Can you read ? Suggest you read and check Kurlak's comments.
There is a war heating up for market share. This coupled with a drop in ASPs and slower PC unit growth, means less revenues and dramatically less profits for Intel.
According to Kurlak, he projects 21M units shipped by AMD/IBM next year (note: I don't think this includes a significant number from AMD's new fab in Dresden, and probably projects only a slight yield improvement at Fab 25, and IBM's yields could be better than AMD's internally produced chips, so this number could be significantly low.)
Furthermore Kurlak estimates that Cyrix and foundry partners will be able to produce 6.4M in fiscal 99, up from 3.2M annualized rate now. Well fiscal 99 starts June 1st (two weeks from now). In order to hit 6.4M for the year, they will probably be shipping 9M units annualized rate by early 1999. So in calendar 99, Cyrix and partners could ship close to 9M units.
Add these two volumes together, and by January, AMD and Cyrix will have enough capacity to make over 30M chips per year. This is enough to take over 30% of the MPU market, up from less than 10-12% in the last 12 months. This will probably be in the sub-zero and mid-tier markets. The only way Intel will hold market share is to sell somewhat better chips at the same price or similar chips at lower prices. Intel's ASPs will decline markedly.
Some people here believe that everyone will be buying PIIs by next year. Why? I have a K6 in my machine, and there is nothing I want to do, that I can't do. Why pay more for a PII machine? I would rather spend the money on things that would improve my performance, like a cable modem hook-up, a better printer or monitor etc. A faster more complex MPU isn't even on the shopping list.
Big trouble for Intel's margins ahead as they've warned. But also big trouble for their market share. IBM and the Taiwanese partners of Cyrix not only bring fab capacity to the game, but also market channels. I wish all you Intel investors good luck, you'll need it.
Paul |
