Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Greater Fool who wrote (65771)	7/16/1999 1:27:00 PM
From: tejek	Read Replies (1) of 1573930

Greater Fool RE: "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." Frankly I think the crux of the problem is that the elasticity of demand is not high for the PC's themselves. Even the low end in the US is becoming saturated. Just the fact they are offering free pc's for signing up with an isp is an indication of the oversupply. Taking the problem one step further is the relatively new issue of more costly fabs. There is an article in IBD, dated 12 July, that talks about the chip equipment makers and how they are starting to improve financially. However there is concern that the revival may be short lived if the pc chipmakers' financials in general don't improve as well. And of course the culprit behind the weakening chipmakers' financials is decreasing ASP's. Unfortunately the lower ASP's are occurring just as the cost of building fabs is increasing. If intc had not improved profit margins through reduced costs this quarter, profits would have gone down accordingly. ted

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