Re: How are your AMD investments doing?
I generally don't get into the practice of what I bought or sold, but, as of this week, I'm out until year end selling is over.
It looks like Intel will be running about 25% more wafer area next year than this year, to produce die about 2/3's the size of this year's average die size - which results in a 90% increase in production.
It looks like AMD will be running about the same wafer area next year as this year, to produce die about 2/3's the size of this year's average die size - which results in a 50% increase in production.
Next year may be quite a bit better for PCs than anyone expects - or the world's economic slowdown may make it worse than expected. Recently, we've had a period in which even processor shortages were unable to provide Intel with significant earnings, and AMD made a loss. Next year, a big increase in supply will probably push prices down.
AMD has been cutting costs drastically, has lowered its breakeven point, and positioned itself as well as it can to weather the storm.
Intel has poured a fortune into doubling capacity which raises its breakeven point and makes it harder for them to lower prices. If those Aliens Intel has been showing as customers on their TV commercials show up and buy half Intel's output (and some of AMD's, too) Intel will be OK.
But, unless those Alien buyers show up in their saucers, Intel is in a world of hurt.
Look at their last quarterly statement. Intel's costs are dominated by fixed capex, R&D, and administrative/marketing costs. They could shutter all their FABs and costs wouldn't drop significantly.
The premium that will be gained from up-selling buyers to 2.2GHZ P4 chips instead of inexpensive 1.4GHZ Celerons and entry level 1.8GHZ P4 is not going to be very big. And the number of buyers that know that 1.2 and above large cache Celerons (and Athlons) perform like P4s clocked 30% higher is growing.
The Dell strategy is going against Intel, here. Compaq, HP, etc. used to sell fairly long lead time packages that hid some of the CPU incremental costs and required that faster CPUs be bought to get access to high end addons like bigger hard drives and more memory. With Dell offering ala cart selection of all options buyers can now get a larger hard drive and more memory instead of paying extra for a few more mhz, where Compaq and HP made them buy the faster chip to get access to the larger hard drive and extra memory.
What do you expect to happen? |
