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

To: that_crazy_doug who wrote (20834)	11/28/2000 11:29:31 AM
From: Dan3	Read Replies (1) \| Respond to of 275872

Re: AMD has said they expect ASPs to remain flat around 90 for this quarter coming up AMD has an important change in market position coming in Q1. Presently, all Athlon (and Duron) sales are made despite the burden of higher motherboard and case costs (of about $25 to $35) and marginally tighter memory specifications (which means up to a $10 higher RAM cost, as well). For Q1, the motherboard delta will go away, but P3/Celeron will still be able to use $5 cheaper cases and $10 cheaper memory. Nonetheless, Duron ASPs are effectively boosted by about $25, so that the market will see constant Duron pricing as a $25 price cut. Duron ASPs should do OK for Q1. The picture is even brighter for Athlon. As Intel is forced to position P4 as the competitor to Athlon, it must assume the burden of a case / power supply even more expensive than Athlon's, dual channel motherboards $75 more expensive than Athlon's, and RAM $100 more expensive than Athlon's. The market (in this case, OEMs) will see an effective price cut from AMD of $175, even if Athlon prices are held constant. Another way to look at it is that if AMD were to raise its average selling price by $75, they would still be at a $100 advantage over Intel, relative to this quarter. They may need it, too, in order to combat the perceived benefit of a numerically higher clocked processor. But whether they need it, or don't (if the IPC of P4 is recognized in the retail marketplace, Athlon needs no pricing advantage) AMD is in a very good postion for Q1, and just as good a position for Q2. Q3, Q4 is harder to call. Intel will have cheaper P4 motherboards and RAM somewhere in this period, but the chip itself will still be 2 to 3 times as costly to produce as Athlon. If SMP Athlon and Palamino come in smoothly, AMD will be hard to stop. If Intel were to get substantial volume out of its untested and untried copper .13 process much earlier than expected, Intel might get it's chip costs down to parity with Athlon and finally be competitive again. By the end of Q4 the hammers start showing up, and the whole race starts over again. This time we will see Intel trying to market its older 32 bit chip against AMD's new 64 bit chip. Regards, Dan

To: that_crazy_doug who wrote (20834)	11/28/2000 3:17:03 PM
From: Michael Ohlendorf	Read Replies (2) \| Respond to of 275872

Yeah, you are right. Athlon ASP should have been ~$175 in Q3 as opposed to my ~$130 estimate. Went back to my old calculation and saw my mistake. Anyway, I still think that their average ASP is more likely to fall than to rise. I think a crucial time for them will be 2H next year if Intel should be able to start to fill the gap between their PIIIs and the PIV by then. I still do not understand why they did not decide to go for this gap between 1GHz and 1.4GHz but decided to produce more Durons with ASPs of $60 ?