To maintain market share and stop AMD’s PC market share growth, Intel leverages capacity and price.
An influential Wall Street company downgraded AMD after alleging that Intel had employed unfair strategies against its smaller desktop PC rival to prevent market share growth. Despite the potential long-term damage of these actions, Intel can currently outsell its opponent and prevent it from entering the lucrative high-end notebook market by taking advantage of its extensive manufacturing capability and capacity to provide competitive pricing.
According to SeekingAlpha, we have recently been more sceptical about future PC dynamics, which has been made worse by Intel’s recent semi-destructive behaviour. According to Stacy Rasgon of Bernstein Research, “Intel has been exploiting price and capacity as a strategic weapon, continuing to overship even amid larger industry breakdowns.” We think Intel decided it would be best if their parts were the only ones stored in the channel.
The Client Computing Group generated about 53% of Intel’s revenue in Q3 2022; as a result, this business unit needs to be protected at all costs. Although Intel’s most recent generations of client CPUs, Alder Lake and Raptor Lake, are fiercely competitive, it is getting harder for the corporation to maintain its client PC revenues.
First, by focusing solely on high-end CPUs for desktops and laptops, Intel’s competitor AMD snatches sales and profits from Intel’s CCG. This limits AMD’s ability to increase its market share.
Second, the vast majority of Apple’s machines are now built using the company’s own CPUs, making it one of Intel’s most prominent clients. Since Apple switched from utilizing Intel CPUs in late 2020 to using its own system-on-chips, Intel has lost 13% of the PC market. Apple had an increasing market share in Q3 2022, controlling 13.5% of PC shipments.
The PC market is also experiencing a decline in CPU sales, and Intel and AMD are becoming more competitive. It looks like Intel is preventing AMD from selling as many devices as it can by utilising its huge production capabilities, deep discounts, and strong contacts with PC makers.
Naturally, this will hurt Intel as well, but perhaps they are less concerned today considering that their financial situation is already poor, according to Rasgon, who was quoted by The Street (opens in new tab).
However, Intel seems to have a different opinion about how the PC industry would develop. At a recent presentation on the PC total available market (TAM) for analysts and investors, Intel claimed that the company is confident that the TAM for PCs is about 300 million units annually and expects that number to reach between 270 million and 290 million in 2023.
Additionally, Apple steals revenue from Intel’s customers like Lenovo, HP, and Dell, so it’s plausible that Intel is targeting Apple as well as AMD with its aggressive tactics. In the PC market, Intel competes against AMD largely effectively (at least based solely on unit share).
AMD appears to be hurting more right now than Apple, though. Although the company dominates the datacenter industry with its EPYC CPUs, AMD’s difficulties in the PC market caused Bernstein Research to lower its per share objective for AMD from $95 to $80.
