Advanced Micro Devices Inc (AMD), the world's second-biggest maker of personal-computer processors, said it expects China to pass the US by the end of next year to become the company's biggest market by sales.
The chipmaker's revenue in the nation rose almost sevenfold from 2002 to last year, Sunnyvale, California-based AMD said yesterday in an e-mailed statement, without giving more details. China may become the company's biggest market by November next year, CEO Hector Ruiz said in the statement.
Chip sales in China may triple to US$124 billion in the five years to 2010 as electronics makers produce computers, game consoles and handsets in the country, researcher IC Insights Inc said.
AMD rival Intel Corp plans to build a US$2.5 billion facility in China, its first manufacturing site in Asia.
"The entire semiconductor industry has been seeking access to China because that's where the growth is going to be," said Stanley Leong, a semiconductor analyst with Deutsche Bank AG in Taipei.
AMD's sales in China, Taiwan and Hong Kong jumped 75 percent to US$1.48 billion last year, making it the company's biggest business by revenue for the first time.
The company didn't disclose revenue for China, the world's biggest chip market. The US was second with sales of US$1.4 billion, the company's 2006 annual report indicated.
AMD's sales fell to US$5.65 billion last year from US$5.85 billion a year earlier, the company's Web site said. The chipmaker reported a net loss of US$166 million last year, compared with a profit of US$165 million a year earlier.
Last week, Stifel, Nicolaus & Co upgraded AMD on expectations that the company will report its market-share gains and higher-than-forecast revenue in the second quarter.
"We believe market stabilization, the seasonally stronger back half and any positive commentary during the upcoming earnings call will be enough to encourage renewed investor interest," analyst Cody Acree wrote.
He raised his recommendation to "short-term trading buy" from "neutral."
AMD, which reports second-quarter results on July 20, has "likely retaken at least a couple of percentage points of share," the Dallas, Texas-based analyst wrote.
Acree said that he also expects AMD's second-quarter revenue to exceed analysts' estimates. He increased his fiscal 2007 revenue estimate to US$5.51 billion from US$5.35 billion.
Meanwhile, Intel Corp was upgraded to "overweight" from "equal weight" at Lehman Brothers, which said a new series of semiconductors designed for laptops may boost revenue and earnings growth.
The world's largest computer-chip maker may also benefit from improving margins and a share price that is "reasonable" relative to the company's earnings, analyst Tim Luke wrote in a note.
Price cuts on the new chips, called Santa Rosa, which are scheduled for later this year may increase demand, he wrote.
"We believe that Intel's new product traction is impressive, and note the ramp of new offerings as helping the company to gain further momentum ahead of what may be delays in volume production ramps from its key competitor AMD," he wrote.
The New York-based analyst also raised the price he expects Intel shares to reach from US$24 to US$28 and increased his earnings estimate for next year to US$1.35 per share from US$1.25.
Shares of Santa Clara, California-based Intel rose 1.5 percent to US$24.14 before the official open of US exchanges.
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