Despite the semiconductor cycle downturn, chip stocks held up fairly well in 2019. The iShares S&P NA Tec. Semi. Idx. Fd. (NASDAQ: SOXX) has gained about 60% year-to-date.
The top-performing S&P 500 stock of the year continues to be Advanced Micro Devices, Inc. (NASDAQ: AMD). Interestingly, five of the top 10 gainers among the index components are either chip or chip equipment makers.
To understand how AMD managed to outperform Intel Corporation (NASDAQ: INTC) for a second straight year, it is imperative to look at one of the storied corporate rivalries in the U.S. It dates back to 1969, when AMD was founded.
Intel and AMD compete with each other in the processor markets for desktops, laptops and servers.
Intel is continuing to lead the market for desktop CPUs. AMD is slowly and steadily making inroads.
In November, AMD's share stood at 20.5% compared to Intel's 79.5%, according to Steam Hardware Survey.
This represents a significant improvement for AMD, which had a 15.98% share in April 2018.
Mercury Research puts AMD's share of desktop processors in the third quarter of 2019 at 18%, an increase of 5% year-over-year, Tom's Hardware reported.
AMD's CPU market share amounted to 31.3% in the fourth quarter of 2019 compared to 68.7% for Intel, the CPUbenchmark.net reported.
The data used by the website is generated by PassMark, which collects data based on its benchmark tests and takes into account only CPUs in use and not the ones sold.
AMD's mobile processor market share stood at 14.7% in the third quarter, according to Mercury Research.
This represents a 0.7% increase from the previous quarter and a 3.8% year-over-year increase.
Mobile processors are the CPU chips designed for portable computers such as laptops and tablets.
The improvement has been achieved on the back of the launch of the second-generation Zen 2 Ryzen mobile processors and increased adoption.
Intel is dominant in the server processor market, with a stake of about 93%, leaving AMD take the remaining 7% share.
AMD, which controlled roughly a quarter of the market back in mid-2006, lost its way from there.
The company is slowly and steadily finding its footing, starting with the launch of EPYC server processors based on the Zen microarchitecture in June 2017. Earlier this year, AMD introduced the second-generation EPYC processors.
"Our goal is to get 10% server share by Q2 2020 with 2nd gen EPYC CPUs and to surpass historical levels in both server and desktop shipments," said Ruth Cotter, AMD's senior vice president of worldwide marketing, according to Wccftech.
Despite the AMD threat looming large, Intel still commands a lion's share of the processor market.
What should alarm Intel is the pace at which AMD is chipping away at its market share.
AMD's renewed product focus and innovation has only served to accelerate its ascension.
Intel is also facing supply constraints with respect its CPUs, and an inordinate delay with 10nm processors — while AMD is already up and running with its 7nm technology.
Related Link: Wells Fargo Names Nvidia As Top Semi Idea Into 2020, Lifts Price Target To 0
Photo courtesy of Intel.
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