For years, Intel (NASDAQ: INTC) was the preeminent player in the semiconductor space, keeping a big lead over rivals like Advanced Micro Devices (NASDAQ: AMD).
But as smartphones, data centers, and game consoles have grown, Intel (INTC) has found itself losing market share to AMD (AMD), and trends don’t seem to stop too soon.
Bank of America analyst Vivek Arya, who has a target price of $ 160 per share for AMD shares (AMD) and a target price of $ 47 per share on Intel (INTC), noted that AMD (AMD) is gaining market in the high-end and commercial segments of the notebook market and managed to raise prices. As customers respond to AMD (AMD) products, the gap is now down to 5% from 20% to 30% in the fourth quarter of 2021, despite Intel (INTC) Alder Lake.
Arya said in a research note that strong pricing and execution helped AMD (AMD) raise its share of PCs to 20% and its unit share by 22% in the first quarter of 2022, “with the value share reaching historical maximums. ”
Semiconductors have been missing for more than two years due to several factors, most notably the Covid-19 pandemic, which disrupted supply chains around the world.
Manufacturers of chip equipment, such as ASML (ASML), have talked about the growing demand that has sustained the space for years, which makes AMD (AMD) able to increase its market share, even with shortcomings, to be much more impressive.
And it’s not just in the PC space where AMD (AMD) has made significant gains that could be hard to beat for Intel (INTC) soon, it’s also the server market, which Intel (INTC) has relied on for growth .
In the first quarter, Arya noted that the unit and average selling price for server chips were “solid” from year to year, but there was a sequential decline for the first time in over a year. While some may be concerned that this is a sign of “peak data center creation” when examining capital spending on the cloud, the server market is likely to remain healthy.
AMD (AMD) now has 16.5% of the value and 11.6% of the unit share in the server market, up 5.7% and 2.7%, respectively, from last year.
The company is not on its laurels either, as its next-generation server chips typically outperform Intel (INTC) offerings. This is best exemplified by the competition between Milan, which is the code name for the AMD EPYC 7003 series of high-performance microprocessors, and Ice Lake from Intel.
Milan takes more than 30% of the unit share compared to Intel’s Ice Lake, which Arya called “interesting”, given that there was such a disparity between the two companies previously.
In the long run, given the company’s prices and ongoing commitments to so-called hyperscalers, including its recent agreement with Meta Platforms (FB), AMD (AMD) is likely to reach 35% of its value share, which would could lead to gains. nearly $ 8 per share by 2024, compared to current estimates of $ 6.54 per share.
Arya added that AMD (AMD) has gained a share of the server market for 12 consecutive quarters, and its market share is now the highest in 10 years, with no signs of slowing down.
Assuming that the computer and server markets continue to grow by about 6% at a compound annual growth rate until 2024, it is likely that AMD (AMD) will have a combined market share of 26% and 26%, respectively. by 19% and 15% in 2021, Arya explained.
Earlier this week, Citi said that AMD (AMD) and Intel (INTC) could be affected by a weak computer market, as notebook deliveries were below estimates for the fourth consecutive month.