Intel BK time analysis - a 2007 perspective
In 4Q05, Intel had a revenue of $10.2 billion. Intel released Conroe in 2Q06, and in 4Q06, its revenue is expected to be about $9.4 billion. Considering the world's CPU market has grown 10%, that's almost a 20% year/year drop. Still, I won't be surprised if Intel misses the mark by half a billion.
As I predicted, Conroe is the last straw that pushed DELL to AMD. With Conroe, Intel frags itself by 75%--overnite, 75% of Intel CPUs are sold at junk yard prices. George Ou used to tout a $125 Pentium D 805 as a SUV, recently, they were being sold at $88 and that was with a motherboard with Intel video.
The entire Intel strategy is governed by an uninhibited "I HATE AMD" mentality. I pointed out that such hatred has its roots in NAZI exclusivitism. Hector Ruiz has taken Intel to the court, and Intel got a lot to hide. Now that Intel can no longer coerce others not to AMD, it keeps cuttting itself in a vain effort to halt the rising power. But, the major batlle has alway been fought and AMD came out as the victor. The industry has set AMD64, HyperTransport and Torrenza as standards. Intel is expected to follow AMD's leadership this year. The question is whether Intel will continue to be around to follow AMD into the next year.
I have predicted Intel's BK time to be 2Q08, many don't believe me, some say it's crazy. But, folks, most of predictions came true and let's wait and see.
The situation for AMD now is that it sells every chip it can make. Since the world's PC market is nearly fixed in size[fn1]. With a declining ASP, Intel's BK time is merely a function of AMD's capacity ramp.
1) Almost all big OEMs are on board with AMD, no artificial restriction for AMD to gain market share.
2) AMD64 has become the standard.
3) 75% of Intel's CPU production is old junk. Almost 100% of Intel's IGPs are unsuitable for Vista premium.
4) The existence of Core 2 Duo further confirms that 75% of Intel's production is junk. Despite Intel's Core 2 Duo ramp in 2007, 75% of Intel will continue to be junk because of AMD's K8L ramp.
5) Given a choice, no one wants junk. Now people have a choice because of 1)
6) 75% of Intel is 60% of world demand (Intel has 77% of the market).
7) AMD's capacity is less than 60% of world demand but is quickly ramping to 55% by 4Q07.
8) Intel has about $4 billion net cash.
9) Once Intel's market share drops to 50%, it will BK in 2 quarters, due to losses in both CPU and chipset/IGP business.
10) Therefore, Intel will BK by 2Q08.
Intelers won't be able to argue on the merits. I predict them to counter the analysis above with "I hate AMD" talk just like what Patty did.
Footnote 1: Note that falling CPU prices will not boost PC sales by much. You have to remember a PC needs CPU+MB+RAM+HD+CASE. Even if CPUs are free, a PC would still cost about $300, more than a Nintendo Wii -- beyond the reach of 90% of the 3rd world.
posted by Sharikou, Ph. D. @ 1/07/2007 11:07:00 AM
31 Comments:
After reading this I thought it was April 1st... Oops is Sharikou's blog where every day is the Pretender's fools day.
INTEL a company that hasn't lost money in the past what 10 years, even thru the 2000 techn melt down.
Lets look at them today, built 3 300mm 65nm factories, 3 45nm factores in construction. 4 billion net cash even after all that capital investment, net 6 billion profits even after all that capital depreciation. All this while competing the past two years with netbust which didn't win a single benchmark.. at least any relevant one.
Now look at the last quarter, core2 ramped in all 3 300mm factories. 45nm Penrym already with silicon. Before AMD can even sample 65nm INTEL has 45nm. Core 2 wins eveyr performance and performance benchmark in the volume segments. On track with cost reduction to return to excess of 6 billion profits in 2008.
Sorry one little 300mm 65nm factory in Dresden isn't going to do much. Here is why, quadcore will be pushed down across the whole consumer market space. As such AMD will again be short one factory just to maintain market share in the consumer space. Without the consumer market AMD is finished.
The final reason BK is for AMD. Free cash flow for INTEL > 3 billion and < 900M for AMD. AMD simply can't afford to build another fab and thus their MS is destined to go down as we move to quadcore across teh board. I predict if we see quadcore 599 computers by end of 2007 which is what will happen... AMD will be luck to have 20% of the desktop/mobile space. Servers are irrelevant to the survival of AMD as a relevant forces.
No one cares about whether ist AM64 or INTEL's copy. All they care is 64 is supported in native x86 which both companies do. Its tiring but true consumers don't care. Sharikou can continue to be a fool but Joe Best buy doesn't care. If vista works and its a quadcore he'll buy it, 75%+ of them will be INTEL in Q4 2007. IN 2007 Q4 AMD will be sucking the depreciation of their Dresden fab, dropping prices on Barcelona like they did on the FX this year as Penrym cleans thier clock.
Happy April 1st Sharikou.
Sharikou, I would consider refining your points a bit and adding more description to describe your reasoning further. It has been observed that typical Intelers have low IQ and are unable to grasp basic concepts without having their hand held the entire way.
I wish Intel NEVER go to BK. If this appens, AMD (Highlander!) will make for sure the past Intel's conduct: crap CPUs at too high prices. I whishes both AMD and Intel long life, hoping in a third or even a fourth singer in the cpu chorus...
intcs cash may drop..their ASP may suffer..but I beleive they have credit line for 10 billion....
lay off the cannibis
Now I understand how your defense for your "higher degree" failed.. Look at your analysis, consclusions, and most importantly your equations!
Dude, stop defending idiot conclusions.. Move on!
justify %55 market share by Q407
Sharikou said...
"Despite Intel's Core 2 Duo ramp in 2007, 75% of Intel will continue to be junk because of AMD's K8L ramp."
Well it would seem you are very informed and I will ask you to let the rest of us in on your findings.
Can you post a link to a review of K8L vs Core 2 Duo?
"Sorry one little 300mm 65nm factory in Dresden isn't going to do much. Here is why, quadcore will be pushed down across the whole consumer market space."
This is a scortched earth approach to the problem that will hurt Intel. The cost of manufacturing the quadcore parts is very high and with declining ASPs, the Intel profit margin will get squeezed.
Not that the alternative is significantly better, but this is the situation Intel is in due to a vacuum in leadership.
Either way, INTC is not a growth company.
"No one cares about whether ist AM64 or INTEL's copy. All they care is 64 is supported in native x86 which both companies do. Its tiring but true consumers don't care. Sharikou can continue to be a fool but Joe Best buy doesn't care. If vista works and its a quadcore he'll buy it, 75%+ of them will be INTEL in Q4 2007."
You've almost got it right....The correct portion is that consumers don't care. The errenous part is about quadcore being their driving factor. Primarily the consumers in the volume space are driven by a mixture of features and price.
This leads to the predicament that Intel is in being that AMD has broken thru the OEM barriers, is expanding capacity, and consumers really don't care whether its AMD or Intel.
AMD is going to sell its volume one way or another and there really is nothing Intel can do about that. The horrendous Netburst vs. Timna decision has led to the Genie being released from the bottle.
The only real question is what will the ASP be for both companies and compared to their overhead, will they be able to survive and prosper. Intel clearly won't prosper since its going in the wrong direction. Surviving likely depends on how soon/late the BOD gets involved and starts deleting the upper rows of the Intel ORG chart.
Hopefully this happens sooner vs. later, but given that Otellini is Barret's 'boy', I don't recommend that anyone hold their breath.
Prove that you are confident and bet on this. Your money. Buy futures for Intel. You win - you earn money. You lose - you lose everything.
"7) AMD's capacity is less than 60% of world demand but is quickly ramping to 55% by 4Q07."
Not too long ago you predicted they would have ~80% capacity by end of 2007 (and 50% by end 0f 2006)...now you have vastly rev'd these "pulled out of the air" numbers down and they ARE STILL WRONG!
You also assume that Intel will remain with 75% "junk". This is a terrible anaylsis as they will be >50% Core2 by end of Q2'07 and K8l will not ramp as fast as you predict. At end of Q2 you will see maybe a handful of server chips and then toward Q4'07 you may start seeing K8l based desktop chips in minimal volume. Q3'07 desktop "launch" means show the chip off. (if you don't think this is the case look at the 4x4 "launch" and 65nm Dec'07 "release")
"But, folks, most of predictions came true and let's wait and see."
A quick scan of past blogs (let me know if folks want some more examples)
"I estimate a 4x4 motherboard will cost $150-$200." (June 06)
(I'm sure with your financial acument this was planning in large US currency fluctuations or do you consider BEING 2X OFF as a a correct prediction)
"The 4x4 tag will add a 20% premium to AMD chips, just like SLI cards sell at higher price." (June'06)
(How's that 20% premium working out for you?)
"I predict Q2'06 GAAP loss for Intel" (WRONG)
"The AMD 4x4 technology will give AMD 80% higher performance on 80% of the benchmarks." (Hmmm....)
"I predict Q3'07 operating loss for Intel" (WRONG)
"With 65nm parts, I expect AMD to achieve a clockspeed increase of 25%, sufficient to decisively defeat Conroe XE 6800 in all benchmarks by brute force." (WRONG, notice the "ALL BENCHMARKS")
"The result will be massive operating losses from 3Q06 onward. BK time is 5 to 7 quarters." (notice "massive losses" should be read to mean "profits". Also note this comment was made before Q3 earnings so 5-7 quarters would put BK from Q3'07-Q1'08)
"I expect AMD's 65nm parts to see 40% performance improvement over 90nm." (July 29)
"Going forward, with AMD's massive price cut and DELL alliance, expect its unit share to rocket." (July 27 - Does 2% gain validate skyrocket?!?)
"the 4x4 will outperform Con XE 6800+ by about 64%"
"Before that, AMD will sell two Athlon X2 AM2s frag the Conroe by 70% with the 4x4 platform." (How are those AM2's working in your 4x4 board so far?)
1) Almost all big OEMs are on board with AMD, no artificial restriction for AMD to gain market share.
you're wrong, All OEMs are alrady on board with AMD!
News is they have AMD inventory building up.
2) AMD64 has become the standard.
Yup AMD created a marketing useless POS standard that everyone has but no one is using.
3) 75% of Intel's CPU production is old junk. Almost 100% of Intel's IGPs are unsuitable for Vista premium.
With the same logic, Core2Duo made 100% of AMD's products old junk.
4) The existence of Core 2 Duo further confirms that 75% of Intel's production is junk. Despite Intel's Core 2 Duo ramp in 2007, 75% of Intel will continue to be junk because of AMD's K8L ramp.
100% of AMD's products are junk because of Core2Duo. Guess who's building up inventory?
5) Given a choice, no one wants junk. Now people have a choice because of 1)
Which is why the OEMs are building up inventories.
6) 75% of Intel is 60% of world demand (Intel has 77% of the market).
And it is sad that AMD's having a hard time competing in this "junky" space. Watch AMDs ASP fall!
7) AMD's capacity is less than 60% of world demand but is quickly ramping to 55% by 4Q07.
good, more inventory!
8) Intel has about $4 billion net cash.
As opposed to AMD's already billions in debt, having cash must be really awful! LOL.
9) Once Intel's market share drops to 50%, it will BK in 2 quarters, due to losses in both CPU and chipset/IGP business.
meanwhile AMD with market share of 24% will make profit? LOL.
10) Therefore, Intel will BK by 2Q08.
Of course.
Intelers won't be able to argue on the merits. We expect them to counter the analysis above with "I hate AMD" talk.
I hate AMD, therefore i am correct.
Sharikou is again showing the logic that got him his internet PhD.
Is it no wonder he got fired from INTEL and can't hold any real job.
Flawed logic, flawed allegiance, flawed hatred...
Poor Sharikou
FUD!!!!!!!!!! OK sharikou since you are so good at predictions then forget about 2008 and give us your prediction for Intel and Amd's earnings for Q4 2006. And none of that runrate fuzzy math crap.
This is fanboy flame bate garbage. For some real educated predictions go to scientia's blog. He has an article specifically about what may happen in 2007 without all this bk, runrate, frag, garbage.
http://scientiasblog.blogspot.com/
I use Intel procs - I also use AMD - so I'm not going to say I hate AMD. I don't - they just don't have the best product out there right now, and won't for the forseeable future.
You, sir, are a liar, a fraud, and a complete idiot.
this post by shaikou was designed to draw hits...nothing else...
I don’t believe Intel will BK, but I’m sure Goldman Sachs and BofA annalist are trying to stack the deck to protect there investment in Intel. They know Intel’s situation is bleak.
If AMD keeps selling all it can make as it ramps and K8L is as good as the hype; then its obvious Intel will suffer. Intel is putting its hopes on a successful launch of the Cloverton 2Q-3Q 07 which may be there trump card, but more likely Intel is bringing a knife to gun fight.
I’ve just become a bias player on this topic by picking up some AMD stock while it was cheap, so I am mostly wishfully thinking.
Ya gotta love this CPU war. Now, anybody can afford a powerful computer. The market place will decide the winner soon enough. The latest offerings from both companies are pushing the technology envelope to ever exciting extremes and I for one am thrilled with the new efficient silicon.
Intel deserves to have its ass kicked, but I hope it’s not a blood bath like the Dr Shariku predicts, else capitalisms mother of invention will be stifled.
This is a scortched earth approach to the problem that will hurt Intel. The cost of manufacturing the quadcore parts is very high and with declining ASPs, the Intel profit margin will get squeezed.
I was so focused on how AMD competes with Intel and if they can/will surpass them that I guess I can say I sort of loss focus on the industry as a whole.
Maybe your right anonymous! With Intel's production costs constantly going up, FAB expenditures, etc I should seriously concider buying PUTS on Intel...
"9) Once Intel's market share drops to 50%, it will BK in 2 quarters, due to losses in both CPU and chipset/IGP business.
10) Therefore, Intel will BK by 2Q08."
Hmmm....another case of Sharikou's lies/predictions unravelling...
Based on the above 2 statements, AMD will not achieve 50% market share until Q4'07 (as it wil take 2 additional quarters to have BK)...only problem with this is Sharikou has stated AMD will be at 50% market share by end Q2'07 due to the ridiculous amount of capacity AMD has brought online (not to mention the fact that AMD sells every chip it makes).
So if AMD is at 50% market share in Q2'07 then BK should be Q4'07, no?
So which of your predictions is incorrect Sharikou? The Q2'07 50% market share or the Q2'08 BK?
Anonymous said...
....picking up some AMD stock while it was cheap....
28 july,06
Purchase AMD @ 17.50
27 sept,06
Sold AMD @ 25.81
Been there, done that brother.
"The cost of manufacturing the quadcore parts is very high"
With dual-die solutions it is considerably cheaper. Of cource with it's 45nm true quadcore it might not be as cheap any more. Then again at true 45nm they'll probably still get more good dies per wafer. AMD with it's half-assed 65nm will tail that for quite some time.
“Golden words brother. I love my X2 3800+ and I'm a poor man.”
I just purchased an X2 3800 reconditioned unit from FRY’s (www.outpost.com) for $399 with windows XP media and free shipping. I’m going to save the Windows key for a future machine and load Linux to make it and inexpensive mail server and fax receiving machine.
Thank you for the kind words, brother.
"Is it no wonder he got fired from INTEL and can't hold any real job.
Flawed logic, flawed allegiance, flawed hatred... "
Do you really think that?
Looking at Intel position it doesn’t look good. Sharikou is right.
Intel besides a good mobile platform have been milking crap for the servers and desktop markets.
Comparing Intel offerings vs sis, via, uli, nvidia, ati and amd they aren’t that good that deserve the right to have 80%. Lots off crap from Intel.
The situation was much worst when Intel only had the P4 and PD and Celeron.
"Intel got a lot to hide"
Yeah, that's the ;anguage a Phd uses.
"I'm going to save the Windows key for a future machine"
You do know you can't use that copy of Windows on any other machine but the one you boutht it with? Blame MS and its monopolistic tactics for that :)
"make it and inexpensive mail server and fax receiving machine"
What will be the load on that box that it needs a dualcore high-end CPU? Even some crappy 200MHz thingie would be enough for home or small-office usage.
28 july,06
Purchase AMD @ 17.50
27 sept,06
Sold AMD @ 25.81
Get real.. any monkey can try and look smart. If you are really smart post your finacial statements. I'll wager you don't didn't own one stock and bought high and sold low you idiot.
Q4 and 2006 results will soon be in and all will ge clear and Sharikou will again be exposed...
This blog site is so entertaining.
Too bad Sharikou has no real job and most of you posters are in irrelevant stocker boy jobs
“You do know you can't use that copy of Windows on any other machine but the one you boutht it with? Blame MS and its monopolistic tactics for that :)”
Boot up in windows, register the key, make the back-up then you have to call them on the phone and tell them your changing machine on the new install.
“What will be the load on that box that it needs a dualcore high-end CPU? Even some crappy 200MHz thingie would be enough for home or small-office usage.”
Your right, however $399 for a more efficient (watts) machine is cheap enough. I will most likely find other uses for the box like extra back-ups and such.
Best regards
"28 july,06
Purchase AMD @ 17.50
27 sept,06
Sold AMD @ 25.81"
I'll do you one better, bought 20 put contacts(2000 shares) at strike of $40 in March, sold when price was ~25 in June.
So ~4000 investment turned in an ~$12000 net profit in 3 months.
Many thanks to the folks who were pumping up AMD in Q1 to a ridiculous (and unsustainable) stock price with a P/E of ~100 for a company which should have a P/E between 20-30...
I'm tempted to buy some calls now, but I think AMD will go sideways (stock price wise) for next 3-6 months.
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