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Politics : Formerly About Advanced Micro Devices

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To: Elmer who wrote (93099)	2/14/2000 10:54:00 PM
From: Dan3	Read Replies (3) of 1571281

Re: Intel can still play the price card. They can respond to AMD's price war by matching AMD's prices... They sure can. Intel had ASPs of about $200 last year. AMD has said that in their strategic planning, they expect their ASPs top out at $100. Intel sold about a 100 millon CPUs last year. If Intel's ASPs had been $100 instead of $200, revenues would have been $10 Billion less than they were - costs would have remained the same. Intel would have lost several Billion dollars for the year. But you suggest that Intel may match AMD's prices - so let's say ASPs on both sides get down to $75. With two FABs running to pay the costs of two FABs AMD will make modest profits with an ASP of $75. At $75, Intel would lose close to $5 Billion dollars a year. If AMD can get an ASP of $100, it will make record profits. The price war is coming, don't doubt it for a minute - just give careful thought as to which of these two companies is best positioned to prosper in such an environment. Dan

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