John F, re:[If the market doesn't grow then] "AMD (and it's shareholders) are screwed also, probably more, because the ASP's will drop substantially."
Get it through your head, AMD is the low cost producer. Intel, with a $180 ASP for its CPU's and those were mostly cheap-to-make P3's had an operating profit margin of 642/6677 or 9.6%.
AMD, with an ASP of less than half of that, will have a larger operating profit margin, despite being more dependent on the worst sector of the semiconductor industry, Flash.
This means that AMD's breakeven cost per CPU are less than half of Intel's. If Intel needs $160 per CPU to break even, imagine how much they will need for the P4, which yields less than half as many chips per wafer!
Of course, Intel can get more $$$ per CPU because of its brand name, but continuing to get more than double the ASP fo AMD is asking a lot when your market share is dwindling. In a low-demand environment, it is the low cost producer, not the "big name" producer, that will flourish and be the most profitable.
Petz |
