Intel Loses Market Share, Suffers Revenue Decline in Q2, iSuppli Says

Following an increase in its revenue and market share in 2005, the world's largest chipmaker in the second quarter saw its semiconductor revenue fall by 12.8 percent sequentially and its share of the global chip market shrink to 11.4 percent, down from 13.2 percent in the first quarter. This is the lowest market share Intel has experienced since iSuppli began tracking quarterly semiconductor market shares in the first quarter of 2002. "Following such an impressive 2005, this represents a major reversal of fortune for Intel," said Dale Ford, vice president of market intelligence services at iSuppli. "However, Intel's recent actions show it understands the need to improve its efficiency and sharpen its focus on its core business of microprocessors and integrated circuits for computing systems." Intel was one of only two companies in iSuppli's Top-20 semiconductor rankings to experience a year-over-year decline in revenues during the second quarter. Only Japan's Matsushita Electric Industrial Co. Ltd. experienced a similar decline in revenue. iSuppli's quarterly semiconductor market share research of the leading 100-plus chip suppliers shows that total semiconductor market revenue grew by 1.2 percent between the first and second quarters of 2006. Revenue increased to $62.3 billion in the second quarter, compared to $61.5 billion in the first. Furthermore, the market experienced a healthy 11.4 percent year-over-year revenue increase in the second quarter, while the first half of 2006 registered growth of 9.4 percent compared to the same period in 2005. iSuppli expects growth in the second half of the year to weaken compared to the first half. Meanwhile, Hynix Semiconductor Inc. moved into the Top 10 worldwide semiconductor rankings in the second quarter, entering the charts at No. 7. The South Korean memory chip maker achieved 39.7 percent year-over-year revenue growth. This was the strongest growth among all of the Top-10 semiconductor suppliers, according to iSuppli. Hynix was not alone in posting more than 20 percent year-over-year growth in the second quarter, as Texas Instruments Inc.'s revenue increased 24.1 percent during the period. This allowed the U.S. wireless chip giant to strengthen its hold on the No. 3 position in the worldwide semiconductor rankings. The other fastest-growing companies among the Top-20 semiconductor suppliers were Micron Technology Inc., with 23.3 percent growth; Advanced Micro Devices Inc. (AMD), with a rise of 52.6 percent; Qualcomm Inc., up 47.9 percent, Broadcom Corp. with a 55.6 percent increase and IBM Microelectronics Inc with a 38.2 percent expansion in revenue. Infineon Technologies AG of Germany and its memory spin-off Qimonda AG in the second quarter captured the No. 11 and No. 13 rankings, respectively, with Qimonda's revenues only $5 million lower than No. 12 Micron in the second quarter. The Infineon/Qimonda combination helped European-headquartered companies deliver the strongest regional performance in the semiconductor industry in the first half of 2006, with sequential growth in the first and second quarters of 3.5 percent and 4.7 percent, respectively. Asia/Pacific-based companies posted much more volatile performance in the first half of 2006, experiencing a 6.6 percent decline in the first quarter and then rebounding with 5 percent growth in the second quarter, according to iSuppli. Despite this mixed performance in 2006, Asia/Pacific companies have increased their share of semiconductor market revenue dramatically during the past three years. The Asia/Pacific share of worldwide semiconductor revenue rose to 17.1 percent in the second quarter of 2006, up from 11.9 percent in the second quarter of 2003. Meanwhile, Japanese companies saw their overall semiconductor market share decline to 22.6 percent in the second quarter of 2006, down from 27.1 percent in the second quarter of 2003.