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AMD's Rapid Growth in This Market Is Here to Stay

By Harsh Chauhan – Sep 21, 2020 at 8:56AM

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The chipmaker has the upper hand over Intel in notebook processors, which have greater growth potential in the coming years.

Advanced Micro Devices (AMD -1.65%) has been making small inroads into Intel's (INTC -1.11%) central processing unit (CPU) dominance over the past year thanks to the success of its Ryzen processors. And now AMD's jabs seem to have turned into full-blown punches, as the latest market share numbers tell us.

Mercury Research estimates that AMD held 19.2% of the desktop CPU market at the end of the second quarter of 2020. That's the highest desktop processor market share that AMD has held in over six years. AMD, however, has made an even bigger dent in the laptop space thanks to its technological supremacy over Intel.

A representative image of a chip.

Image source: Getty Images.

AMD has made terrific advances in the notebook market

Mercury Research points out that AMD's notebook processor market share stood at 19.9% at the end of the second quarter. Two years ago, the chipmaker held just 8.8% of that market.

The gains in this space are a big deal for AMD, as notebook processors account for almost two-thirds of the market for consumer processors. What's more, sales of notebooks and laptops have surged amid the novel coronavirus pandemic on account of a shift toward online education, remote work, and video gaming.

More importantly, the notebook market is expected to sustain its impressive momentum in the coming years. According to IDC, notebook sales are expected to grow from 171 million units last year to 194 million units in 2024. On the other hand, desktop sales are expected to go south from 91 million units in 2019 to an estimated 66 million units in 2024.

So AMD's growing influence in laptop processors is good news from a financial standpoint, as this market is still growing and the chipmaker has a lot of opportunities to take more share from Intel. That's because Intel's Tiger Lake-based laptops, which are expected to compete against AMD's Ryzen 4000 laptop processors, have yet to hit the market.

Intel is trying to fight back, but AMD has an upper hand

Based on a refined 10-nanometer (nm) process, Intel is counting on its Tiger Lake mobile processors to stem AMD's growing clout in the laptop market. Not surprisingly, benchmarks provided by Intel suggest that its new Tiger Lake chips are going to be better than AMD's offerings.

Independent tests carried out by Tom's Hardware using reference designs provided by Intel also indicate that Chipzilla may have plugged the performance gap to some extent, and would be able to compete effectively against the Ryzen 4000 series. But AMD continues to hold its ground in multi-core performance.

Also, the unit reviewed was a pre-production design, and laptops based on the new Intel chips are expected to be out by the holiday season. So the results of the benchmark test should be taken with a grain of salt, as the true difference can only be seen when original equipment manufacturer (OEM) units using Intel Tiger Lake chips come out.

Intel estimates that it will have 50 Tiger Lake-based notebook models on the market by the holiday season. The chipmaker estimates that OEMs could launch a total of 150 designs based on Tiger Lake over time. AMD, however, already has an upper hand over Intel in this market, as it expects over 135 devices based on the Ryzen 4000 series processors to hit the market this year. As it turns out, more than 50 devices have already been launched so far, helping AMD make rapid strides against Intel this year.

Moreover, AMD is about to release processors based on the next-generation Zen 3 architecture soon. The new processors are expected to be around 20% more capable than the company's current offerings, and have faster clock speeds and improved efficiency. So it won't be surprising to see AMD step up its game in laptop processors next year once it brings out chips based on the new architecture, turning up the heat on Intel and maintaining its terrific growth on the back of more market share gains.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

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