AMD to Gain From Graphics-Processor Growth in Notebooks
AMD has a market share of close to 50% in the business of supplying discrete GPUs for notebooks. Going forward, the company will not only benefit from the growth in global notebook shipments, but also from an increase in discrete GPU penetration in notebooks. We estimate that the discrete notebook GPU business constitutes about 12% to AMD's stock. Let's take a look below at why this penetration will increase.
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Discrete GPUs in notebooks (sold as a percent of notebook shipments) increased from 25% in 2005 to 33% in 2011. We expect this to steadily increase to close to 46% by the end of our forecast period, close to the figure witnessed for desktop GPUs.
As the economy improves, gaming enthusiasts will have better ability to afford GPUs. Emerging markets also represent a tremendous opportunity to expand the GPU sales. The middle class income is growing and with wider availability of PCs and higher income, we expect more customers to purchase GPU loaded notebooks. China, especially, has a high GPU-attach rate and its GPU market is growing faster than the U.S. We expect Nvidia and AMD to get competitive on pricing or introduce more features on same pricing in order to boost their GPU sales.