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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: eplace who wrote (9990)	9/22/2000 10:53:56 PM
From: Maverick	Read Replies (1) \| Respond to of 275872

SSB:executing very well in ramping up Dresden fab,speed gap widens wrt INTC Excerpts frm SSb Research on INTC,9/22/00 CHALLENGES AHEAD IN NEW PRODUCT TRANSITION We believe the significant challenge for Intel in the next 6-9 months is its transitions from the old PIII architecture to the new P4 architecture. As Intel management commented at the recent Developer Forum, the PIII was never designed to run much above 1GHz. Largely for that reason, yields at that speed grade and higher remain below average, and the 1.13GHz product was recalled. Meanwhile, we do not expect the P4 to hit large volumes until mid- 2001. It has two problems: 1) the P4 is wholly dependent on RDRAM for its primary memory. Intel bet heavily that RDRAM would be widely deployed by now, expecting it to be 20-30% of the market in Q4. Instead, RDRAM, which is costly and does not show much of a performance advantage, is only about one percent of the market currently. Intel will not have its own SDRAM PC-133 chipset until mid next year, though it may license Via to produce a chipset earlier. 2) the die size is large, and some OEMs actually believe the P4 underperforms the PIII at certain speed grades and in certain applications. For this reason, the P4 will probably not be a compelling technology until the 0.13-micron process shrink ramps in volume later next year. We believe the P4 will be a significant new architecture for Intel, only that the transition will take 6-9 months to smooth out. MORE COMPETITION COULD MEAN MORE PRICING PRESSURE Over the next 12 months three x86 players will make their presence increasingly felt in the market, which could force Intel to sharply cut prices, as it did when it drove Cyrix, once owned by National Semi (NSM, $42.94, 2H), and IDT (IDTI, $98.56, 1H) out of the market 18 months ago. These players could amount to an incremental 12-15 million units, which represents about 6-7% of the 200 million unit microprocessor market next year, or about a third to a half of its incremental unit growth. These are the three players: * Advanced Micro# (AMD, $27.56, 2S) will likely increase its unit shipments from 28 million this year to 32 million in 2001, an estimate that is probably too conservative. The company is executing very well in its ramp of the Dresden fab, which should generate about 5,500 new wafer starts per month when fully ramped, about equal in output to the current fab in Austin. AMD seems to be having better luck at the high end than Intel. Its current average speed mix is above 800MHz, we believe, which puts it above Intel's 700MHz. We figure that gap will only widen over the next six months as AMD's next generation products, including a new T-bird, Duron, and Mustang (with 2MB of cache for server applications) come on board. * Via Technologies has just announced its Cyrix III, which will be aimed at the mobile market and run between 500-600MHz. We do not consider Via a powerful competitor, but it could ship 4-6 million units next year, up from 1-2 million this year, which would represent about 2-3% of a PC market that may grow only about 15% in 2001, at best. * At least one other private microprocessor company is targeting the mobile market and could capture between 2-4 million units next year.