TG
SSB just said that pIII with sdram outperforms p4 with rdram
yet another great launch for intel
Regards
-Albert
07:29am EST 20-Nov-00 Salomon Smith Barney (Jonathan Joseph 415-955-4998) AMD M
The Semiconductor Beat
SALOMON SMITH BARNEY Industry Note
Semiconductors
The Semiconductor Beat
November 20, 2000 SUMMARY
* The spot market demand for free tee-shirts at
Jonathan Joseph COMDEX was apparently far stronger than demand for
415-955-4998 microprocessors last week. Average Intel processor
jonathan.joseph@ssmb.com prices fell about 1% to a 7% discount to list,
Dunham Winoto though Pentium prices were mixed and on average rose
415-951-1875 about 1% to a 5% discount to list as the market
anticipated the P4 introduction.
* Average AMD processor prices also fell by about 1%
last week, though there was some pickup in demand
for certain speed grades, like the T-bird 900MHz.
* DRAM spot prices declined again last week, with
64Mbs falling from $3.50 to end the week on a firm
note at $3.15; 128Mbs fell about $1.00 to about
$7.40, on average. "Unbranded" parts were trading
about 10-15% lower.
* High-density Flash continued to come off, with
32Mbs falling 20% from $60 to $48; low-density Flash
was off about 3-5% following several weeks of
stability.
THE "COM" IN COMDEX NOW MEANS COMMUNICATIONS
The demand for free tee shirts was strong as ever at COMDEX last week. It was
pretty embarrassing at the Ricoh booth, with showgirls making all those
screaming engineers with pocket protectors beg for free stuff. They certainly
were not begging for personal computer components. All parties at the show were
complaining about weak demand. In a taxi (whose driver knew what Flash memory
was and got an extra time for it!) the president of one board assembler
admitted something I thought I would never hear from a Taiwanese supplier:
"Personal computers are a mature product." For this reason, perhaps COMDEX is
fading relative to new communications shows, like NetWorld+Interop. And even
COMDEX has begun to lean heavily toward communications: far more common that
PCs and servers were "internet appliances" web tablets, wireless PDAs, and cell
phones with enhanced web browsing capabilities. And other important themes at
the show were wireless home-networking, Bluetooth and WAP-enabled devices. No
longer theory, we are now at the point where computing, communications, and
consumer electronics have converged.
'TWAS THE NIGHT BEFORE P4'S LAUNCH...
...and all through the house not a CPU was stirring, with or without a mouse.
Average prices for Intel's CPUs dropped only slightly from last week to a
discount of 7% to list compared to 6% the week before. However, this was aided
primarily by Intel's unscheduled price move last weekend on the P-III 650 and
700MHz processors. Processors from AMD (AMD, 2S) also dropped about 1% last
week, though some prices, like the Thunderbird 900MHz, actually rose slightly
on the week. Volumes remained very low.
Monday (today), Intel (INTC, 2M) is expected to formally launch its much
awaited Pentium 4 processor, and several PC manufacturers should announce
systems simultaneously. Of course, all these systems are based on Intel's 850
chipset that supports only Rambus DRAM. Never mind that some tests have shown
the new P4 with Rambus is actually running slower than the Pentium III with
SDRAM. As we have mentioned before, the P4 is a good news, bad news story for
Intel. It does recapture for them the speed leadership from AMD, with the
initial P4s running at 1.4GHz and 1.5GHz (press reports are pricing the
products at $644 and $819, respectively), compared to AMD's Thunderbird, which
runs at 1.2GHz. On the other hand, Intel is pulling the P4 program forward,
which will weigh heavily on gross margins because initial yields will be low
and the die size will be considerably greater than the Coppermine PIII. In
addition, it will subsidize every purchase of RDRAM-based Pentium 4 with a $70
rebate. We are forecasting only 100,000, or so, units this quarter (compared to
34.5 million total processors) ramping up to several million units per quarter
by Q2. There will be several new developments for Intel over the next six
months. The company should introduce the 0.13-micron version of the PIII
processor, called Tualatin, some time by Q2. It will also introduce a DDR-
capable chipset by mid-2000, though VIA Technologies should have its own DDR
chipset out some time in Q2, under a licensing agreement with Intel.
DRAM SHOULD START LOOKING FOR A BOTTOM
After having fallen over 65% since July (the majority of which occurred during
the last two months), DRAM spot market prices for 64Mb equivalents seemed to
show some attempt at finding a bottom. The spot market for "branded" 64Mb DRAM
out of Asia initially began the week by falling from $3.50 to $3.00, but
rebounding slightly by Friday to around $3.15. Meanwhile, 128Mbs closed the
parity (2x price) gap with 64Mbs, with branded product falling from about $8.25
to $7.30-7.50 on the week. At one point during the week, we had brokers
offering us "unbranded" 64Mbs at $2.66 and "limited" quantity of 128Mbs at
around $5.80, both all-time lows. The premium 128Mbs have enjoyed over 64Mbs is
rapidly narrowing because most suppliers are quickly ramping up the higher-
density part. We expect the leading suppliers to derive a majority of their
shipments from 128Mbs starting early next year.
With prices still close to the all-time low, it is perhaps not surprising to
hear that a lot of the weaker DRAM suppliers are having a tough time. By our
guess, the cost leaders, like Samsung, Micron (MU, 2S), and Infineon (IFX, 2H)
are still making money, though just barely. Costs for second tier players,
however, are probably at about $5.00, or higher, which suggests they are
wrapping two one-dollar bills around every 64Mb DRAM they are shipping out the
door. Ultimately, that is an unsustainable environment and we would expect to
hear of sharp cutbacks in DRAM-related capital spending.
HIGH-DENSITY DOWN HARD AGAIN, LOW-DENSITY SLIGHTLY WEAKER
Gray market prices for 32Mb Flash dropped from $60 to $48, down 20% on the
week. Note that this came on the back of an already sharp 14% decline the
previous week, and indicates further availability of parts. With Flash capacity
set to double next year (the bulk of which likely to be for high-density
parts), this means that price declines for that segment of the Flash market may
outpace that of low-density parts for the foreseeable future. On average, high-
density Flash (defined as 8Mbs and above) fell an average 11.7% this week
compared to last week's 7.5% decline. The action in other densities was as
follows: average 16Mb TSOPs (the bellwether part for cellphone handset) fell $2
to $16, while 8Mbs traded lower by $1 to $9.67. Not to be outdone, low density
Flash began its own downward movement, following several weeks of stability,
with 4Mb and 1Mb SOJs closing the week 3% and 5% lower to $8.00 and $5.20,
respectively. |
