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Politics : Formerly About Applied Materials
AMAT 294.18-7.7%12:03 PM EST
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To: Darin who wrote (8922)10/18/1997 6:44:00 PM
From: davesd   of 70976
 
Darin, Regardless who has the better chip, the problem is that INTC cannot milk the chip market anymore. There was a time that INTC would introduce a new chip and charge an arm and a leg for it...and when the need for a fast chip was required...they would then release that and milk it.

Now that AMD and CYRX have competing chips in the mid and low range (80% of the MPU market), INTC has to cut prices to hold onto market share and keep AMD at bay. Also, it's forcing INTC to release chips that the market is really not ready for. INTC released the MMX chips, which are about 50% of the MPC sales last quarter....the MMX transition is not even over and they are already pushing out the PII to keep ahead of AMD. But the major market is still happy with the 200-233Mhz class of chips. There is no widely used application out there that can really needs much more power than the 233Mhz. Sure there are graphics and other such apps...but they make up a very small part of the market.In Corporate and consumers market a 233Mhz is plenty to do the job and then some.

I'd suspect that of all the MPU's that INTC sells, over 80% of them are Pentiums and Pentium MMX and margins on those products are much lower than they used to be because of AMD and CYRX. As long as AMD and CYRX are in business, INTC's margins will continue downward. I doubt INTC cut the prices of their chips by 50% in July just cause he was feeling generous.

dave
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