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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: dumbmoney who wrote (63468)	6/26/1999 1:20:00 AM
From: Yougang Xiao	Read Replies (1) \| Respond to of 1572645

Fun reading: by Market_Shark from Yahoo. This is the way I see it...Part 1 by: Market_Shark 44166 of 44177 You guys give it an ending. Have fun. K6 got us in big financial trouble. Let me explain. It is a hell of a consumer chip. But it infuriated the Gorilla. First they counter attacked with the celeron (PII core-no cache). It was such a dog that we were even allowed to make money 4th quarter of 98. Then the consumer reports came and INTEL did not like them. AMD had over half of the consumer market. I can see manager in charge, John Smith, being told “…crush the fly. I give you one quarter to fix it or you are gone”. “No problem sir, consider it done” –the manager said. So first thing, was to bump up the speed dramatically and add 128K of L2 cache to Celeron. Unluckily for us the K6 was never design to go past much 400mhz and sure enough yields past 300 were close to non-existent. So, in a rush (2 months), we tinkered with the process and got yields again. Amd's only fab was idle in the meantime. Customers that were counting on shipments of 350-400 had to be told to wait. Sanders makes the decision to sale VANTIS while they still don't look desperate for money, and a decent price can be negotiated. Meanwhile, a series of deep (up to 35%) price cuts kept pouring INTEL. At times more than once a month. We started smoking again, producing over 2 million chips per month in our only fab. However, lost customers had no incentive to come back when they could get celerons cheaper and cheaper. AMD kept its hopes up through negotiation that orders would come back. They did. But customer after customer demanded prices we couldn't meet. Inventory kept accumulating. Well let's not jump the gun yet, we are introducing the K6-3 and that should give us some leverage if we can price it just below PIII. PIII, just introduced, was one speed higher than k6-3. By the time we introduced K6-3 INTEL announced price cuts on PIII (shortest time after introduction in history). Cuts so deep that PII processors became more expensive than their newly introduced PIII counterparts. Of course the deepest cuts were the K6-III matching speeds (even though the K6-III could not pose much of a revenue loss threat to INTEL due to its large size and low manufacturing quantities, it would have grabbed a fraction of a percent point of PIII sales). K6-III found itself valued higher than a comparable INTEL chip since introduction. Nobody (some were actually sold) were buying them. Every time we tried to cut the prices on K6-IIIs INTEL would cut prices on same speed PIIIs even deeper. ----continues in next post----- We are in May and OEMs get celeron 400 for $80 and P-III 450 for $250. AMD doesn't want to warn for fear of spoiling K7 introduction, get every analyst to downgrade them and may be even loose customers due to a heavily pessimistic painted business future. Besides, the quarter is still not over and maybe a big sale could come and save the day. Let's not jump the gun until we have to. Sanders is very worried and accelerates the payment on VANTIS. It happens. Gets word that K7s are yielding extremely well at 500-550-600 and that introduction will be on schedule. Dresden is on schedule. INTEL is having problems with .18 coppermine. June is here. Inventory of K6 is growing to millions. K6-III is not selling and Intel just announced more price cuts. Intel announces delay of coppermine, due to low yields at 600. INTEL gets word that the shipping version of K7 is yielding extremely good at speeds not yet achieved by PIII (at least out of a lab room). INTEL also gets word that a consumer release-grade K7 system outperforms the fastest XEON by a wide margin. Management at AMD decides to make the quarter situation public at K7's introduction to minimize shareholder damage and loss of business. K7 is announced along with a pre-announcement of the poor quarterly financial situation. K7 is out and is wearing the crown of Windows compatible processors. Manager John Smith at INTEL gets another call. “…Crash them again, your job is on the line…”. This time, he remains silent for a long second and replies: “With what?” Sanders calls motherboard and chipset manufacturers. They are on schedule. IBM reports on schedule. K6 production stops and all available fab space is devoted to the manufacturing of Athlons and chipsets. Compaq reports on schedule. Gateway reports on schedule. Athlons are starting to trickle and finding home in the best-of-class soon-to-be-released computer and workstation lines. The phone rings. “Hello, my name is John Smith, remember me?. “Ah huh” replies Sanders. “Well, I just got a new job and I am calling from Dell…”