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

To: THE WATSONYOUTH who wrote (107123)	4/20/2000 8:06:00 PM
From: Yougang Xiao	Read Replies (6) \| Respond to of 1573901

Intel delays Celerons because of manufacturing crunch By Michael Kanellos Staff Writer, CNET News.com April 20, 2000, 4:35 p.m. PT URL: news.cnet.com Intel has pushed back the release of two desktop processors because of a manufacturing crunch that has created shortages. The Santa Clara, Calif.-based chipmaker has delayed the release of 633- and 667-MHz Celeron chips by approximately two months, according to industry sources close to the company. The chips, designed for budget PCs, were slated to appear in computers beginning next week. Instead, they will emerge toward the end of June, along with a 700-MHz Celeron and a 933-MHz Pentium III. An Intel spokesman would not comment on the Celerons' release date but said that they are slated to come out in the second quarter. Rival Advanced Micro Devices may benefit from the delay. The Sunnyvale, Calif. company reported last week that it has produced a surplus of its touted Athlon processor. Computer makers, tiring of Intel chip shortages that have lingered since last October, may well begin to adopt more Athlons. In the past, Intel often capitalized on AMD's inability to manufacture chips in adequate volumes. Intel's shortfall results from manufacturing problems the company addressed when it reported its quarterly earnings earlier this week. Intel underestimated PC demand when it prepared its manufacturing plans last year. Consequently, a processor shortage developed. "We did not anticipate the level of demand for the first half, especially for microprocessors, chipsets and flash memory," Andy Bryant, Intel's chief financial officer, said earlier this week. "Supply will continue to be a challenge." Supplies of Intel processors are expected to remain fairly tight until the second half of the year, the company said. To ameliorate the problem, Intel is raising its capital spending this year to $6 million from $5 million. Intel has been struggling with supply issues for about seven months. Last fall, the company had to deal with a shortage of high-end Pentium IIIs, a problem that is not completely solved. A number of chip dealers have stated that it is extremely difficult to find Pentium IIIs running at 800 or 850 MHz and 1 GHz. The delays have been exacerbated by growing demand. Postponing the release of the two Celerons makes sense from both a financial and a manufacturing point of view. The least-expensive Intel processors, Celerons for desktops, carry lower profit margins than Pentium III chips, Xeon processors for servers, or even Celeron chips for notebooks. Allocating manufacturing capacity to these other processors will allow Intel to maximize its profit opportunities. Paul Otellini, general manager of the Intel Architecture Business Group, which is responsible for making chips, said earlier this week that notebook chips and upcoming Xeons will not be affected by the manufacturing issues. In addition, Celeron chips often take more time to get to market than other Intel processors. Many Pentium III processors come in computers that are built to order. The chips therefore start appearing in computers within a week or so after they emerge from Intel's factories. Celerons, by contrast, frequently are incorporated in PCs that manufacturers produce by the hundreds before shipment to retailers. These PCs, and hence their processors, can sit in warehouses for longer periods of time.

To: THE WATSONYOUTH who wrote (107123)	4/20/2000 8:35:00 PM
From: kash johal	Read Replies (1) \| Respond to of 1573901

Thewatsonyouth, I agree. I think evrybody underestimated the current transition. But if you think about it it is NON TRIVIAL to bring up multiple fabs with lots of new capacity without disruption. When AMD had NO competitive product at high end this transition was easily masked by Intel using pricing to limit demand. Thinking about it - this is a major problem of having such a huge entrenched volumes running. regards, Kash

To: THE WATSONYOUTH who wrote (107123)	4/21/2000 1:13:00 AM
From: SteveC	Respond to of 1573901

"I think the best Intel could do would be to convert 1 fab by that time" So much for Intel's claim that its duplication of manufacturing processes throughout its Fabs was a key to its success. Now it is a source of weakness. I wonder how much money Intel is going to actually throw at this problem. Intel went from $5 to $6 billion in capital spending for 2000 recently. Maybe the real number will be much higher. The anti-AMD crowd that keeps raising the issue of the effect of Dresden's decpreciation on AMD's earnings ought to be posing the same question to Intel. Can Intel achieve a 60%+ profit margin if it spends nearly $13 billion in capital expenditures over the next year? I don't think so.