The dominance of Intel

When talking about microprocessors, the first name that comes to mind is probably Intel, the world’s largest and highest valued semiconductor chip makers. Intel’s dominance in the computer and laptop CPU market is unparalleled and no competitor is even close to be considered a rival. So why is Intel such a dominant force in this market? Bill Holt, the general manager of Intel’s Technology and Manufacturing Group, pointed out that Intel is three-and-a half years ahead of its nearest competitor in the fabrication of three-dimensional features, an transistor architectural adaptation necessary to reduce the size of the microprocessors (Forbes, 2014). This is crucial for manufacturers to stay competitive as smaller space translates directly in, less power usage, lower cost and most importantly greater performance. In addition, as the the silicon manufacturing process becomes more complex, the cost of a silicon fabric has increased from roughly $3 billion to $12 billion, forcing competing players out of the market. The number of players operating with silicon manufacturing process has declined significantly.Fewer and fewer firms can afford to sit at the big table in silicon manufacturing. Source: Intel Investor Meeting 2014, Stacy Smith, CFO

To further emphasize the dominance of Intel, the nearest competitor in the CPU market, Advanced Micro Devices (AMD), has around 17% market share and has been declining every year since 2009. The primary reason that AMD still has this percent mark is due to their exclusive partnerships with players in the console industry, providing processors to the Xbox One and PlayStation 4. However, when looking at the PC desktop and laptop market, Intel’s unit share hit over 95% of the total industry sales in the last 4 quarters.

Unlike Microsoft, known for their monopoly practices in the computer software industry which involved numerous high-profile antitrust lawsuits, Intel has been dominating the microprocessor market almost completely under the radar besides a major dispute in 2009 with AMD. How is this possible? Well there is an old controversial story in the history of microprocessors involving the two above mentioned parties and goes like this. To stay out of the potential antitrust lawsuits from the regulatory authorities, Intel has deliberately kept AMD in the business by licensing them the x86 processors design. After one decade, AMD has grown into a small but reasonable competitor. And around the time Microsoft was sued by competitors, the United States and even the European Union, Intel could simply point out and say that they do have a legitimate competitor and is not a monopolist in the CPU industry. So whenever AMD is doing well, as in the mid 2000’s with almost 20% market share, Intel would just take back their share by aggressive pricing. And whenever AMD fell under the 5%, they would let AMD breath again, just enough to survive. Of course this is just a rumor and there is no hard evidence to be found, however the numbers don’t lie as AMD’s market share went up and down so many times that have to start wondering that there must be some truth to this story.



1. Kay R. Forbes Welcome. Forbescom. 2015. Available at: Accessed October 18, 2015.

2. Cunningham C. The rise and fall of AMD: How an underdog stuck it to Intel. Ars Technica. 2013. Available at: Accessed October 18, 2015.

3. Stevenson D. AMD vs Intel: which you should buy. PC Advisor. 2015. Available at: Accessed October 18, 2015.


One response to “The dominance of Intel”

  1. vadimgalaktionov says :

    The way Intel came to dominate the CPU market is a fascinating story for sure. To elaborate on your post, I’d like to dive a bit deeper into the historic rivalry between Intel and AMD.

    In the early years of Advanced Micro Devices, they marketed themselves as a second-source supplier for processors based on Intel designs. Essentially, major clients like IBM forced Intel to license their designs to AMD, as they did not want to rely on a single supplier. In 1985, Intel stopped licensing out their designs to AMD, and the company had to resort to reverse-engineering the chips instead. Due to the time it took AMD to release solid competitors to Intel’s products (up to 6 years in some cases), a Merrill Lynch analyst proclaimed the company “dead” (a remarkably similar situation to the one they find themselves in today).

    Their fortunes turned when AMD purchased a small startup called NexGen, who had been competing with Intel as well. Following the acquisition, the company was finally able to produce competing products (K6 and following models) of their own design. An important feature of those processors was compatibility with Intel motherboard sockets. This meant that customers could switch to the AMD processors without replacing motherboards and other parts. While behind the scenes AMD was struggling due to bad management, they were able to achieve a market share of around 15% during this period.

    Riding this initial wave of success, AMD released their line of Opteron server processors. The gamble paid off due to solid feats of engineering on their part, the biggest of which were 64-bit extensions. Basically, they allowed the processor to utilize more than 4GB of RAM, while still retaining compatibility with legacy (32-bit) operating systems and applications. In fact, the AMD64 extensions were licensed out to Intel and remain industry standard to this day.
    Opteron led to a successful consumer spinoff in the Athlon 64 line, which managed to outperform Intel consumer offerings while running cooler and more power-efficient.

    This brings us to the point you mentioned in your post, where AMD managed to capture market shares of 20% and up. Had they been able to capitalize on this success, we may have had true competition in the CPU market. Unfortunately, several factors prevented that. Examples include taking on large amounts of debt to fund premature investments, a product line that was spread too thin and overpaying for the ATI acquisition (Cunningham, 2013). Intel abusing its monopoly position could also have been a factor, as evidenced by the drawen-out lawsuit that was eventually settled. However, I tend to agree with former CEO Hector Ruiz’s assessment of the situation: “Now if you ask me what is AMD all about? It’s not obvious. I can’t tell you. When I was there, it was obvious.” In other words, lack of a clear competitive strategy has been AMD’s downfall.



    Cunningham, C. (2013). The rise and fall of AMD: A company on the ropes. Ars Technica. Retrieved 18 October 2015, from

    Cunningham, C. (2013). The rise and fall of AMD: How an underdog stuck it to Intel. Ars Technica. Retrieved 18 October 2015, from

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