Friday, April 07, 2006

AMD must have the aspiration for #1

You can judge a people's intelligence from their writings alone, that was how people concluded that Richard Nixon had an IQ of 155, Bill Clinton had an IQ of 182, without doing an IQ test.

Even though Joe Osha downgraded AMD to sell at some point, I said repeatedly that he is one of the smartest. I can see that just from his writings, the ability to learn and the ability to correlate discrete pieces of information into a logical and coherent conclusion are essential measures of intelligence.

So, it's no surprise that Joe Osha has come to similar conclusions as mine: 2Q06 will spell the start of ice age for Intel.

I previously projected operating losses for Intel from 3Q06 onward, I had revised my projections to include the possibility of a 2Q06 operating loss. I talked about inventory build up here, about NGMA effects here, about AMD's shift to higher end (increase of ASP) here, about Intel's capacity here, about AMD's five generation lead over Intel here, about Intel's Bensley paltform(with Dempsey, Woodcrest) here... The list can continue, basically, Joe Osha now agrees to most of them.

But still, Joe Osha thinks Intel has a lead in mobile. However, if he reads this about the 53 watt Core32 Duo and the coming Turion 64 X2 as well as the delay of Merom, he will change his mind, soon if not now.

Joe Osha summed up the situation for Intel:

Over the longer term, it’s fair to ask whether Intel will ever return to the dominance it once enjoyed... The company’s failure to acknowledge and react to clear cues from the marketplace opened up a competitive opportunity for AMD in servers that it will take years, if ever, to reverse. Even now, our checks suggest a disconcerting lack of urgency at Intel given the problems that the company faces.

In my simple and humble words:

Intel doesn't know it's dead because it doesn't have a brain.

My concern is: AMD's CFO has failed to correctly project demand twice, once in 4Q05, once in 1Q06. Twice, AMD benefited its competitor by handing CPU sales over to Intel.

Can AMD leadership wake up from an underdog mentality and strive to become the #1 global x86 vendor, by the end of 2006 if possible?

If AMD aspires to being #1, the time to plan for it is NOW. Intel is most vulnerable till 4Q06. It's time for the kill.

AMD's statement that it will only double 2005 capacity by 2008 saddens me.

PS: to keep this article at the top, I modified its date to April 19 -- the Intel capitulation day


Anonymous Anonymous said...

I think that mentally they are ready to lead because they lead for last 24 months in technology but the capacity is the most important issue and AMD is not able to handle this. We assume that from technology point that AMD has another CPU construction like K8L etc. HT is the powerful transport advantage. Still from capactity point of view AMD is able to handle 25% of the market, maybe 35% but not 50%. Counting 30.000wspm as 21.4 of the market demand, AMD needs another 40.000wspm to reach 50% of the market.
Now according to you and AMD official statements has 30 from Fab30, 17 from Fab36 and will get 5k wspm from Chatered. 52k is not 70k, so to reach 50% they should convert both fabs to 65nm. And this is not going to happen soon because it costs a lot of money...

12:28 PM, April 06, 2006  
Blogger Sharikou, Ph. D said...

FAB30 is 200mm. FAB36 is 300mm. One 300mm wafer produces more than 2X dies than one 200mm wafer. 17,000wspm at FAB36 + 5000wspm at Chartered FAB7 is more than equivalent of 44000wspm at FAB30. Even at 90nm, AMD can take over 50% of the market. See my calculations.

What I sense is AMD is in a passive mode. They are sitting there waiting for customers to come over and ask for chips. But, since customers think AMD is capacity constrained, they won't ask for big number of chips in the first place. What AMD should do is tell the customers that they can produce X million chips if there is a demand.

1Q06 was clearly another failure to project demand. FAB36 started on ct 14, 2005, so why finished CPUs only showed up in March instead of Feb? I can guess that the CFO said "no demand, 1Q is a down Q, we are going to build inventory, so slow FAB36 down"...

12:53 PM, April 06, 2006  
Anonymous Anonymous said...

Bill Clinton does NOT have an IQ of 182

He thinks with the wrong head anyway:)

2:42 PM, April 06, 2006  
Anonymous Anonymous said...

What I remember on the conference one of AMD reps said that 300mm yelds are similar to 200mm and they are improving the process.
Second if your calculation is true, AMD is able to reach 63% of the market because Chatered+Fab36 can produce "more than 44k wspm in FAB30."
Together it is performance of 3xFAB30. Not mention next production lines in Fab36, Chatered production increase, 65nm....
I think that they are targeting 35% of the market. That's a 50% increase and this is huge step forward the balance 50/50

3:48 PM, April 06, 2006  
Anonymous Anonymous said...

I hear Intel has more Chemical engineers than EEs !! ..Probably they can keep themselves alive by doing some contract work like Chartered does !! (LOL)

5:25 PM, April 06, 2006  
Blogger Sharikou, Ph. D said...

AMD stated in their press release that FAB36 is running at mature yields at 90nm. AMD's yield at 90nm is over 95%. I have done an estimate with 13000wspm at 90nm, you can try it for 22000wspm.

5:56 PM, April 06, 2006  
Blogger Sharikou, Ph. D said...

Jech! Please read what I wrote and make sure you got the points, such as whether I used dual core or single core for capacity estimate. I deleted your comment because it was pointless and wasting too much space.

7:48 PM, April 06, 2006  
Anonymous Anonymous said...

Reasons for delaying FAB 36 start up:

1. Starting at mature yields reduces impact to margins.

2. Japanese will only start using AMD after the end of their fiscal year. Thus they will start this quarter (Q2). We hope. This means Sony and NEC and the others. They should make a big step in demand.

Remember that FAB 36 puts in a gonzo depreciation of $200 mil a quarter into the equation. Starting it with mature yields and the Japanese as customers will reduce it's impact. Methinks that the AMD management knows what they are doing, unlike Intel. Rome wasn't built in a day. As much as we would like the market share to rise astronomically Q on Q it's going to happen as fast as it happens. The hamster is running his wheel as fast as he can. Nonetheless it is a pretty amazing shift in marketshare.

12:43 AM, April 07, 2006  
Anonymous Anonymous said...

Maybe AMD is number one but dosn't know it yet.?

see here

12:49 AM, April 07, 2006  
Blogger DBA said...

AMD can tweak capacity on FAB30, I guess they can do this to FAB36.

4:48 AM, April 07, 2006  
Anonymous Anonymous said...

Why capitulation on April 19? :-)

4:15 PM, April 08, 2006  
Anonymous Anonymous said...

Intel releases it's earnings report on April 19th.

4:20 PM, April 08, 2006  

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