Is There Any Competition Between Advanced Micro Devices, Inc. (AMD) and Intel Corporation (INTC)?

Intel continues to go full throttle, and has laid out aggressive plans to introduce new chip architectures every two years in an effort to widen its lead over AMD in the processor performance race. In 2011, the firm launched its Sandy Bridge chips, which combine computer and graphics processors onto the same silicon, and further pushed the envelope of semiconductor fabrication technologies with the release of 22-nanometer (circuit size) Ivy Bridge chips in 2012. In the next few months, the firm is scheduled to release a new processor architecture, code-named “Haswell,” which has been designed with power efficiency in mind.

AMD historically managed to maintain a minor share in the market by providing a low-cost alternative to Intel’s higher-performance chips. But then in 2003-06, AMD took the lead in processor performance and gave Intel a run for its money. Riding on the strength of its Opteron server processors, AMD took significant share from its rival and added PC makers such as Dell to its list of customers. But the success was only temporary; AMD has since lost its processor performance crown to a resurgent Intel. Its immense scale allows the firm to maintain R&D levels that dwarf those of AMD and boast the most advanced semiconductor manufacturing technologies in the world. As a result, Intel is generally better positioned than AMD in the race towards building faster chips, which is the key to gaining share in the microprocessor market.

Conclusion

The semiconductor industry is cyclical, which causes fluctuations in Intel’s financial performance. Intel must hold on to its technology lead in order to maintain its position as the behemoth of the microprocessor market. Failure to do so would result in share loss to AMD.

The article Is There Any Competition Between AMD and Intel? originally appeared on Fool.com.

Ahsan Aslam Khan has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Ahsan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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