"Market demand for processors was weak in July and in August," said Shane Rau, director of PC-related semiconductor research at IDC, in a statement.
PC vendors reacted to slowing demand by slashing orders for new PC systems, while also cutting orders for processors and other components.
"The whole supply chain is skittish," Rau added.
Intel, the world's largest chip maker, lost market share during the third quarter. The company took 80.4 percent of global market share, based on the number of processors, IDC said. Advanced Micro Devices (AMD), increased its share to 19.2 percent and Via Technologies took 0.4 percent of the market. Last year at the same time, Intel held 81.1 percent of the market, followed by 18.7 percent for AMD and 0.2 percent for Via.
IDC said it did not include processors based on RISC (Reduced Instruction Set Computing), such as those made by Arm Holdings, nor EPIC (Explicitly Parallel Instruction Computing) in the market share ranking.
Intel's share of the lucrative mobile processor market also fell in the third quarter. The company's market share was 85.9 percent in the quarter, down from 86.9 percent the same time a year ago, while AMD gained a bit to 13.7 percent from 12.6 percent. Via fell to 0.4 percent from 0.5 percent market share, according to IDC. The mobile market, which includes chips for laptops, netbooks and other devices, has been the hottest segment of the PC market in recent years in terms of growth.
IDC predicts the fourth quarter will be good to the processor market as PC vendors start producing devices with Intel's Sandy Bridge processors inside and AMD's Fusion processing architecture launches.
Next year, the PC system and PC processor market should gauge double digit growth in terms of shipments, IDC said, due to strong corporate purchases. Demand among consumers in developed nations will remain slow, the market researcher said, while corporations will see PC upgrades as a priority.
