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

To: that_crazy_doug who wrote (16218)	10/27/2000 3:39:23 PM
From: dale_laroy	Read Replies (1) \| Respond to of 275872

Price war? Was Desert Storm a war? In H1 AMD is the US and Intel the Iraqis. In Q1, with AMD shipping the 1.0 GHz Palomino at $149, or even slightly less, they can still price the 1.5 GHz Palomino at $749. Look at historical pricing. The 750 MHz classic Athlon was introduced at $749 and 500 MHz classic Athlons were being cleared out at under $150 in this same time frame. The historical pattern of AMD selling the same speed grade at 75% of Intel's price would result in Intel pricing the 1.0 GHz P-III at $199. Drop the price of the 1.0 GHz Palomino to $139 and Intel is forced to sell the 1.0 GHz P-III at less than their $189 end of product life to maintain the historical ratio. In Q2 the scorched earth assault will intensify. With the Morgan matching the top speed grade of P-III, Morgan on solid DDR mobos can provide equivalent performance to same speed grade P-IIIs at even lower prices than the same speed grade Palomino. Additionally, Intel's Xeon processor will come under assault by Mustang on Micron Mamba mobos in this timeframe. Intel's only hope of salvaging ASP will be to ramp production of P4 very rapidly. But prior to the move to 0.13-micron, this would be a strategy from which AMD could realize major benefits, as Intel would be sacrificing between 2.5 and 3 P-III processors for every P4 rolling out of the fabs. This would induce a processor shortage, which would enable AMD to grab a greater than 33% market share without resorting to a price war. Additionally, until P4 can use memory other than DRDRAM, P4 sales will be limited by DRDRAM production levels. Of course, beginning in Q3, with the introduction of Intel's 0.13-micron fabs, it becomes a whole new ballgame.