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

To: Road Walker who wrote (126318)	10/17/2000 2:23:52 PM
From: Daniel Schuh	Read Replies (1) \| Respond to of 1580415

Again, John, what do you think AMD should do with their ghz parts? Downbin them to 800 mhz to sell against what Intel produces in volume? Or price them to sell in volume at 1ghz? Or just cut back production?

To: Road Walker who wrote (126318)	10/17/2000 2:47:48 PM
From: Joe NYC	Respond to of 1580415

John, You and I could argue the interpretation of past pricing policy forever and it won't matter a bit. We don't necessarily have to agree on the interpretation. My claim is that nothing changed from the point of view of an outside observer. You see change because you are looking at it from the point of view of (mainly) Intel shareholder, and from that point of view, everything changed. If we are truly in a long term overcapacity situation, and these guys decide to do a market share grab with prices as the weapon, then they will make their products a commodity, and make both companies very, very lousy investments. This is a good analysis for a wheat market. It doesn't work at all in microprocessor market. You have great qualitative differences between the chips, and a price curve to reflect that. Those who have chips on the upper end will always sell those chips at profit, no matter what, because there will never be an overcapacity of high performance chips. By definition, there is always a shortage of those parts. If you take the a wafer of the microprocessor dice of the fastest design, a small percentage will clock at the very highest speed, more at a lower speed etc. When it comes to low end chips, you in fact may have a glut, and if the quality of your chip is highly undesirable, no matter how you price it, you will not be able to sell your chips. Just look at prices of Winchip, Cyrix, Rise microprocessors. Do you think that if they reduce their prices from say $20 to $10, they will drive AMD and Intel out of business? Joe

To: Road Walker who wrote (126318)	10/17/2000 5:44:13 PM
From: TimF	Read Replies (1) \| Respond to of 1580415

I'm saying that we have two companies with very healthy gross margins. I'm saying that if the companies get stupid, by setting a new, much lower price point for high end processors, that the industry could take years to recover, if at all. I'm saying that in a real price war, my AMD stock will go to single digits and my Intel stock won't be too far off. If they price the chips at such a low level that they cannot make solid profits on them then this is true, but they are not that low yet. AMD had to come out with lower prices. Its expanding capacity and it doesn't have business SKUs, high end laptops, server sales, or anything from Dell. To say that it is stupid for AMD to lower prices is basically saying it was stupid for AMD to ever try to grow or gain market share from Intel and that it should have settled for being a minor player in the industry. Intel doesn't really need to slash its prices right now (although that may change at least of PIII and Celeron prices), because AMD can't produce more then a fraction of what the market is demanding. Intel may decide to fight viscously AMD's expansion of market share and if it does then we might see both companies profits and margins take a dive. Alternatively Intel could price to maximize profit and give up a bit of market share. Tim