Despite a sharp decline in server processor shipments, AMD continues to gain ground in the data center, taking CPU market share from leader Intel.
Overall, the processor market took a hit in the fourth quarter of 2022 and throughout 2022 due to falling demand, continued inventory adjustments and a slowing economy, according to analyst firm Mercury Research.
In 2022, total unit shipments (clients and servers, excluding ARM) will be 374 million and revenue will be $65 billion, down 21% and 19% respectively compared to 2021.
Specific to server processors, full-year sales were 36.1 million units, a decrease of 4.2% from 37.7 million units in 2021. Revenue in 2022 will be $24 billion, down 7.7% from $26 billion in 2021. Revenue compared to sales volume as average selling price (ASP) declined.
AMD’s total share of the CPU market (excluding IoT and custom chips) rose to 29.6% from 23.3% in 2021, while Intel’s share fell to 70.4% in 2022 from 76.7% in 2021.
In the server market, AMD’s total market share increased from 10.7% at the beginning of 2022 to 17.6% at the end of 2022, while Intel fell from 89.3% at the beginning of the year to 82.4%.
Interestingly, the top-selling server chips aren’t the latest and greatest models. Rather, they are generations. This again reflects the lower turnover rate in the server market compared to clients.
“This is a business where products come into the market and stay in the market for a long time,” McCarron said. “For AMD, it took a long time for their share to start climbing. AMD’s execution has been very consistent over the years and it’s paying off.”
Inventories and economy to blame for downturn
According to Mercury Research, the main reason for the decline in shipments is excess inventory in previous quarters. But there are other factors at play. For example, CPU vendors intentionally limit shipments to help increase inventory consumption rates. Macroeconomic concerns are also prompting PC OEMs to reduce inventories, the company said.
On the server side, McCarron attributed the slowdown in sales to the common “down” portion of the data center purchasing cycle. Typically, data centers have six to eight quarters of purchases, and then sales slow down over a similar period as customers install and deploy the servers they purchased.
“We’re in really good shape in 2021,” McCarron said. “So the top of the cycle is pretty much January 2022. Now we’re entering the bottom of the cycle, probably in the first quarter [of 2023].” It looks like we’re going to have a deeper down portion than a typical cycle and hopefully in The bottom fell out in the first quarter, but we’ll see. “
Intel and AMD are gearing up for new chips in 2022, but McCarron doesn’t think the Osborne effect – a term that describes declining sales of models that are being replaced – will come into play because the server market’s purchasing cycles are much longer than those of consumers. many.
“It’s not like a consumer is going to say ‘Oh, there’s something new, I’m going to postpone my purchase this month and buy it next month.'” There’s a lot of planning [for server purchases],” he said.
McCarron said that while server vendors’ inventories have increased, they don’t have much on hand. “Customer inventories are probably about a quarter of total PC demand. Server inventories are nowhere near that level. It’s hard to know exactly what they are, but it’s probably a matter of weeks, not months of inventory.”
Barring any economic concerns, McCarron said we should see growth return after the first quarter. He expects economic concerns to capture server buyers’ attention more than the Intel-AMD debate. “I would say the next cycle may not be as strong as past cycles due to concerns about the economy, so buying behavior may be a little cautious,” he said.