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Politics : Formerly About Advanced Micro Devices
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To: Elmer who wrote (90033)1/27/2000 8:32:00 PM
From: Dan3  Read Replies (2) of 1583001
 
Re: With the $2+ Billion price tags of a modern fab you just can't afford to have them sitting around hoping there'll be a need for them (unless you're AMD of course!)...

That beautifully sums up the difference in management philosophies at the two companies. Time will tell which approach was the correct one.

Intel unquestionably saved some interest and depreciation costs Q4 99 and Q1 00 while AMD had some excess interest and depreciation costs.

AMD picked up Gateway and much of the retail market, Intel's cash mountain got a little higher as it aggressively pinched pennies.

The curious thing is that Intel could easily have maintained excess capacity - instead they saved a few bucks and put off expansion, while for AMD to expand was a struggle that put the company in jeopardy - but they did it anyway.

It's easy to forget that something like 2/3 of the units and probably 4/5 of the dollars are in the corporate market. Intel is continuing to do very, very, well. But they've handed AMD an open shot at the high margin business market, and all because they wouldn't pay for a "guard band" in capacity.

I doubt Willamette is going to do AMD any damage - remember that Athlon professional will have on chip cache and .10 gate length copper when Willamette ships in Q3. Also keep in mind that, per share, AMD made 2/3s the profits of Intel when AMD's ASPs were in the $80s and Intel's ASPs were around $200 and AMD had half its large FABs sitting idle while all of Intel's FABs were running flat out.

It's going to be a great year for both companies - but (Paul, are you listening?) AMD has more upside potential.

<VBG>

Dan
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