<font color=red>amd price cuts - looks like register rumors were right, after all
07:51am EDT 9-Oct-00 Salomon Smith Barney (Jonathan Joseph 415-955-4998) INTC
The Semiconductor Beat
SALOMON SMITH BARNEY Industry Note
Semiconductors
The Semiconductor Beat
October 9, 2000 SUMMARY
* Brokers continue to report that microprocessor
Jonathan Joseph demand is soft, with Intel spot prices falling
415-955-4998 slightly from an 11% to a 12% discount to list, the
jonathan.joseph@ssmb.com largest discount in memory.
Dunham Winoto * AMD evidently plans to cut prices sharply as soon
415-951-1875 as this week, probably to help introduce the new
"horse series" over the next couple of months, but
also an indication the market is not absorbing its
product as fast as it can produce.
* Overall DRAM prices remained flat on the week with
64Mb equivalents trading at about $6.00; contract
prices should fall from $8.00 to the mid-$6.00 range
in the next month, we would estimate.
* Low end Flash was softer while high-end remained
firm. Power semiconductors and analog lead times
appear stable.
MICRO DEMAND STILL KIND OF SLOW
Only 10 weeks left until Christmas, and still not much sign of the seasonal
pickup we have been waiting for since June. Like farmers in a drought, we look
to the sky for signs of rain, and have none yet. Meanwhile, most
microprocessors are growing in availability as lead times for even the higher
speed chips have come down from two weeks or more, to about a week. We still
expect some kind of a tepid pickup in the next couple of weeks.
Average gray market processor prices for Intel fell from an 11% discount to a
12% discount to list price last week, while PIII prices continued to trade at a
13% discount. Celeron prices have dropped substantially in recent weeks.
Average gray market prices for Celerons fell from an average 14% discount to
list to a 17% discount, and are now trading at a faster pace than PIIIs. Intel
has shifted wafers to Celeron in recent months as more capacity became
available. Pentium IIIs were, on average, trading at a 13% discount to list
prices last week. These are the greatest discounts to list price in memory, and
may spur Intel to make an interim price "move" before the next scheduled move,
which is October 29.
Meanwhile, we are hearing from brokers that Advanced Micro# (AMD, 2S) may soon
initiate substantial price cuts on its Athlon processors, with the cuts
possibly coming as soon as today (Monday, October 9). In part, the early cuts
are to front-run Intel's end of month move. In addition, it is likely to
prepare the market for AMD's new "horse series", the Mustang (server), Palomino
(desktop), and Morgan (value), which are to be introduced in the next couple of
months. Finally, it is another sign that the problem in the microprocessor
market is not supply, but demand. The cuts will be steep, brokers tell us. For
instance, a mid-grade 850MHz Athlon could drop by more than 50 percent from
around $350 to $165, while the low-end Duron 600 could move from $79 to $53. We
also have confirmed reports that AMD is poised to introduce the 1.2GHz Athlon
as well as the entry level 800Mhz Duron later this month, with systems
available for the critical Christmas buying period. An announcement regarding
DDR support for the products is expected to follow shortly thereafter. AMD is
also adding more OEMs who have historically been 100 per cent Intel, such as
the UK's Tiny (no comment), Germany's Vobis (a big one) and Micron Computer in
the US.
DRAM SPOT CONTINUES TO PAUSE
The one cause for hope is the fact that DRAM prices continue to hold firm in
the $6.00 range for 64Mb equivalents. Spot market prices for 64Mb PC100 SDRAMs
held their ground this week at $6.00 after they dropped more than $2.00 in
September. PC133 64Mb prices were also relatively unchanged from last week.
Contract prices should come down fairly quickly, moving to the mid-$6.00 range
in the next month, or so, we estimate. There was news last week that Hyundai
Electronics suffered a fire at one of its Inchon fabs, but our assessment is
that the damage was pretty minor, probably only a couple thousand wafers.
Micron made some very cautiously optimistic statements on its conference call
last week. For one, computer customers are still expecting a strong seasonal
pickup, though we have yet to see it. Second, the industry does not appear to
be significantly over-inventoried, which suggests there is not a lot of
structural overhang to force prices down again in the next couple of months.
Then we come to Q1, which is seasonally the softer part of the year.
LOW-END FLASH DOWN SLIGHLTY
Spot market prices for the higher density Flash memory chips, 8MB and above,
remained unchanged on the week, though 16Mb TSOPs have apparently fallen into
the $20 range, down from over $30 several weeks ago. Meanwhile, 4Mb prices fell
about $0.50 to $8.00 and 1MB prices also dropped $0.50 to $5.50 over the week.
Flash trading activity has been slow, according to one prominent broker.
Power discretes, according to one key distributor, are still tight with lead
times still stretched to six months for most suppliers. Lead times on catalog
analog products remain pretty firm between 8-12 weeks, depending on the part
and particular supplier. |
