"amd is clearly loosing market share" - as our most un-biased and
trusted Paul and other intelabees stated
as SV pointed out " Intel's pricing actions will at least slow the rate
of AMD's market share gains."
since when "slowing market share gain" <=>"clearly loosing market share"
09:32am EDT 6-Jun-01 Wit SoundView (Scott Randall 203-462-7246) INTC AMD INTC.
Taiwan Semiconductor Trip Highlights June 6, 2001
Semiconductors Taiwan Research Trip June 6, 2001
Summary
This week we are at Computex as well as visiting a number of chipset,
motherboard, memory, and foundry companies in Taiwan. Taiwan continues to be a
much more important geography from a channel manufacturing standpoint then from
one of local consumption. After discussions with chipset, CPU, motherboard, PC
and memory vendors, we believe that both current demand entering June as well as
the view towards the summer continues to suggest somewhat conservative growth
prospects for PC component vendors. We believe that both Intel's mid-quarter
update tomorrow night as well as National Semiconductor's reporting of its
pre-release quarter will highlight PC component trends that continue to suggest
weaker than normal seasonal trends as we enter the summer.
We continue to be less ambitious in owning PC component stocks. We believe that
both the current demand environment as well as aggressive pricing intended to
either protect or gain market share will continue to hold back results. While
our estimate reductions, as well as those of others, have pulled consensus
estimates down for Intel to the point where improving second half PC demand
could allow the company to achieve these estimates, even at current prices we
believe the implied multiple for Intel is higher than warranted. Although both
Intel and Advanced Micro Devices may continue in a trading range from the
mid-$20s to mid-$30s, we would take advantage of any strength in the shares to
reduce positions.
Main Points
This is the fourth year that we have attended Computex. This show is not unlike
COMDEX in the sense that it is the largest computer show in Asia. However,
unlike COMDEX, this is a "working show" where vendors and customers actively
negotiate forecasts and pricing. In past years, it has been relatively easy to
determine the strength of future business trends over the first few days of the
show. This year, we have noted a higher degree of uncertainty reflected in the
conversations between vendors and customers. Although some of this uncertainty
has its underpinnings in the current economic environment, we continue to hear
concerns regarding a pre-XP stall ahead of back-to-school demand and that
customers are not yet willing to commit to significant inventory builds ahead of
uncertain demand. While this may very well change over the coming weeks, we
believe that the aggregate forecast currently being shown to Taiwan Inc.
suggests a less than robust build going into the back-to-school season.
Somewhat unexpectedly, this year's Computex has been richer in new product
announcements than has been typical. With AMD, Intel, and a number of chipset
vendors highlighting new products, it is clear that the PC component
battleground continues to heat up. Although AMD's new multiprocessor offering
as well as nVidia's nForce chipset introduction and support only for AMD's
Athlon were perhaps more interesting announcements than Intel's discussion of
SDRAM support for the P4 being added in the second half, we were surprised that
a number of local vendors suggested Intel's aggressive price action on the P4
may be serving to slow AMD's market share gains. Although this may not suggest
a sea of change, we do believe it is a sign that Intel's aggressive pricing
actions are having the desired effect on market share. Unfortunately, we are
not seeing demonstrable signs that more aggressive pricing is generating
elasticity for PC component vendors.
Is momentum shifting back towards INTC? Following our trip to Computex last
year, we noted that the Taiwan infrastructure was firmly in AMD's camp. Not
unexpectedly, with AMD working much more closely with the major Taiwanese
chipset vendors and with AMD's choice of supporting mainstream memory, AMD has
always been viewed as a vendor much more aligned with the direction of Taiwan
vendors. Interestingly, a number of vendors have suggested that the drastic
price cuts that Intel has put in place for the P4 is having the effect of
slowing AMD's momentum. While its too early to say whether this will have the
effect of reversing any of AMD's market share gains on the desktop, it does seem
that Intel's pricing actions will at least slow the rate of AMD's market share
gains.
New Product Trends:
Increasing adoption of DDR. The debate between next-generation PC memory has
been defined by two camps. Intel has chosen RDRAM as its main future memory
roadmap, while AMD had chosen DDR. Over the past few quarters, AMD has
continued down its path of supporting DDR while Intel has softened its position
and increasingly highlighted its plans to support both SDRAM and DDR for use
with the P4. Recall that Intel's current chipset offering for the P4 supports
only RDRAM. At Computex, all of the major chipset vendors including VIA, Ali,
and SIS all highlighted support for DDR for both AMD's Athlon as well as Intel's
P4. While schedules vary, most vendors will be in production in the second
half with chipsets that support DDR for both AMD and Intel. Both Ali and SIS
are currently licensed with Intel for the P4 bus while VIA's legal status in
this area is less clear.
Chipset Wars:
Although chipsets will never grab the headlines that CPUs do, chipset strategies
adopted by the major vendors' are having a strong influence on vendor success.
While Intel will continue to be the world's largest chipset manufacturer,
Taiwan's major chipset vendors including VIA, Ali, SIS and now nVidia are
playing an increasingly more important role.
Although AMD has continued to offer its own chipsets, the company has relied
much more on the industry for a volume chipset support of its processors. In
addition, AMD's choice of supporting mainstream SDRAM and DDR while ignoring
RDRAM has been closely aligned with the Taiwan infrastructure that is always
focused on the most cost-effective solutions.
In part, Intel's decision to initially only support RDAM with the P4 has served
to open an opportunity for merchant chipset vendors' to support more mainstream
memory solutions for the P4 ahead of Intel. VIA, ALI, and SIS were all either
showing or talking about their support of SDRAM and DDR for the P4.
Intel's 845 chipset was also widely shown at Computex. Recall that the 845 is
Intel's yet to be released chipset which will support both SDRAM as well as DDR
for use with the P4. Given the continued price premium of RDRAM when compared
with more mainstream memory technologies, we believe that a non-RDRAM memory
solution for the P4 is critical. Unfortunately, SDRAM will be the first memory
supported by the 845 for the P4 while production support for DDR from Intel is
not likely until, we believe, either late 2001 or early 2002. Although SDRAM
will support lower system price points, we believe that P4 performance with
SDRAM will significantly lag the performance of the P4 when using DDR memory.
nVidia chose Computex to announce its nForce integrated chipset. This chipset
integrates both core-logic functionality as well as the graphics controller.
While a number of vendors including Intel have tried in the past to drive
penetration of an integrated chipset, nVidia's nForce may have a better chance
of success. Although integrated chipsets, including nForce, will not offer the
highest level of graphics performance available, nForce may achieve performance
points that are acceptable to the mainstream. To date, nVidia has only
announced support for Athlon. While we would not rule out eventual support for
Intel's processors, nVidia does not currently have a bus license from Intel.
Multiprocessing Support From AMD:
AMD chose Computex to announce the availability of its two-way capable Athlon.
Dubbed Athlon MP for Athlon Multi-Processing, Athlon MP will finally provide AMD
with a hardware solution capable of being sold into two-way server and
workstation applications. Although on a clock-for-clock basis we expect Athlon
MP to compare favorably with Intel's Xeon family, initial versions of Athlon MP
will only be at 1 GHz and 1.2 GHz and will lag the performance of faster speed
multiprocessor capable processors from Intel. We believe that penetrating the
multiprocessor server and workstation market will continue to be a challenge for
AMD. This it is an area we believe Intel will continue to defend. Although we
believe achieving penetration will be difficult for AMD, we do forecast that
over time Athlon MP will likely increase the degree of price pressure seen in
this space. Unfortunately for AMD, the server space has been an important area
where Intel has enjoyed strong pricing power.
Low-Density Flash Pricing:
As one sign of both weaker motherboard demand as well as excess capacity,
pricing for all low-density flash continues to reach new lows. Although AMD and
Intel are not especially levered to low-density motherboard flash applications,
pricing for both 2 Meg and 4 Meg devices has come under significant pressure.
For 2 Megs, pricing is now in the $0.50 range, down from roughly $1 at the end
of last year. We believe these price points reflect a combination of excess
inventory as well as weaker demand. 4 Meg flash has dropped to $1.35 from $2.20
over the same period. |
