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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 255.11

+7.4%

1:49 PM EST

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To: graphicsguru who wrote (241509)	9/30/2007 1:37:56 AM
From: Saturn V	Read Replies (1) of 275872

It is very difficult to raise prices of chips. Intel was the world's dominant Flash Supplier, and tried to raise the price of Flash chips in 2002/2003 believing that there was a shortage. It was one of the biggest mistakes that Intel made. Nokia was Intels biggest Flash customer and the largest consumer of Flash. Nokia was so enraged, that Intel was completely thrown out.Intel's share was allocated to Samsung and AMD, which had no presence at Nokia. At time AMD was bleeding, and AMD was soon going to need external funding.AMD was saved, and the extra revenue was used to launch the Operon. Intel's Flash business was destroyed, and never recovered.It took years before Nokia bought anything else from Intel. In the case your hypothetical scenario materializes, it is far easier to increase profits by postponing or eliminating the normal price reductions due to typical normal improvements in manufacturing efficiency. Sure Intel revenue will stay the same, but the profits will increase enormously.

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