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

To: Steve Porter who wrote (64443)	7/8/1999 2:46:00 PM
From: Yougang Xiao	Respond to of 1583368

Steve: Via/Cyrix Deal Revisted There are two types of structure (from ownership and manufacturing standpoints) for Via/Cyrix deal, and each structure poses different level of competitive threat in low end for AMD and Intel. 1. Worst for AMD and Intel -- Take Home Structure Under this structure, Cyrix is sold outright; manufacturing of Cyrix chips will be done in Taiwan, either at TSMC or UMC. This structure will enable Via to take advantage of manufacture cost effectiveness in Taiwan, eliminate hurdles of management and operational issues for JV; unrestricted financing from Formosa Group. All these factors can contribute to an “extended” price war in low end among Via/AMD/Intel. Thus, worst. 2. Better for AMD and Intel -- Stay in the US structure. Co-ownership of Cyrix with NSM, Manufacturing will be in the US and more specifically in NSM's Fab. Manufacturing by NSM would effectively kill any cost effectiveness that Via may achieve in Taiwan if structure 1 is chosen; Co-ownership would pose significant challenges for both NSM and Via in management and operation areas that may lead to internal fighting; further, co-ownership would institute the JV on a more traditional US business model -- operate a business based on business considerations, therefore eliminate Via's potential war waged soly based on Pride should Via stands alone. The possible results of the Co-ownership: Cyrix chips may not get THAT dirt cheap, therefore there may exist a certain controled sanity in low end price war; the JV is more likely subject to ultimate death much sooner than Via flyes solo. Here is the clues what the Via/Cyrix deal may finally look like: The clues are in Intel's latest license with NSM. According to news.com The major points for the latest renewed Intel/NSM license are: (A) NSM can make products that take advantage of Intel IP for NSM (B) NSM can only make products that take advantage of Intel IP for others (as foundry) before year 2000. Obviously, Via would not go with NSM for only six month left if (B) is Via's objective to obtain Intel IP. What (A) says is that if NSM MAKE products invloving Intel IP for NSM, it is legal. To visualize; MAKE=production in NSM owned fab(s); for NSM=NSM logo Yesterday's chipset deal between Via/NSM follows this path and I believe that the yet to be announced Via/Cyrix deal will take the same shape. And to make the “for NSM” argument stronger, co-ownership helps greatly. Thus, Via/Cyrix deal appears to suggest that the final structure of deal is not “THAT” threatening to AMD and Intel as originally thought. *********************************************************** Thanks for Dave_L for sharing your thoughts with me on Via/Cyrix deal.