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Technology Stocks : Intel Corporation (INTC)
INTC 36.82+1.5%Dec 19 9:30 AM EST
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To: Paul Engel who wrote (140502)7/31/2001 8:53:09 AM
From: Dan3  Read Replies (1) of 186894
 
Re: AMD looking forward to reaching 100% production capacity at Fab 30 by the end of the year from our present level of approximately 60%.

What is going to happen to chip prices in general as Intel opens new FABs and AMD's accelerated ramp increases its production at Dresden by 66% between now and the end of the year?

Dresden produces .18 Notebook chips that run at the same speeds and have the same battery life as Intel's .13 chips. Dresden produces desktop and server chips that slightly outperform Intel's current desktop and server chips, but they do it through a better IPC, which is a marketing disadvantage - but one that can be eliminated overnight using performance rating.

Austin is good for 1.2GHZ for Morgans using AMD's old .18 Aluminum technology. AMD will be satisfied with $40 for Austin chips. An Austin Morgan, packaged and tested, will probably cost AMD $35, while Intel will be able to produce Celerons from the new FABs it's currently building for $25 - but Austin is paid for, while Intel's new FABs represent a $15 Billion Investment over the past 18 and next 6 months most of which will never be recovered - not if those FABs are going to be used to produce Celerons to compete with Durons that sell for $40.

AMD is increasing production 66% at Dresden and Intel is opening whole new FABs to produce parts to dump into this market:

US RETAIL PC DEMAND
             During the week beginning July 8, US retail desktop shipments fell
             46% yoy.  Sequential data suggests relatively flat shipments month
             on month during June versus the typical end-of-quarter
             acceleration. As we said in a prior PC Beat, Gateway typically
             characterizes the June quarter as the "in like a lamb, out like a
             lion" quarter---the lion is taking a breather this year.

             WEEKLY DESKTOP SHIPMENTS YR/YR GROWTH BY PRICE POINT - U.S RETAIL

       Week Beg.         5/20   5/27    6/3   6/10   6/17   6/24    7/1    7/8
       $599 and below    -53%   -30%   -26%   -49%   -53%   -69%   -30%   -79%
       $600 - $999        66%     8%    -1%    33%    23%    37%    37%    33%
       $1000 - $1499      -2%   -13%    12%   -33%   -41%   -55%   -46%   -53%
       $1500 and above   -55%   -39%   -42%    -6%   -20%   -35%   -67%   -46%
        Market Growth     -5%   -15%    -9%   -15%   -18%   -31%   -24%   -46%
             Source: NPD Intelect and Salomon Smith Barney
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