Earlier this month, reports indicated that Intel had hit a roadblock, with its chip supply strained thanks to the manufacturer clinging onto the 14nm process for both its current CPUs and their respective chipsets. While this was expected to hinder system sales, OEMs seem to be turning to AMD to fulfil demand, projecting a significant increase to the company’s market share.
AMD has already experienced a jump in its shares this year thanks to the continued success of its first-generation Ryzen processors, the introduction of its second-generation and the impending architectural overhaul of Zen 2 next year. This trend has been further bolstered by Intel’s fumbling around its 10nm chips and continued use of the 14nm process.
Jefferies analyst Mark Lipacis has raised its target price of AMD shares from $30 to $36, citing a report from research firm Fubon which indicated that Dell and HP would be adopting an increasing amount of AMD processors for their PC systems throughout 2019. Considering the sizeable prediction of a 30 percent adoption increase, the analyst believe this will see AMD triple its market share, going from today’s 10 percent to 30 percent by the second half of next year.
“Fubon’s report that Intel will undersupply the PC market between 4Q18 and 2Q19 leaves us with higher conviction that AMD will report improving revenue, pricing and margins near term, and that is positioned to take share in the high end PC MPU and server market long term,” Lipacis said in a note to clients with the title “INTC Supply Constraints = Multi-Fold Benefits to AMD.”
Despite the strong forecast with “a market share of 70/30” not being out of the question for AMD, according to Lipacis, shares did dip 0.5 percent when the news dropped on Friday, 21st September. There’s still plenty of time for the company to capitalise on Intel’s supply shortage and noticeable lack of CEO, continuing the trend that has seen AMD stock appreciate “200% year to date.”
What’s seemingly good news for AMD has been a horror show for Micron, however, as the company explained that it was suffering as a result of the shortage, seeing its memory supply dwindle. These issues are unlikely to stop at Micron as Intel’s situation worsens, however other manufacturers have yet to address how the current shortage has affected them.
KitGuru Says: There’s no telling just how long things will continue to worsen for Intel, with predictions spiralling throughout 2019. Hopefully the company will manage to stabilise itself soon, potentially resulting in the most balanced CPU market we’ve seen in years.