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

To: tejek who wrote (84916)	1/4/2000 12:11:00 PM
From: Charles R	Read Replies (1) \| Respond to of 1572262

<Chris Dries, technology analyst at Invesco Funds, is looking for sales late this year of 2.5 million Itanium chips, which would translate to at least 5% of Intel's revenue and significantly boost profits in the fourth quarter. "That's definitely the story on the stock next year," he says.> Sheesh! 2,5Mu of Itaniums? I wonder how many analysts have these kind of numbers.

To: tejek who wrote (84916)	1/5/2000 1:12:00 AM
From: ptanner	Read Replies (3) \| Respond to of 1572262

Re: <Chris Dries, technology analyst at Invesco Funds, is looking for sales late this year of 2.5 million Itanium chips, which would translate to at least 5% of Intel's revenue and significantly boost profits in the fourth quarter. "That's definitely the story on the stock next year," he says.> -snip- <The server chip market, which generates $6 billion in sales, has been relatively flat, but still represents a pie Intel hasn't been able to touch. On average, Intel gets about $200 for each chip it sells, but the Itanium will sell at prices from $2,000 to $6,000 each, with as many as 10 chips per server. And since it costs Intel little more to manufacture the Itanium than the Celeron that sells for $65, we're talking about a chip that's almost pure profit.> The numbers in this analysis don't really add up -- or perhaps I missed something? Total server chip market of $6B Itanium: 2.5M @ $2,000-$6,000 each is $5-$15B And the Itanium will only be out for the last quarter? High-end server chips definitely offer a high profit margin relative to production costs. However, there is an additional factor to consider: the fixed design cost is spread over a much smaller volume. Intel's "copy exact" strategy for fabs is an example of how the high initial cost can be effectively recovered by spreading it over a large volume. Previously Intel has been able to avoid the challenge of its competitors because it operates in multiple segments of the MP market -- low-cost AMD chips were confronted with Celeron. Now AMD offers competitive products in the two large volume MP segments and is preparing its own server offerings. Previous discussions that AMD could significantly reduce its position in the low-end made me wonder whether this would provide an opening for Intel to raise low-end prices to compensate for a reduction in the high-end. However, AMD is not alone in offering low-end options and the introduction of low-cost chips from Via could provide healthy competition. While I presently only own AMD (among chipmakers) -- as a consumer I will benefit from the increased competition when purchasing my next CAD machine. PT