Kap,
"What do you think is ASP threshold for Intel bellow which they are starting
operating at a loss? My guess would be around $150."
That is a tough question to take a stab at. It is a multi variable equation that involves:
1) ASPs - Intel by the virtue of production capacity (or alternately lack of AMDs production capacity) can, more or less, set the pricing for their parts even if AMD is wildly successful with K7
2) Cost structure - Intel can do a lot about this too. I *know* miracles can be done here both at chip and company level.
3) Market share - Intel has very little control over this, especially if K7 is on time (in volume). Barring any screwups, AMD *will* get to its 30%+ unit share within a year. I will be looking for Intel's signals on slowing down fab updates and new fab constructions.
4) Market growth - This one is truly a challenge - lower ASPs mean higher growth and price elasticity is tough nut to measure. I am sure Intel is spending phenomenal amount of time on this topic.
As you can see the only thing that is totally out of Intel's control is, potentially, market share. So, profitability is strictly a function of time and what Intel does with it. Even if the low-end and midrange pricing collapses to the $100 range, given their solid position on the server side, Intel would have to screw up big time even to entertain that thought. Unfortunately, from an Intel shareholder point even the relatively rosy scenarios mean a low-growth stock.
Intel stock holders, today, need AMD's failure to be successful. And, unforunately, HOPE is NEVER a good strategy.
Chuck |
