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

To: kash johal who wrote (109178)	5/3/2000 2:56:00 AM
From: ptanner	Read Replies (1) \| Respond to of 1579334

Kash - Re: server class chips <They probably make $800 net on each one they sell or close to 50% of Intels operating profits. Until AMD plays in this arena Intel has a major profit source to subsidize its desktop offerings. And this is critical on building a long term viable biz that is somewhat impervious to Intel attack.> I agree fully with (1) server chips can provide great margins and (2) AMD needs to broaden the front. However, some quick math reduces the %profits for Intel's server class to below 50% but still very significant. None of these numbers are for certain but should be close enough for the illustration: Total MPU/QTR [GM=Gross Margin] 32M * $190 (ASP) * 0.62 (GM) = $3,534M Server MPU/QTR 1M * $1,000 * 0.8 = $800M, (3% units, 22.6% gross profit) Other MPU/QTR (values implied by Server assumptions) 31M * $164 * 0.54 = $2,734M An old data point I saw was Xeons were 4% of units and 15% of revenues in 1999 which is close to the values above (3% units, 16.4% revenues, 22.6% gross profits). And as you noted, this is a very rapidly growing market segment. The server chips make a big impact in ASP and gross margins. The GM for non-server above is much closer to AMD's 1Q00 gross margin (44.5%?). PT

To: kash johal who wrote (109178)	5/3/2000 4:19:00 AM
From: Petz	Read Replies (2) \| Respond to of 1579334

kash, <AMD had a significant oppty in 2 way servers which has been blown> Even if AMD had 2-way chipset NOW, they wouldn't have a prayer of capturing more than 10% of market by end of year. And if we sold 2M Athlon's in Q1, their ASP would have been $150 at best, with the potential of an all-out price war. The rate of expansion in these markets is limited. The chipset/motherboard shortage was real, but I see Intel's actions pushing VIA more and more into AMD's camp. Petz