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

To: Aaron Cooperband who wrote (92803)	2/12/2000 7:01:00 PM
From: Dan3	Respond to of 1574076

Re: I assume by AMD's inventories that they weren't supply-constrained as of year end. For that reason, I must assume that they've either found additional buyers for incremental product, or that they've found a buyer for their unsold inventory. One has greater implication for increased earnings than the other. Hmmm... But I have a feeling that you haven't fully considered the implications of your statement. All speed grades of a given chip family cost the same to produce, so the profitability of the higher speed grades is far greater than that of the lower speed grades. If a company educates the market that a given speed grade, say 800MHZ, is available and desirable, then it will necessarily be reducing the profitability of slower parts such as 650MHZ. If that company can't produce volume at speeds greater than, say, 700MHZ, it should not offer a speed higher than 700MHZ. The market pays roughly the same amount for the top speed grade, regardless of what that speed happens to be at any given time. So if a company sets the top speed grade higher than the speed it is currently capable of producing it will reduce its revenues. A company should always be able to produce more high speed parts than the market demands, if it cannot, it should set the top speed grade to a lower level so that it can still receive as much revenue as the market is willing to offer. The chips all cost about $35 to $70 produce, depending on die size, on-chip/off chip cache, and packaging, and the market will pay about $800 each for whatever is the official "fastest" chip at any given time, and proportionately less for chips that are proportionately slower. A company that doesn't have inventory, particularly at the highest speeds, is having problems with production, marketing, or both. At present, AMD is not having problems. Dan

To: Aaron Cooperband who wrote (92803)	2/12/2000 9:08:00 PM
From: Petz	Respond to of 1574076

Aaron, re:<<Re: "FAB 25 could produce 10 million K6-2's and still produce more than 8 million Athlon die">> Aaron: <I assume by AMD's inventories that they weren't supply-constrained as of year end. For that reason, I must assume that they've either found additional buyers for unsold inventory. One has greater implication for increased earnings than the other.> I don't think Sander's statement implies that K6 sales will be up sequentially in absolute terms, just that they will not be down as much as anticipated. Between Q4'98 and Q1'99 K6-2 sales plummeted by over 25%. The same thing is NOT going to happen this year. I would suspect that wafer starts for the K6-2 were in fact reduced a few months ago to expand Athlon production. So, combined with higher-than-anticipated demand, AMD might be supply limited on the K6-2, which means that prices will remain stable and fewer parts will be downbinned. Petz