Server CPU market reshuffling? UBS Group AG: AMD (AMD.US) and Arm (ARM.US) eroding Intel Corporation's (INTC.US) market share in the first quarter.

UBS Group AG stated that Arm Holdings (ARM.US) and AMD (AMD.US) saw a quarter-on-quarter increase in server CPU shipments in the first quarter that surpassed Intel Corporation (INTC.US), continuing to gain market share from Intel Corporation. "The total shipment of server CPUs increased by approximately 6% (or around 19% year-on-year), outperforming the normal seasonal decline of about 7%. The shipment growth of ARM and AMD exceeded that of Intel Corporation, continuing to erode Intel Corporation's market share. By vendor, Intel Corporation's market share declined by about 370 basis points (to 54.9%), while AMD's market share increased by 230 basis points (to 27.4%) and ARM's market share increased by 140 basis points (to 17.7%)," stated the analyst team led by Timothy Arcuri. The analysts noted that ARM's market share increased from 11.5% year-on-year to 17.7%, while AMD's market share increased from 24.1% to 27.4%, and Intel Corporation's market share decreased from 64.4% to 54.9%. In the x86 market, in terms of revenue, Intel Corporation's share decreased by 490 basis points (to 53.8%), while AMD's share reached 46.2% - this is because Intel Corporation's server shipments declined by 1% quarter-on-quarter, while AMD's server shipments increased by 15%. The analysts stated that after a 21% year-on-year growth in server CPU shipments in 2025, they do not expect any slowdown by 2026, as capital expenditures in hyperscale data centers are expected to increase by nearly 81%, and agent-based AI is driving a substantial increase in CPU demand. "While all CPU architectures will benefit from the growth in AI demand in the short term, we expect hyperscale data centers to heavily adopt ARM architecture for head nodes and other applications due to its energy-saving characteristics. AMD, with its industry-leading core count and multi-threading capabilities, is able to run multiple sub-agents on a single device, better handling agent workloads, and therefore has a favorable position. We believe that with the launch of the Coral Rapids series, Intel Corporation's server roadmap will be more competitive, and we also believe that running agent workloads locally will catalyze growth in the PC market in the mid-term, benefiting Intel Corporation in the client space as well," stated Arcuri and his team. In addition, the analysts pointed out that in the first quarter of 2026, PC CPU total shipments (including desktops and mobile devices) fell by 13% quarter-on-quarter, 6 percentage points lower than the five-year average (down 7% quarter-on-quarter), marking the second consecutive quarter below seasonal growth, with a 6% year-on-year decline. x86 desktop CPU shipments fell by 26% quarter-on-quarter (normal seasonal decline is 19% quarter-on-quarter), while x86 laptop CPU shipments fell by 7% quarter-on-quarter (normal seasonal decline is 5% quarter-on-quarter). By shipment volume, Intel Corporation's desktop market share increased by 160 basis points quarter-on-quarter (to 61.6%), but laptop market share decreased by 160 basis points quarter-on-quarter (to 59.8%), despite the early launch of the Panther Lake processor, its overall market share still decreased by 80 basis points to 60.2%. AMD's shipment market share increased by 10 basis points (to 25.3%), and Arm's market share increased by 50 basis points (to 14.4%). In terms of revenue, the trends in market share changes are similar. The analysts noted that Intel Corporation and AMD both achieved a moderate single-digit percentage growth in PC average selling price (ASP) quarter-on-quarter, higher than the usually stable normal seasonal levels. UBS Group AG predicts that due to rising memory prices dampening demand for the year, global PC shipments are expected to decline by around 11% in 2026. "In particular, we believe that some pre-purchase occurred in the first quarter of 2026 before further price increases, and we expect lower-than-seasonal growth in the second to fourth quarters of 2026. Therefore, we forecast global PC shipments to be approximately 242 million units," stated Arcuri and his team. "Looking ahead, given the continued high memory prices, potential configuration adjustments, and a more normal replacement cycle after the transition to Windows 11, we expect a 2% year-on-year growth in PC shipments in 2027. Nevertheless, AMD will continue to directly gain client market share from Intel Corporation."