SAN FRANCISCO — An ongoing shortage of Intel PC processors is opening the door for AMD, setting the stage for a battle between the two longtime rivals in the second half of the year, according to one market watcher.

A shortage of Intel processors that began last year — particularly at the higher end of the market — has constrained PC OEMs and prompted several of them to introduce systems based on AMD processors. Intel CEO Bob Swan said in January that the processor shortage could last into the second half of 2019.

Meanwhile, as Intel continues to struggle with yields at 10 nm, AMD is already forging ahead with 7 nm, announcing at CES earlier this year that it would have Ryzen 7-nm desktop CPUs available around the middle of 2019.

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“Amid Intel’s troubles, AMD has made a strong statement of intent with its 7-nanometer architecture announcements for CPUs and GPUs, and it is targeting new product segments, such as Chromebooks,” said Ishan Dutt, an analyst with market research firm Canalys, in a press statement.

On the whole, shipments of PCs are widely expected to decline once again in 2019. But Canalys expects combined shipments of desktop, notebook, and two-in-one PCs to rebound in the second half of this year and post modest growth of 0.4% compared to the second half of last year.

Canalys is currently forecasting that PC shipments for the full year will be about 259.7 million units, down 0.5% compared with 2018.

Source: Canalys

According to Canalys, an underlying strength in demand and business IT spending will remain in place as the shortage of Intel PC processors begins to ease in the third quarter of this year.

Dutt said that as Intel’s supply problems begin to ease, it will “set the stage for a tussle between Intel and AMD.”

Despite widely reported market share gains in desktop and PC processors late last year, AMD continues to lag Intel in total market share by a significant amount. According to Mercury Research, AMD’s processor market share was about 16% in the fourth quarter of last year, with its share of the notebook market about 12%.

According to Dutt, AMD has benefited by taking a greater share of the entry-level PC market as Intel moves to ramp up its supply of premium and server chips in the channel.

“AMD’s strength in the cost-friendly segment in parts of Asia Pacific and Latin America is a major factor behind why these regions are set to avoid shipment declines this year,” Dutt said. These are the only two regions that Canalys expects to avoid PC shipment declines in 2019.

The next few months will reveal AMD’s prospects for long-term success as the Intel CPU shortage comes to an end, according to Dutt. In countries where AMD has enjoyed recent share gains, “it will be vital to build up stronger retail, sales, and support capacity to cement its position,” Dutt said.

Source: Canalys quick poll, January 2019

Canalys reports that channel sentiment remains pessimistic in PC space. According to a survey conducted by Canalys, 57% of PC selling partners expect a medium to severe impact on their business in 2019 due to Intel shortages.

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