Chipmaker Report: Intel's Revenue Sank In 2006 - InformationWeek

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Chipmaker Report: Intel's Revenue Sank In 2006

The chipmaker's troubles were due to a bleak performance in its core PC microprocessor and flash-memory businesses, market analysts with iSuppli report.

While Intel appears to be making a comeback this year, the chipmaker in 2006 stumbled badly against rival Advanced Micro Devices, as its market share fell to the lowest level in six years, according to a market research firm.

Intel revenue last year fell 11.1% to $31.5 billion, the only top-five vendor to show a decline, iSuppli said Thursday. No. 8 AMD, on the other hand, experienced a 91.6% jump in revenue.

Intel's revenue troubles were due to a "bleak performance" in its core PC microprocessor and flash-memory businesses, the researcher said. The sales decline brought the company within less than a half percentage point above its 2004 sales level, which means it wiped out virtually all its gains in 2005. In addition, the company's market share fell to 12.1%, its lowest level since before 2000.

For AMD, on the other hand, it was the best of times, as the company experienced a huge increase in revenue, which was partly due to the $5.4 billion acquisition of ATI Technologies. AMD, however, also made strong gains in the microprocessor market. As a result, the company moved from the 15th largest chipmaker in 2005 to the eighth in 2006.

Nevertheless, the battle is far from over. Intel has launched a strong counterattack against AMD this year, which warned recently that it was unlikely to meet its first-quarter revenue target. In its offensive, Intel has overhauled its product line, particularly its server chips. AMD, however, has said it plans to comeback this summer with a new version of its Opteron chip line.

Revenue for the global semiconductor industry last year rose 9.3% from 2005 to $260.2 billion, iSuppli said. The top five vendors stayed the same from 2005, according to iSuppli. They were Intel, followed by Samsung Electronics, with a 7.6% share; Texas Instruments, 4.8%; Toshiba, 3.9%; and STMicroelectronics, 3.8%.

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