency and sheer scale to slow AMD's progress, primarily through price cuts rather than innovative new products. We'll have to wait until next year to see the fruits of Intel's Comet Lake labors, but they largely look to be yet another iteration of the 14nm Skylake architecture. Without some severe price cuts, that isn't going to be enough to hold AMD back from stealing significantly more market share in the DIY and enthusiast markets.
AMD's EPYC Rome is also slowly gaining steam, and while it isn't a critical selling point for the client market, Intel's lack of PCIe 4.0 support is too hard to ignore for many high-performance applications, like in supercomputing and HPC. Those systems will be obsolete long before their expected shelf life of five years due to the now-bottlenecked interface. That's why we see AMD nearly running the table in HPC and supercomputer wins. All this means we can expect some drastic price adjustments to Intel's forthcoming server chips, too.
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