SSB:MPU FLAT TO UP SLIGHTLY ON END OF SEASON BUYING
11/27/00 SSB Excerpts:
In a holiday-shortened week in the U.S., the average delta between list and
contract for Intel (INTC-$43.94, 2M) processors narrowed 2% to a 5% discount,
while Pentium prices increased by 1% as several parts saw better pricing. We
do not read anything in this tepid rebound other than end of season buying in
what has turned out to be a softer than anticipated unit market. Average AMD#
(AMD-$20.81, 2S) processor prices fell by 1%. The company's latest high-end
processor, the 1.5GHz Pentium 4, was trading at about $940, 15% above its
$819 published list price, while the 1.4GHz part was traded at about $850,
32% above its list price of $644.
P4 accelerated, Tualatin (next-gen 0.13-micron PIII) given a speed boost.
Intel has been informing its customers of its new processor roadmap over the
last couple of weeks, and though some of this has appeared in the trade press
and some Intel alluded to on its recent webcast, we thought it is important
enough to review with investors. 1) The primary point is that the P4-
Wilamette (0.18-micron) will be accelerated in 2001. We had anticipated about
15-20 million units shipped next year, a number that may now double. That
compares with our estimated total of 170 million processor units for Intel
next year. Given that the costs of producing the P4 are significantly greater
than producing the PIII-Coppermine (0.18 micron), and that the company will
subsidize Rambus DRAM to the tune of about $70 per system, there will be an
impact on gross margins, some of which is figured into our forecast of a 5%
decline in gross margins over the next year. The P4 will not overtake the
PIII in volume before 1H 2002. 2) It appears the company will now lean more
heavily on the PIII-Tualatin ("too-all-a-tin", 0.13 micron) which should
boost the speed of that hide-bound architecture from about 1GHz to 1.26GHz by
increasing the SRAM cache to 256Kb. Tualatin is expected to ramp in volume by
Q2-Q3 next year and will go first into the mobile segment. 3) We had expected
the next generation P4-Northwood (0.13 micron) to ship in volume by mid-year
2001. That now appears to have been pushed back to Q4, but will take the
speed of the P4 to greater than 2GHz.
850 largely replaced by Brookdale late next year. On the chipset front, while
the 850 (with Rambus memory interface) is expected to spread from the
Performance (above $2,000 system price without the monitor) to the Mainstream
2 (as low as $1,200 system price), by Q4 of next year, it should be largely
replaced by the Brookdale (SDRAM capable) in all but the Performance segment,
beginning in Q3 2001. By Q1 2002, the company expects to ship a DDR
Brookdale. Though Intel has agreed to the Rambus DRAM subsidy only through Q1
2000 thus far, unless prices fall sharply on Rambus DRAM, Intel could
conceivably spend $1.5-2.0 billion underwriting that memory next year. Even
VIA Technologies is not expected to have a P4-DDR SDRAM chipset before mid-2001. |
