Chip market in excellent health as Intel comes to an agreement with Transmeta

Rising demand for laptops has helped drive the worldwide chip market to stronger than expected growth for the third quarter of 2007.

According to IDC’s Worldwide PC Processor 3Q07 Vendor Shares, microprocessor shipments grew 14.3 per cent sequentially to hit record levels in Q3 while PC chip revenues rose 14.8 per cent to $7.95bn (£3.86bn).

Leading the growth surge was increased demand for laptop processors, which jumped by 26.6 per cent in the quarter. Shipments for PC and server processors were solid in Q3 at 7.7 per cent and 4.6 per cent respectively.

Shane Rau, director of IDC’s semiconductors personal computing programme, said: “The third quarter of 2007 was the second quarter in a row to exceed expectations for PC processor unit shipments.

“We attribute the market’s performance to Intel and AMD’s aggressive pricing for their new platforms, which stimulated early demand from PC OEMs building PCs for the back-to-school buying season. However, we also believe that real end demand is there. OEMs are passing processor savings to consumers who, instead of buying cheaper systems, are purchasing more robust configurations, partially to support Windows Vista.”

In the vendor stakes, intense competition saw AMD secure a 23.5 per cent share of the chip market against Intel, a tiny rise of 0.4 per cent over Q2. Intel controlled 76.3 per cent of the market. In the mobile space, AMD’s share rose by almost two per cent to 18.9 per cent, with a modest 0.7 per cent rise in server chip shipments to 13.9 per cent.

In related news, Intel’s legal battle with small chip maker Transmeta has come to a close with the chip giant agreeing to pay out $250m to settle claims and patent disputes. Intel will pay $150m to start and $20m per year for the next five years. In return it gets a lifetime, but non-exclusive, licence to all Transmeta’s existing and future patents. The deal is a crucial lifeline for Transmeta, which has reported quarterly losses for almost two years and has made numerous job cuts.

“We are very pleased to have reached this agreement with Intel,” commented Les Crudele, president of Transmeta. “This will create value for Transmeta stockholders both by realising immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward.”