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Home » AMD gains market share in servers while x86 sales see a steep decline. Following a decline brought on by excess inventory and an economic downturn, the server CPU market is anticipated to bounce back.

AMD gains market share in servers while x86 sales see a steep decline.

Following a decline brought on by excess inventory and an economic downturn, the server CPU market is anticipated to bounce back.

Despite a sharp fall in server processor shipments, AMD is gaining ground in the data centre market by gaining significant CPU market share against the market leader Intel.

According to analyst firm Mercury Research, the processor market suffered overall in the fourth quarter of 2022 as well as for the entire year due to weaker demand, continuous inventory adjustments, and a deteriorating economy. Total unit shipments (client and server, excluding ARM) during 2022 were 374 million, and revenues totalled $65 billion, which is a 21% and 19% decrease from 2021, respectively.

Sales of server processors fell 4.2% from 37.7 million in 2021 to 36.1 million units for the year. Revenues fell 7.7% from $26 billion in 2021 to $24 billion in 2022. The steeper decline in revenue versus units, according to Mercury’s lead analyst Dean McCarron, is a result of falling average selling prices (ASP).


The overall CPU market share of AMD (excluding IoT and custom silicon) increased from 23.3% to 29.6% in 2021, while Intel’s share decreased from 76.7% to 70.4% in 2022. In the server industry, AMD’s overall market share increased from 10.7% at the beginning of 2022 to 17.6% by the end of the year, while Intel’s decreased from 89.3% to 82.4%. It’s interesting to note that the most popular server chips aren’t the most recent and advanced types. Instead, they date back a few generations. Again, it’s a result of the slower server market turnover when compared to the client side.

According to McCarron, “this is an industry where things enter the market and stay there for a very long time.” “With AMD, their market share didn’t start increasing for a long period. For years, AMD has maintained a high level of consistency in its performance, and it is paying off


Economic downturn and inventory are to blame for the fall:

According to Mercury Research, the majority of the cargo decline is the result of prior quarters’ excessive inventory shipping. Yet there are also other elements at work. For instance, CPU providers purposefully restrict shipment volume to aid in boosting inventory usage. According to the company, PC OEMs are also reducing their inventory due to macroeconomic concerns. McCarron ascribed the sales slowdown on the server side to the typical “down” phase of a data-centre buying cycle. Sales typically slow down for 6 to 8 quarters as customers install and deploy the servers that they purchased after 6 to 8 quarters of data centre purchasing.

McCarron remarked, “We had a pretty nice run up to 2021. Hence, roughly speaking, the cycle’s peak occurred in January 2022. And right now, we’re approaching the cycle’s lowest point, which will likely occur in Q1 [2023]. We’ll see, but it appears that the downturn will be a little bit worse than usual and that the cycle’s bottom will be reached in Q1.  Intel and AMD have new CPUs planned for 2022, however, since server market buying cycles are far longer than consumer buying cycles, McCarron does not think that the Osborne Effect—a concept that indicates dropping sales of a soon-to-be-replaced model—is at work. . “It’s not like customers hold off on purchases this month in order to make them next month because something fresh has come out. The planning that goes into [server buying] is extensive”, he added.


Moreover, McCarron noted that while server providers’ inventories are higher, they don’t actually keep a lot on hand. “The client inventory is most likely at around a fourth of the demand for all PCs. Server inventories are not even close to the level. It’s difficult to know what they actually are, but it’s probably a few weeks, not months of inventory.” After Q1, growth should resume, according to McCarron, barring any economic concerns. He anticipates that economic concerns will be of greater interest to server customers than the Intel vs. AMD controversy. Because of the economic concerns, he said, “I will say that it’s looking like this next cycle may not be as strong as the preceding cycles, so purchasing patterns may be a little bit cautious.”