Chip Market Rebounds, PC Sales Lag In 2Q - InformationWeek

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Chip Market Rebounds, PC Sales Lag In 2Q

Intel's overall PC processor shipments increased 12.5% while AMD saw a 1.8% rise.

Global shipments of PC microprocessors increased significantly in the second quarter, but the rise was due to Intel and hardware makers replenishing inventories and not a result of higher PC sales, a market research firm said Thursday.

Intel's overall PC processor shipments increased 12.5% quarter-to-quarter in the second quarter, while Advanced Micro Devices saw a 1.8% rise in the same period.

Shipments grew by 10.1% from the first quarter, compared to a 10.9% decline from the fourth quarter of 2008 to the first quarter of 2009, IDC said. Market revenue rose by 7.9% and fell by 11%, respectively.

Compared to the same period a year ago, market revenue declined 15.3% in the second quarter, IDC said.

Intel's growth was helped by shipments of its Atom processors, which are used primarily in netbooks, inexpensive mini-notebooks that have been the hottest-selling segment of the PC market during the current recession. Atom shipments rose 34% quarter-to-quarter. The chips represented 25% of Intel's mobile PC processor shipments in the second quarter and 8.1% of revenue from laptop chips.

IDC believes Intel's significant increase in shipments and revenue in the Asia/Pacific region, where many PCs are made, combined with the fact that AMD's overall shipments were about flat "indicate that the PC processor market didn't recover in 2Q09," IDC analyst Shane Rau said in a statement.

With chip inventories replenished, future market growth would depend on PC sales increasing. But because the latter market is still in a weak condition; IDC did not opine on whether the processor market is now in recovery mode.

"IDC believes that ODMs (original design manufacturers) and OEMs (original equipment manufacturers) have balanced out their inventories and so we can't rely on inventory replenishment to drive market improvements," Rau said. "Instead, we can only rely on what actual end (PC) demand really is, and that means we have to be cautious not to be over-exuberant that, say, the traditional back-to-school PC buying season will materialize into a bullish second half. It won't."

Indeed, in a separate report released last month, IDC said it expected to see the PC market return to growth by the end of the year after several quarters of decline. Nevertheless, market revenue would be dragged down to lower levels as a result of consumer preference for inexpensive PCs and a lack of business spending. Companies are not expected to start buying again until next year.

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