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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (65753)7/16/1999 12:09:00 PM
From: Greater Fool  Read Replies (1) of 1573939
 
>>too many chips for the marketplace to absorb

I may offer a slight extension: too many chips for the marketplace to absorb at the existing ASPs. The elasticity of demand for microprocessors is not that high. One of the things working hugely in AMD's favor is that concurrently with the launch of the K6 there were steep price declines in memory, hard disks, and video cards. These working together with declining microprocessor prices allowed price declines in PCs, resulting in significant increases in quantities demanded.

If those other price declines had not taken place, I think AMD would now be in even worse shape.

Note that AMD is going to be ramping up Athlon when those other price declines have already taken place. AMD is going to attempt to take a lot of market share away from Intel, and the price offered is going to have to be very low in order to accomplish this. The alternative is for AMD to offer significantly higher performance or significantly better marketing. The former is debatable, and I think the latter is so obviously not achievable I won't discuss it.

If you want to look for evidence of supply quantities exceeding demand quantities, look at Intel's and AMD's finished goods inventories over time. In recent quarters, Intel's inventories have been rising very rapidly. I expect that Intel's Q299 inventories will be higher yet again. This does not bode well for either company, but AMD is in a much less advantageous position.

Rgds,

Gerald
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