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

To: Paul Engel who wrote (93154)	2/15/2000 12:49:00 AM
From: Scumbria	Read Replies (1) \| Respond to of 1571324

Paul, Remember who prospered during 1998 and most of 1999 when AMD and Intel were in a price war. The company which had the fastest parts prospered. Which one will it be this time? Scumbria

To: Paul Engel who wrote (93154)	2/15/2000 1:16:00 AM
From: Dan3	Read Replies (1) \| Respond to of 1571324

Re: Remember who prospered during 1998 and most of 1999 when AMD and Intel were in a price war.. AMD had a disastrous period, but it wasn't due to the price war (though that didn't help!) it was due to a yield crash at their only FAB, running their only process. Looking forward, AMD has been very conservative in their process management, and they now have two radically different FABs with radically different processes - either of which can keep the company from another catastrophe such as we saw a year ago (though Dresden will have to produce by H2 - just as Intel has to get to .13 and copper by Q1 of 01). We've all seen that AMD has been quite non-confrontational with pricing of late (they'd clearly have increased total revenue - and profits - if they'd priced the Athlon to sell out, instead of pricing it to position it as an upper end chip) Intel, in contrast, has been pushing prices below the market clearing price for their products, creating a shortage and giving up substantial revenues of their own. It could be a bit sinister actually, since in a shortage situation, Intel's leverage over its customers increases the non-financial returns it can extract from its customers(such as no business SKUs from AMD allowed) in return for allocations of underpriced chips. An aggressive price war by Intel would take away that leverage (since grey market chips are widely available at such times, and OEMs need not deal with Intel at all to get a reliable supply of competitively priced chips) leaving OEMs in a better position to adopt AMD chips wherever they wanted - and since the OEMs would benefit enormously from a price war, they'd work hard to keep both sides strong enough to keep fighting. At this point, with the market for CPUs growing rapidly, it is in the best interests of both companies (and certainly us investors!) to not go overboard in a price war. Unfortunately, that doesn't mean it won't happen. And another point, how much will Intel have to undercut Mustang prices with Willamette prices in order to make up for the difference in price between Rambus and DDR266? Is Intel really going to stick with a DRAM solution that, under the very best of circumstances, will saddle them with at least a 25% cost disadvantage? Dan