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AMD not spitting chips over market share

AMD not spitting chips over market share

Isolated from the turmoil of international markets, AMD's Australian third-quarter shipments increased 29 per cent over the previous quarter, according to John Robinson, country manager for Australia and New Zealand.

AMD's worldwide percentage of shipments fell to 11.6 per cent of the market for the third quarter, down from 15.6 per cent in the second quarter and 20 per cent a year ago. However, analysts say AMD's share numbers do not paint a complete picture of the company's sales. The drop in shipments can be attributed to the chip maker's decision to ship fewer processors in the third quarter to relieve a large oversupply in the channel, said Dean McCarron, principal analyst at Mercury Research.

"AMD's momentum is not as strong as it was a year ago, by any measure," McCarron said. "But they are not losing momentum the way the third-quarter figures would indicate."

Robinson said the scenario in Australia is quite different. "Business here has remained very stable and in fact Q3 sales grew over Q2," he said.

Both Intel and AMD experienced worldwide inventory problems this year, as they increased production following a record first quarter that had the channel talking about a resurgence of the processor and PC markets, according to McCarron. However, the resurgence didn't happen and resellers for both companies were left with excess stock. Intel is better equipped to handle this type of downturn, since it ships around 35 million processors a quarter and can absorb hiccups in the channel, McCarron said. But AMD, with average quarterly shipments of around 7 million processors a quarter, was faced with a greater percentage of its processors stuck in the channel.

To counter this, AMD has changed the way it moves product through the channel. In the past, worldwide distributors such as Avnet have ordered product in bulk at the end of the quarter, but AMD has stopped this practice. AMD also keeps tabs on what products move through the channel, measuring the sell-through rates of its distributors as well as the product that moves into the channel.

The story in Australia is again different, because AMD's Q2 sales here were in part skewed by the vendor's decision to axe APD from its distribution line-up. While Robinson won't give specific numbers, he said sales for the third quarter had grown 29 per cent over Q2 figures and the vendor is having success countering issues such as parallel importing. "My understanding is that there are still people out there parallel importing, but the amount of traffic has reduced dramatically, particularly since we introduced our boxed products," Robinson said.

Part of the reason for this was that the boxed process and fan bundles were harder to ship. AMD compensates its distributors for part of the freight costs on the products, he said.

According to McCarron, fourth-quarter shipment numbers should be a more accurate representation of PC manufacturing habits.

"Whenever you have an inventory bubble, it creates havoc with the inventory statistics," he said.


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