AMD and Intel: The Giants of the PC Hardware Market

Of all the corporate names playing in the personal computer (PC) hardware market, no two companies are arguably as well-known as Advanced Micro Devices (AMD) and Intel Corporation. That these two names are synonymous with personal computing is not surprising as these two companies manufacture the sheer majority of the microprocessors which are at the core of a consumer PC.

In 2008, Intel had a 76.7% market share of the general purpose microprocessor market (which includes desktop and server processors) to AMD’s 23.1% (Shilov, 2008). While Intel outsells AMD 3-to-1, the two companies combined ship 99.8% of the world’s desktop and server processors.

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Both Intel and AMD were founded from former employees of Fairchild Semiconductor. Intel was created in 1968 by Fairchild Engineers Bob Noyce and Gordon Moore while AMD was founded in 1969 by former Fairchild Executive Jerry Sanders and his team of employees (Singer, 2005). Today, AMD has quarterly revenues of $1.7 billion and Intel has yearly revenues of nearly $40 billion.

While both known for their processor products, both AMD and Intel started out manufacturing memory chips. All of this changed in 1971 when Intel developed its 4004 – a chip designed for Japanese company Busicom to be used in their line of calculators.

The 4004 chip integrated the following components – 16 registers for holding data, a program counter to keep track of execution, an arithmetic logic unit to perform numerical computations, a decoder for instructions, and a clock to keep its processes synchronized.

Together, these components allowed the single 4004 chip to decode instructions stored in external memory, instructions which could contain any number of numerical computations that the 4004 could execute. By designing a programmed flow of instructions, the 4004 could be used to perform any number of tasks, not only the calculations needed by Busicom’s calculators.

This made the 4004 Intel’s, and consequently, the world’s first general purpose microprocessor chip (“Intel's First Microprocessor—the Intel® 4004”).

Intel secured the right from Busicom to market the 4004 as a part of Intel’s product line up. As a standalone microprocessor, the 4004 was the birth of a revolution. Instead of building a computer for every task from scratch, an engineer can simply buy a 4004 chip, a memory chip and write a set of commands for the task at hand.

A 4004 can be thought of performing any task which the engineer could program. The 4004 was then followed by the 8008, a more powerful version of the 4004.

By 1981, IBM had chosen Intel’s 8088 as the processor to be used in its personal computer products. While the 8088 was the chip, IBM was essentially choosing not the 8088 but Intel’s x86 architecture as the basis for their personal computer family.

This was important for two reasons, first because the IBM PC was an open standard. Any company can build a compatible machine buy building it from parts which conform to the standard. The typical example is how a RAM module can be plugged out from a DELL machine and be inserted into an HP machine and work fine. Secondly it was because the use of x86 meant that only chips compatible with Intel’s architecture could be used with PCs (“Intel Corporate Timeline”).

To avoid overdependence on Intel products, IBM demanded that Intel should find a second supplier of chips. Because of this, Intel reaches out to AMD in 1982, giving AMD full access to its 286 chip technology and allowing AMD to manufacture 286 products. Thus in the beginning, AMD could only be thought of as an outsourced manufacturer of Intel processor designs (Singer, 2005).

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