AMD vows to break Intel monopoly

About one in every four processors shipped today are manufactured by AMD

AMD must grow its market share in the microprocessor market to 30 per cent to reach a positive cash flow, chief executive Hector Ruiz said at the Morgan Stanley Technology Conference in San Francisco.

"We need to get to share numbers that are indicative of breaking the monopoly. We need to get about 30 per cent share to sustain [our business]," he said.

About one in every four processors shipped today are manufactured by AMD. The CPU market is dominated by Intel.

AMD issued an official warning on the day of Ruiz's presentation that its earnings will fall short of projections. The previous guidance put revenue at $1.6bn to $1.7bn. The company did not provide a new revenue projection.

Ruiz was quick to dispel any fears over AMD's long-term future. The relative revenue drop was caused by channel partners postponing orders and will only have a temporary effect.

AMD traditionally sells most of its chips through channel partners and has only recently expanded its ties with computer makers.

As demand from these original equipment manufacturers (OEMs) grew at a faster pace than previously expected, AMD had to limit the number of chips that it could make available to channel partners.

Those partners temporarily increased the number of chips that they purchased from AMD competitors and it will take them a few months to switch back.

"We could not recover as fast as we would like. As a result we will miss the projections for the quarter," said Ruiz.

"That issue should be alleviated this year. We are now serving OEMs and the channel as always before."

Ruiz remained optimistic about the overall growth potential for the x86 chip market. Although he does not expect a short-term impact from Windows Vista this year, he expects that Microsoft's latest operating system will push chip sales growth to 20 per cent.

"As Vista becomes pervasive and better understood, more people will be embracing it," he said.

Analyst firm IDC has projected that PC and x86 server sales will grow by 10 per cent in 2006, 11.3 per cent in 2007 and 10.9 per cent in 2008. 

Ruiz expects a sales boost from new project categories such as the forthcoming One Laptop per Child project, as well as increased adoption of computers for home entertainment and medical applications.