<font color=red>that is a good one - "We conservatively estimate these
new entrants will contribute 15 million of the 30 million incremental
processor unit shipments next year - good chunk of those conservative15mil
incremental portion should come from AMD
Regards
-Albert
08:22am EDT 25-Sep-00 Salomon Smith Barney
.......................
MPU MARKET STILL SLOW
For those who were still in doubt, Intel's (INTC---47.94, now 2M) announcement
last week that revenue growth would be up only 3-5% this quarter, following
guidance of 5-10% ("most front-end loaded Q3 we have ever had"), and
expectations of 10-15% only a few weeks ago. Just to review what we think is
going on: 1) The microprocessor market is rapidly moving from shortage to
excess. That transition invariably results in a reduction in backlog as
customers cancel double orders. Intel's Q3 guidance, unfortunately, was based
on double orders that they could not see. 2) Just like the cellular handset
market, the PC market is growing at a pace slower than analysts and companies
earlier forecasts, and slower than component makers have built for. That
results in excess inventories, like those now being built in the DRAM market.
Though most component suppliers now expect a pickup by mid-October (we have,
after all been waiting for that pickup since mid-July), we believe the momentum
in the PC component area has begun to slow.
A slower market will not be Intel's only challenge over the next year. 1) We
expect Intel to have a bumpy transition from the PIII to P4, in no small way
because it is wed to Rambus DRAM. But this version of the P4 is also large,
hot, and expensive to produce. Some OEMs even believe the P4's performance will
lag PIII's at the same clock speed. 2) New competition is entering the field
with Via's Cyrix III (based on a Centaur core, which just shows you
microprocessors are marketing, marketing, marketing), likely to ship in
multiple millions of units next year, other mobile entrants, and Advanced Micro
(AMD---25.25, 2S), who is rapidly ramping Dresden. Over the next 18 months,
Dresden could double the company's microprocessor output. We conservatively
estimate these new entrants will contribute 15 million of the 30 million
incremental processor unit shipments next year, clearly not leaving that much
for Intel. Certainly, price will once again become an issue as Intel seeks to
prevent market share erosion.
This week, spot market prices for Intel microprocessors downticked 100 bp to a
10% discount from last week's already low mark of an 9% discount. Celerons
prices are still declining, with spot prices for 566-700MHz falling from a 7%
discount to an 11% discount to list last week. Overall, Intel microprocessors
traded at a 8% discount to list, down from a 6% discount a week ago. The market
is looking for the Christmas build to compensate for what has been a lackluster
2H sales so far in 2000.
DRAM PRICES CONTINUE FALLING
.................................... |
