The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
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Advanced Micro Devices
is keeping itself focused on the growing mobile processor market driven by the surge in popularity for tablets, netbooks and other mobile-connected devices.
Although AMD didn't show much interest in the mobile processor market earlier, it has now realized the tremendous potential of this market and is ready to take on
Sandy Bridge and Atom processors with its Llano and Brazos platforms.
is similarly pushing harder to gain a meaningful stake of market share.
With the high-end tablet market being dominated by Intel, AMD hopes to leverage the tablet and netbook market with its lower power consuming processors.
While we anticipate AMD's notebook processor market share will remain stable at close to 15% over our forecast period, Trefis members predict market share to increase to 17% implying about an 6% upside to our AMD stock price estimate.
We currently have a Trefis price estimate of $9.63 for AMD's stock, above the current market price of around around $9.
Growth in Mobile Processor Market
According to IDC estimates, worldwide PC microprocessor shipment growth declined in the fourth quarter 2010, both quarter-on-quarter and year-on-year basis. However, shipments increased for the full-year 2010 by 17%, and revenues grew almost 27% to over $36 billion.
The firm reckoned the shift to mobile processors (which formed 54% of overall processor sales) as the reason for the rise in overall average selling price of processors. This indicates that there is a substantial market for not only low-end but also high-end mobile processors. In another study, IDC pegged the tablet and e-reader semiconductors market size at $3.3 billion in 2010.
AMD is pitching its Llano processor against Intel's Sandy Bridge. There are differing views on power consumption, performance, and graphic processing capabilities between the two processors. While AMD is betting on more usage of video and graphics, Intel still thinks that going with a more powerful CPU and putting relatively less emphasis on graphics is the way to go.
AMD has also seen solid demand for its Brazos platform for notebooks with sales crossing 1 million in its debut quarter. The company suffered a significant market share decline in notebook processors since hitting a peak in 2007, and it holds a much lower share in this segment compared to desktops. If AMD can effectively leverage the demand for tablets and other mobile devices through its Llano and Brozos processors, this could give a significant boost to its market share.
Our complete analysis for AMD's stock is
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