Market Overview

Semiconductor Shipments Are Weak (Because Of PCs)


In a report published Monday, Citigroup analyst Christopher Danely noted that a Mercury Research study into microprocessor shipments in the first quarter declined 17 percent from the previous quarter to 71.3 million, marking the lowest shipment total since the first quarter 2009.

Danely said that weakness in PC demand and large inventory reductions in the supply chain resulted in the decline in shipments. The analyst added that PC MPU shipments are expected to decline a further 2 percent in the second quarter, below normal seasonality of up 4 percent due to additional inventory reduction in the supply chain and no signs of PC demand weakness improving.

Despite the decline in shipping, Intel Corporation (NASDAQ: INTC) saw its overall microprocessor unit share increasing 40 basis points to 90.0 percent in the first quarter driven by gains in the desktop and server segments. The analyst stated that Intel's market share in the quarter marks its highest on record, surpassing the previous high of 89.6 percent in the fourth quarter 2014.

"We expect Intel's unit share to remain elevated at more than 90 percent throughout 2015 driven by its superior performing Broadwell processor," Danely wrote. "We believe Intel has a sizeable advantage over Advanced Micro Devices, Inc. (NASDAQ: AMD) in both performance and power as Broadwell is manufactured on 14nm, while AMD's latest Carrizo platform is based on older 28nm technology."

However, the analyst stated that Intel may be "too bullish" in its second half 2015 outlook. Intel's flat year-over-year revenue growth in 2015 requires a 17 percent growth in the back-half of the year, well above the average growth rate of 5 percent. As such, shares remain Neutral rated with an unchanged $32 price target.

Shares of AMD remain Sell rated with an unchanged $2 price target as the company continues to lose market share and money in its core PC processor and graphics segment.

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Posted-In: Broadwell carrizo Christopher Danely Citigroup Mercury Research MicroprocessorAnalyst Color Analyst Ratings


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