The semiconductor giant hit the 31-year market share low, according to Mercury Research, as it starts to show signs of a comeback, most notably with its Data Center Group reporting in late July a record 59 percent in year over year revenue growth for the second quarter.
Intel’s share in the x86 CPU market for PCs and servers fell under 70 percent for the first time since 1995, marking a 31-year low for the semiconductor giant, even as AI spending fueled historic growth for its data center business.
Dean McCarron, president of Prescott, Ariz.-based CPU-tracking firm Mercury Research, confirmed the point about Intel’s 31-year low to CRN in an email last Thursday following the release of his second-quarter CPU market share report comparing Intel and AMD.
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Asked to comment, an Intel spokesperson referred to record year-over-year sales growth for its Data Center Group and momentum in its client business unit touted in its latest earnings report as well as a growing number of long-term supply agreements.
A senior executive at a U.S. systems integrator that partners with both Intel and AMD told CRN recently that he has started to sense more engagement from Intel’s channel teams after a period in which AMD was getting more of his attention.
“I think they’re realizing that, ‘Hey, we have to be active. We have to be out there with partners. We can’t go to sleep on that stuff,’ which I do think they did for a while,” said the executive, who asked to not be identified to speak candidly.
The Latest x86 CPU Market Share Report From Mercury
In the Mercury report, Intel’s overall x86 CPU market share fell 6.5 points year over year and dropped by under 1 point sequentially to 69.3 percent as AMD’s position grew just as much to 30.7 percent, a new record for the rival, the researcher said.
These figures were based on total CPU shipments for PCs and servers, not including semicustom, embedded and IoT products. If those latter three segments were included, Intel’s share for the second quarter would be 65.9 percent, down 4.6 points year over year and down 1.5 points sequentially, against AMD’s 34.1 percent, according to Mercury.
One thing that helped AMD with this all-inclusive measure was “better than expected” shipments of the company’s system-on-chips for gaming consoles. Unlike AMD, Intel does not have a big console business for its chips.
Why Intel’s Server CPU Share Fell As It Hit Record Growth
Intel hit the 31-year low as the company has started to show signs of a comeback, most notably with its Data Center Group reporting a record 59 percent in late July in year-over-year revenue growth for the second quarter. The company also reportedly said it has signed 10 long-term CPU supply agreements with customers, including Google.
But despite the high demand Intel saw for its server CPUs in the second quarter, AMD managed to grow shipments faster during the same period, according to Mercury.
This allowed AMD’s server CPU share to grow by 7.3 points year over year and 1.3 points sequentially to 34.5 percent against Intel’s 65.5 percent.
However, McCarron said, AMD’s share would have been higher in the segment if the company counted embedded CPUs it shipped for networking and storage applications in data centers. Intel, on the other hand, counts such CPUs within its Data Center Group.
Without this accounting difference, AMD’s server CPU share would have grown 9.2 points year over year and 2.9 points sequentially to 46.4 percent against Intel’s 53.6 percent, according to the CPU market researcher.
The share movements happened as server CPU shipments grew nearly 20 percent year over year for the second quarter, with both Intel and AMD expecting demand to remain strong for the rest of the year, McCarron said.
The Intel spokesperson said the company is working on improving production capacity.
“Our top priority is to ramp capacity and improve factory output as quickly as possible to support customer demand even as we work to improve our competitive roadmap,” the representative said.
AMD Takes Share From Intel In Shrinking Desktop PC Segment
In the PC market, AMD’s share grew 6.4 points year over year and increased under 1 point sequentially to a record 30.3 percent against Intel’s 69.7 percent, but it was in laptops and other mobile form factors where most of the action happened for both companies.
That’s because desktop CPU shipments were “best described as ugly,” according to McCarron, with the segment seeing a “large on-year downturn in excess of 20 percent.” The researcher said this was likely due to “higher PC prices and limited GPU supplies.”
The culprit behind these two dynamics is the AI infrastructure boom, which has prompted component manufacturers to prioritize production for data centers over PCs. This, in turn, is creating component shortages and driving up prices.
Under these constraints, AMD’s desktop CPU share grew 2.7 points year over year and 1.8 points sequentially to 34.9 percent against Intel’s 65.1 percent.
“Both AMD and Intel experienced significant on-year weakness in desktop CPUs—with AMD having relatively smaller declines—however, on a sequential basis AMD’s declines were much smaller than Intel’s,” McCarron wrote.
AMD Grows Market Share The Fastest In Laptops
It was the laptop segment where AMD grew market share the fastest, reaching 28.9 percent, up 8.4 points year over year and under 1 point sequentially, against Intel’s 71.1 percent.
While Intel “added millions of additional units of mobile CPU capacity in the second quarter” to close the supply-demand gap, AMD still managed to increase share sequentially by a small sliver, McCarron wrote.
He said total shipments for the segment “were up strongly on a sequential basis and had modestly positive on-year growth, in stark contrast to warnings about client segment weakness made in [the prior quarter].”
Intel, AMD Seek To Diversify As Arm CPU Rivalry Heats Up
While AMD continues to put pressure on Intel in the x86 CPU market, both companies are feeling the heat from the growing number of firms introducing central processing units based on the Arm instruction set architecture.
Those include Nvidia with its new Vera CPU as well as hyperscalers like Amazon Web Services that are embracing their own designs for new data centers.
Then on the PC side, there’s Apple with the M-series chips inside its Mac computers and the Snapdragon processors from Qualcomm, which is also planning another attempt in the server CPU market, though no launch date has been confirmed. Nvidia is entering the PC arena too with the RTX Spark chip for Windows PCs.
However, AMD is further ahead than Intel in finding a new major source of revenue with its Instinct GPUs. AMD CEO Lisa Su reportedly said during its second-quarter earnings call that it could surpass $30 billion in Instinct revenue next year as big customers line up.
Meanwhile, Intel recently landed security vendor Fortinet as a customer for its contract manufacturing and custom chip design businesses, two major ways in which the company seeks to diversify its business. While the company has reportedly said its custom silicon business is nearing a $2 billion annual run rate, it has yet to announce a major customer that company officials have said is necessary for Intel Foundry’s future.
At the same time, the semiconductor giant continues to retool its AI chip strategy, most recently turning its focus to the idea of inference and agentic AI workloads powered by GPUs, including ones designed by Intel, in tandem with other chip types.
