Paul and all,
Sorry if this has already appeared. It is 10 days old from Merrill Lynch and Joe Osha.
Excerpt: AMD reduced to a seemingly desperate strategy which, despite impressive specs for Athlon on paper, has little chance of success.
<<Semiconductor Industry - Reiterate Buy rating on Intel. (Joseph Osha)
Recent changes in market, specifically National and IDT departing from the PC MPU business, and AMD increasingly moving away from low end, raise questions of whether competitive vacuum may be emerging at the low end of the MPU market. Dan Heyler believes that significant barriers exist, both in terms of foundry willingness to manufacture and ability to bring large OEMs on side, to success of Cyrix and IDT/Centaur under new Taiwanese ownership. Although AMD will continue to make K6II and K6III parts, incremental volume from that company now likely to come from K7/Athlon - expecting AMD to draw down K6 family volumes over next three quarters. This is good news for Intel - seems increasingly likely that aggressive pricing on Celeron may ease. Question now is whether AMD can ramp Athlon, announced yesterday. We were surprised at stock's reaction given substantial challenges that AMD faces, and want to reiterate those challenges. First - manufacturing successfully at 0.18 Micron at 550 Megahertz and above, something Intel has yet to manage. Second - ramping copper next year, something that IBM and Motorola have struggled with. Third - convincing OEMs to buy AMD in the non-value segment, where reliability and deliverability are just as important as price. We are not convinced that AMD can achieve this. In sum? In our view Intel, competitive position now looks as good as it has been for some time. Low end of market, which is where the threat lay, has cleared out. AMD reduced to a seemingly desperate strategy which, despite impressive specs for Athlon on paper, has little chance of success. We reiterate intermediate and long term buy ratings on Intel.>> |
