Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 198.12

-5.2%

Dec 17 3:59 PM EST

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To: Dan3 who wrote (201842)	6/13/2006 9:50:33 AM
From: Joe NYC	Read Replies (1) of 275872

Dan, It's looked to me that AMD's big problem has been coping with rapidly increasing demand. Their risk has been that they would appear to be an unreliable supplier. Their recent strategy appears to have been successful and they were able to supply the demand (at the prices they quoted). The price increase was in March, just as the demand was softening and Fab 36 parts started to trickle in. Supply should not be an issue this Q. BTW, Alan brought up an issue that AMD will have to deal with. Suppose it takes 3x (conservatively) die area to make DC rather than SC. AMD needs to migrate 20 to 30% Athlon 64s to X2. That means that AMD capacity needs will grow 40 to 60% in order to produce the same number of units. Good thing is that this ramp is gradual, and it had a fortunate timing of falling on the slowest quarter. But in Q3, the capacity needs will increase significantly, as the build for Q4 will start to take place. AMD should be able to meet the demand with Fab 36 and Chartered coming online. It costs Intel (and anyone else) a lot of time and money to build a brand. Right now they're starting almost from scratch, again. Throwing out Pentium brand has been the stupidest decision of Intel. I think AMD has been doing a spectacular job of navigating a treacherous pricing environment. They're still in the middle of a scorched earth price war that's taking place in an overall dropping market, but the job AMD has been doing has been terrific. It's still going to be very, very, tough for them, going forward. The prices are generally on a falling trajectory, as newer speed grades are introduced at the top. I think AMD should just make it orderly. 1% increase, followed by 50% cut is not exactly an orderly price environment. Joe

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