Saturday, April 21, 2007

My comment on the AMD inventory situation

Hector made one mistake: he didn't drop X2 prices sooner.

But that mistake is now forcing him to take the corrective action which is not too late. By selling X2s at around $125 or even lower, the $900 million inventory can be cleared by the time of K10 launch. Since AMD basically has one FAB (FAB38 will ramp down soon), its switch to K10 will be rather quick.

The above moves will deliver multiple blows to Intel.

First, the fire sale of X2s will make all Core 2s tough sale. AMD solutions are far more attrative when priced competitively---AMD solutions always come with good graphics, sufficient for Vista. Expect Intel to be seriously wounded in this first round.

Then, once the X2s are cleared, come the K10s with crushing performance advantage. This second blow may prove fatal to Intel. Don't be fooled by Intel's profit numbers, its cash flow that matters. To stay competitive, Intel has to spend a lot of cash on new FAB technology. AMD on the other hand, has no problems using Chartered and TSMC...

As of today, you can get a DELL Desktop PC with dual core X2 3600+ and Nvidia graphics, loaded with Vista, all for $339.

5 Comments:

Blogger lex said...

The PhD farts another "Ph"ony "D"umb idea.

Lets see if AMD was to take their 900 million of inventory they've already booked at current value and do a fire sale their Q2 is going to go from a 400 million to about 800 million loss.

INTEL can easily respond as they are making huge margins on their mature 65nm process. Yields are good, speed is good and they are releasing new cheaper die shrink products. THey can continue to pump C2D celeron on 65nm while they ramp their 45nm factories with 500+ ASP to force Barcelona price down.

AMD is busted... they are going fab lite soon. Charter is illequiped to manufacturing anything but the bottom end. With the reduction in install of 65nm in Dresden the volume of Barcelona in late 2007 and all of 2008 is permanently reduced. I expect the capital install reduction will amount to a reduction in between 20 and 40 million CPUs at Dresden that my boy is some serious $$$ AMD lost.

To bad they blew their wad on ATI instead of a faster ramp of 65nm.

AMD BK in 2008.. LOL

10:47 PM, April 21, 2007  
Blogger IT Kitty Cat said...

in Q1, Intel Gained back all the market share they lost in 2006 to AMD. Wow man! just how bad did AMD do.

I did not think that AMD market share will go down as fast as it did. I think it will be a lot harder for them to repeat the good times of the last 3 years. Too bad!

11:18 PM, April 21, 2007  
Blogger Roborat, Ph. D. said...

Sharikou said: "Hector made one mistake: he didn't drop X2 prices sooner."

AMD has dropped X2's prices so many times that AMD realized that even if they pay their customers just to use their products, they still wouldn't want it. Any smart system builder knows that a PC with AMD in it doesn't sell. People in droves are looking for the "worlds best processor".

With $900M inventory, when Barcelona comes out, K8 will frag K10. AMD will frag itself with K8. And using Sharikou's own analysis of "fragging", market share loss, ASP downs, successive quarters of loses, AMD should BK in Q2'08.

2:26 AM, April 22, 2007  
Blogger Randy Allen said...

With $900M inventory, when Barcelona comes out, K8 will frag K10. AMD will frag itself with K8. And using Sharikou's own analysis of "fragging", market share loss, ASP downs, successive quarters of loses, AMD should BK in Q2'08.

Indeed. Just find all Sharikou's older posts on the subject, replace Intel with AMD and vice versa. Then replace Core 2 with K10 and Neburst with K8.

2:30 AM, April 22, 2007  
Blogger middle_of_the_road said...

"As of today, you can get a DELL Desktop PC with dual core X2 3600+ and Nvidia graphics, loaded with Vista, all for $339."

Can't be selling too well if Dell has lost marekey share to HP, AMD are building inventory and Intel are regaining market share (especially in US retail markey). :)

8:34 AM, April 23, 2007  

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