Listen Up Boys and Girls. Analysts View of K7 at Comdex:
Thanks to Albert for the notes. The private thread is filled with goodies and information.
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01:36am EST 18-Nov-98 Morgan Stanley\DW (Edelstone/Cross/Gerhardy) AMD
INTC NSM
SEMICONDUCTORS : VIEW FROM COMDEX : MICROPROCESSOR DEMAND IS STRONG AND... / P1
Semiconductors (I/CPR): View From COMDEX: Microprocessor Demand Is
Strong And Rambus Is On Track
Mark Edelstone/John Cross/Louis Gerhardy (415) 576-2381
Date: November 18, 1998
Industry: Semiconductors Type: Industry Report
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KEY POINTS
- Following two days at the Fall COMDEX trade show in Las Vegas, we
believe PC demand is strong, and the new microprocessors (MPUs) scheduled to be introduced during the next several quarters suggests the price/performance of PC systems should continue to improve significantly throughout next year.
- Based on our discussions with Advanced Micro Devices (AMD--$27,
Neutral), Intel (INTC--$108 1/2, Strong Buy), and National Semiconductor (NSM--$13 1/2, Neutral) we believe MPU demand is extremely strong, and it appears that all three vendors can sell everything they can make at this time.
- Given the current roadmaps of AMD, Intel, and National, we believe MPU product positioning will increase in importance next year. While we believe it is too early to be negative, we see the potential for excess MPU supply in 1999 if all three suppliers execute to their current plans.
- NeoMagic (NMGC--$19 1/2, Strong Buy) is the dominant suppler (52%
market share) of graphics controllers for notebook PCs, and based on discussions with the company, we believe notebook PC demand is strong, and as expected, the company's January quarter got off to an exceptionally strong start.
- We believe Rambus (RMBS--$74, Outperform) had a strong showing at COMDEX, and the company's suite highlighted the fact that the necessary infrastructure support for Direct Rambus DRAMs has continued to gain momentum. Most important, we believe Intel has started to sample its 820 chipset (code named Camino), and it appears that things are on track to launch the first Direct Rambus DRAM-based PCs in the second quarter of 1999.
AMD Should Be Able To Significantly Strengthen Its MPU Product Offerings. Despite difficulty with its initial production ramp last year, we believe AMD's MPU manufacturing operations are doing extremely well, and we believe the company's upcoming product offerings will be well received by the PC market. AMD shipped 3.8 million K6 MPUs for $381 million last quarter, and we believe
strong demand will enable the company to ship at least 5 million units for $500 million or so in the current quarter. Based on strong demand, we believe AMD is on track to report a large positive earnings surprise in the fourth quarter, and a better appreciation of the company's MPU product roadmap suggests our 1999 earnings estimate is too low.
The high end of AMD's MPU product line is the 400 MHz K62, and the
company's next generation K6 MPU (code named Sharptooth) should be officially introduced in March at 450 MHz. The Sharptooth design will incorporate 256K of cache memory to the current K62 design, and AMD's demos suggest that it will outperform a comparable speed Pentium II from Intel by approximately 15%. We believe AMD will begin initial shipments of the Sharptooth MPU in the early part of the first quarter, and when compared to Intel's product offerings, it should provide AMD with solid demand, incremental pricing power, and the potential to penetrate new customers. Furthermore, we believe Sharptooth will allow AMD to increase its share of the notebook PC market and enhance its chances of penetrating the corporate market.
We have previously stated that we thought AMD stole the show with its K7 MPU at the recent Microprocessor Forum. We believe AMD's demo at COMDEX suggests that K7 has the potential to enable the company to be extremely competitive with the high end of Intel's product offering in the second half of next year. Although there will be significant execution risk leading up to the company's expected launch in the middle of 1999, AMD's demo suggested that the performance of the
K7 is compelling. More important, AMD has already completed the design
and the company has working silicon of the core logic chipsets, as well as the motherboard reference designs necessary to support the K7 infrastructure.
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More on Intel
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More on NSM
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More on NeoMagic
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The buzz word these days on Wall Street is "K7".
Maxwell |
