All, thoughts on why AMD price is going south.
I thought AMD will rebounce when Office Max announced to slae desktop PC using AMD K6. To the contrary, AMD share price drops disregard the NASDQ is up 17 points on last Friday.
What is going on with AMD share price recently?
Starting 2 weeks ago, a couple of companies start to announce product to target at the low end market of x86. This include Cyrix, IDT and even National Semi. Some INTC investors, including myself, start to worry the the effect on INTEL market shares. But those announcements seems to effect AMD share price more.
Looked back the Pentium, 486 market in the past, I found some lights and it might explain the share price of both AMD and INTEL in reaction to those announcements.
AMD has been sucessfully to accquire the low end market and support PC customers who are not ready to migrate with INTEL's newest technology.
AMD has been succesfully in chanlleging INTEL's processor at the same speed. AMD's 486, K5 and K6 are running surprising good when comparing INTEL counterparts at the same speed.
INTEL has a plan to roll out faster or new processor instead of improving current processor at the old speed to counter attack competitors in the history. (a recent report from PC magazine found the 300 Mhz P/2 system is far faster than K6 266 Mhz system) We had seen INTEL phase out 386, 486 and soon will be the classic Pentium. There is no doubt AMD will get more sales during the transitions, but the majority market seems to buy INTEL's plan to upgrade faster/newer processors.
Now, There are a handful of chip manufactuers are aiming for the low end market. This market mainly target for customer less critical to the processor speed. In the past, AMD has to compete with INTEL. Now AMD has to compete with Cyrix, IDT and National Semi. To INTEL, this is almost the same situations when she pased out 386 and 486, she will let AMD to finish the bone and skin. Even better, INTEL can sell Pentium at lower price from those already depreciated Fabs (Only if she realy care the market shares).
As far as INTEL can yield faster P/2 (300, 500 Mhz)and phase in .25u Micron technology, the threats from AMD and others are reduced. AMD might be able to get .25u replaced on time, but at the time AMD is able to ship 266 Mhz K6 in quantity, we will see 300/500 Mhz P/2 yield in quantity too.
Your comments are welcomed.
-Henry |
