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Politics : Formerly About Advanced Micro Devices
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To: Scumbria who wrote (63713)6/29/1999 1:16:00 PM
From: Charles R  Read Replies (1) of 1577014
 
Scumbria,

I am more in sync with you and Paul than Kash on this one but still am not quite sure what this could mean going forward. If this deal gets done, CPU biz might not be the place for investments for a long term player.

VIA/TSMC is a killer combination if they can get out socket370 part with the Jalapino core. TSMC, in addition to having state-of-the-art process, may also have the lowest cost structure in the industry today. In addition, there is plenty of cheap assembly capacity in the far-east. Folks like Intel/AMD pay a premium on assembly because they prefer solid suppliers instead of focussing on the price-de-jour but Taiwanese are experts at exploiting every small price move in the market. And, if you pump enough chips out there ASPs will collapse - first low-end and then high-end. Look at what 3Mu CYRX parts did this Q.

VIA/TSMC are not stuck with fab depreciation issues like AMD or Intel. They can incrementally ride on the excess capacity. That is a pretty powerful dynamic. All else being equal (I am not saying they are but just assume), low ASPs favor the low cost competitor.

If I were Intel, I would definitely take this business off the street - couple of hundred million dollars is chump change and probably as good an insurance as one can get.

Chuck
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