Thread,
I am surprised by how blind the market has been to Intel's announcement today of 820 slippage. Based on what is flowing out of Anand, Sharky, Ace on 820 bechmarks, it is clear that Intel was
resorting to expensive and risky RDRAM technology to close the gap with Athlon. (by the way, Anand, clearly broke some new ground here and deserves kudos)
Now the last minute hiccup has changed the scene dramatically. Let's look at how this can play out:
- Camino motherboards: Intel will probably have to scrap all these.
IMPACT: Say 1.5 Mu @ $50 cost = $75M
- RDRAM: Carry the inventory of all the RDRAM that was procured for these 1.5M motherboards. Probably need to take a write down as RDRAM prices collapse after this fiasco.
IMPACT: Unknown
- The 600/533B platform: This is now limited to the 810E chipset. To the extent that customers were relying on Camino, Intel needs to:
a) find new 810E motherboards that they did not plan ship them, OR,
b) remark and sell them as lower binned 100 MHz parts
IMPACT: Inventory bloat; Direct losses unknown, but probably several M$
- CuMine Launch: Intel would have to get a bunch of 2-slot Camino motherboards at least to get a few benchmarks, even though I doubt if anyone will use it for Christmas (or after that for that matter)
IMPACT: Potential delay to CuMine launch
- The CuMine platform: This is limited to BX and 810E now. Using 810E with CuMine would be a major segmentation collapse for Intel. But, the alternative is much worse. If intel does BXs, then CuMines built at 133MHz would have to be sold as 100MHz parts at significantly lower speed grades. And, even this will happen only if Intel can find the extra motherboards to makeup for the Camino scrap! Wow!!
IMPACT: Inventory bloat; Direct losses unknown, but several M$
- OEM liability: Some OEMs may be asking Intel to foot the bill for the motherboards that they have built based on Camino.
IMPACT: Unknown
- Design wins: It is a safe bet that more OEMs will now be considering Athlon as alternative for post-Christmas builds
IMPACT: Potential cancellations and weakness in backlog going forward.
- Xeon: The Xeon/Profusion problems don't help either.
So, in summary, what Intel confirmed today was that Q4 is likely to be bad. Intel will see a significant (if not massive) rise in inventories, will very likely take one time charges in excess of $100M, and will most likely have profits below (if not well below) expectations.
I wonder what the analysts who are upgrading Intel or the people running up Intel are thinking!
Chuck
P.S.: Unfortunately for AMD longs, Athlon platform has clearly not reached the maturity level necessary to exploit this situation. Yeah, they will get a little incremental business for AMD but nowhere near what they could have if the product was launched cleanly on time a couple of months back.
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