Joe
they may downbin them less now :-))
Regards
-Albert
06:24am EST 13-Nov-00 Salomon Smith Barney (Jonathan Joseph 415-955-4998) INTC
The Semiconductor Beat
SALOMON SMITH BARNEY Industry Note
Semiconductors
The Semiconductor Beat
November 13, 2000 SUMMARY
* Brokers report they have begun to wrap up their
Jonathan Joseph Christmas season in trading of microprocessors, and
415-955-4998 expect a slower market now going into COMDEX and the
jonathan.joseph@ssmb.com holidays.
Dunham Winoto * Average Intel processor prices fell about 2% to a
415-951-1875 6% discount to list, while average AMD processors
fell by about 1%. The exception was AMD's popular
1GHz Athlon, which spike 17% on the week.
* DRAM prices continued to weaken, with 64Mbs
falling to $3.50 from $3.85 by week's end, and
128Mbs falling to $8.25 from about $8.90;
"unbranded" DRAMs were trading about 10% lower for
both.
* High-density Flash prices fell sharply last week,
with 32Mbs falling to $60 from $70; low-density
products were more stable.
MICROPROCESSORS: CLOSING THE BOOKS FOR THE YEAR
This year is shaping up to be weaker than the seasonal norm. There have been
some reports of a slight pickup in demand for processors in the last couple of
weeks. For example, Advanced Micro (AMD, 2S) suggested at their analyst meeting
last week that October was disappointing but that the first couple of weeks of
November showed a rebound. Some of our microprocessor brokers contacts are
reporting that activity in the last couple of weeks has been "active", but down
from higher levels seen in September and October. This week is Comdex, the next
week is Thanksgiving, and then only three weeks to Christmas. As one broker put
it,"some guys have already closed their books for the year." And after New
Year, we head into the seasonally weak period.
Prices on all Intel (INTC, 2M) processors fell by about 2% to a 6% discount to
list last week. In addition, some brokers were reporting Intel is cutting list
prices on some of its P-III processors this weekend, just two weeks since the
last price cut. The normal schedule for such price cuts has typically been
every other month. AMD's processors held up their prices a little better,
dropping about 1% on average from last week. There was a 17% spike in Athlon
1GHz parts, which could be an indication of a pre-Christmas rush.
Probably one of the more impressive points AMD made at its analyst meeting was
how well its manufacturing is going. AMD announced that it has demonstrated
test structures on its 0.13 micron process technology, and would begin
production of shrink versions of the "Pony family", the high-end Palomino and
low-end Morgan by Q4 of next year. The company expects to produce 1.5GHz
processors by Q2 and greater than that speed in 2H. As a side note, it appears
that the Mustang, the workstation processor, has been cancelled, to be replaced
by the already planned-for Palomino. Intel also announced that it has completed
development of its next generation 0.13 micron process technology, which should
generate processors running at 1.6 GHz, and above. Intel has talked about
producing a 2GHz Pentium 4 by Q2 of next year, which would put it ahead of AMD
in terms of processor speed, but not necessarily in overall performance.
DRAM SLAMMED AGAIN
Just when we thought that memory prices could not possibly fall any lower, they
did. We received quotes from brokers for "unbranded" 64Mbs at $2.80, an all-
time low and as much as $3 below tier-two suppliers' "all-in-costs". Spot
market prices in Asia for "branded" 64Mb-equivalent parts were $3.50 by Friday,
down from $3.85 the week before. We estimate that contract prices for 64Mbs are
running at $4.50-4.80. Meanwhile, 128Mbs fell late in the week to about $8.25
(2.3x premium over 64Mbs) from about $8.90, the price 64Mbs were selling for as
recently as July. There are also reports of "unbranded" parts in Asia trading
in the mid-$7.00 range. We figure 128Mbs are common enough now that they will
continue to move toward parity (2x the price) with 64Mbs. Overall demand
continued to be slow, and we were hearing fresh reports from brokers that the
inventory overhang at OEMs and suppliers may be worse than initially thought.
This came on the back of local Korean press reporting that at least one Korean
supplier was further converting capacity over to foundry and Flash memory. As
mentioned, DDR SDRAM was in the news again last week, first with AMD announcing
it would ship its DDR-capable 760 chipset in Q1, and press reports that DDR
modules from Samsung will ship in Q1, apparently three months ahead of plan.
Similar parts from NEC and Infineon (IFX, 2H) can be expected around the same
time. Meanwhile, Taiwan's leading memory makers, including Winbond, ProMos, and
Powerchip announced their support for DDR in place of Rambus DRAM, citing lack
of support for that standard.
HIGH-DENSITY FLASH TUMBLED AGAIN; LOW-DENSITY STABLE
Once again, the average "open market" prices for high-density Flash parts (8Mbs
and higher) dropped significantly, ending the week about 7.5% lower following a
much more modest 1.1% decline the week before. This past week 32Mbs took the
biggest hit, trading sharply lower from $70 to $60 or a 14% decline on the
week. At least one broker said a buyer was offering him $19 for his Intel 5v
TSOPs, compared to prices of about $80 only six weeks ago. Other lower density
Flash parts fared better during the week, with 16Mb TSOPs (the standard part
for cellphones) weakening slightly from $19.75 to $18.00, and 8Mb TSOPs from
$11.17 to $10.67. On the other hand, 4Mb and 1Mb SOJs were flat, as they have
been for the past four weeks, at $8.25 and $5.50 respectively. Supply in the
channel across most densities were reported to be generally good. According to
our Taiwan analyst, Andrew Lu, customers at one Taiwanese supplier have begun
to ask for more competitive pricing in the face of increased competition from
Korean suppliers. The same supplier also disclosed that 16Mbs accounted for
about 60% of total shipments, with 4Mbs following behind. At its Thursday
analyst meeting, AMD told analysts its own average Flash prices would increase
through next year as its average density continued to scale. Though demand
remains very strong, supply continues to come on at a rapid pace. AMD is
increasing its output from 2 fabs this year to 5 next. The Korean press reports
that Samsung is looking to reduce its dependency on DRAM by expanding its non-
DRAM output, including Flash, at its Onyang plant by 2002. And of course, most
other Flash players have announced a doubling of capacity from this year to
next. |
