PC processor shipments to drop in 2009, IDC says

IDG News Service - PC microprocessor shipments slowed in the fourth quarter and will continue to decline this year, according to an IDC survey released today.

Microprocessor unit shipments will decline by about 15% in 2009 compared to last year, according to preliminary numbers from the market researcher. Worldwide microprocessor shipments during the fourth quarter dropped 17% sequentially and 11.4% year over year, IDC said.

The research firm couldn't quantify the number of microprocessors shipped during the fourth quarter, but the fall was precipitous, said Shane Rau, an analyst at IDC.

"After hinting at a decline last September, the market fell off a cliff in October and November," Rau said.

The worldwide recession has slowed PC demand, which will continue to affect microprocessor shipments. Worldwide PC shipments fell 0.4% year over year in the fourth quarter of 2008, IDC said in study released last month. Shipments of netbooks totaled 10 million in 2008, but strength in netbooks was outweighed by slow or even declining sales of traditional laptop and desktop PCs.

Intel took a big chunk of the server, mobile and desktop chip space from its rivals, Advanced Micro Devices and Via Technologies.

Intel's market share in unit shipments was 81.3% in the fourth quarter, up from 80.8% share in the third quarter and 76.7% in the fourth quarter a year earlier. AMD had a 17.7% share in the fourth quarter, down from 18.5% during the third quarter and the 23.1% share it had a year earlier. Via Technologies held a 0.4% share during the fourth quarter, compared to 0.2% it had the previous year.

After dominating most segments, Intel is now looking for new markets to grow, Rau said. The company has its feet wet in the mobile space with chips like Atom for mobile devices, but the competition is intense from entrenched competitors like Texas Instruments and Qualcomm, Rau said. These markets are either flat or in decline because of the recession, which also poses a big challenge for Intel.

Beyond entering new markets, Intel on Tuesday announced it would try to provide faster chips by shifting to the 32-nanometer manufacturing process. The move should stimulate chip demand for Intel and help it gain market share over rivals, Rau said.

"Intel is enabling its customers to build better products rather than just cutting price," Rau said.

Intel already dominates the netbook space with its Atom processor, though Via could present some challenges. The small chip vendor can provide inexpensive chips for netbooks and enable new form factors, so customers may look at its chips as an Intel alternative.

As long as Via continues to ramp its C7 and Nano processors, it will inevitably gain some share, though the numbers are hard to quantify, Rau said.