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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (123756)	12/28/2000 7:07:53 PM
From: Dan3	Respond to of 186894

Re:The war is not really between Intel and AMD. What is best for AMD as well as for Intel is that Wall Street has a good understanding of the microprocessor and semiconductor industry. I don't understand what Wall Street means by technology if they are not refering to semiconductors and microprocessors. There is no monolithic "Wall Street" that does or doesn't understand the semiconductor industry. But several things have recently become clear. Intel worked hard to build itself a proprietary platform (the Pentium PRO, Pentium II, P3 platform - plus the new P4 platform). This forced AMD to develop its own platform (slot A / Socket A). In 2000, the Intel platform cost about $150 to build($75 motherboard plus $75 128 meg RAM - then buy an Intel chip to plug into it). In 2000, the AMD platform cost about $225 to build (motherboard, video card, network card or modem and memory - then buy an AMD chip to plug into it). The result was that Intel could sell Celerons for $100 and if AMD charged more than $25 for a Duron, then using the AMD chip cost manufacturers more than using Intel's chip. In 2001 the low end of Intel's line uses the same $150 platform is used in 2000, but the high end needs the P4 platform which costs about $350 to build ($150 motherboard plus video card, network card or modem and $150 memory - then buy a P4 to plug into it) In 2001 both the low and high ends of AMD's line use the same $150 platform. Now AMD can charge $75 for that same chip and leave Intel's chips looking more expensive. At the high end, AMD can charge $200 for a chip and Intel will have to give P4s away free to match system costs. The fact that the P4 costs 4 times as much to build as AMD's Athlon, doesn't make things any easier for Intel. AMD has gone from being at a huge disadvantage in costs to having either similar costs to Intel's or being at a huge advantage. Intel delayed this reduction in AMD's costs by distracting what once was AMD's primary chipset source by giving VIA a socket 370 license. This held back AMD in 2000 and temporarily elevated AMD's costs, but is no longer holding AMD back in 2001. But now Intel no longer has a proprietary socket in the the FCPGA socket 370 since it had to give up rights to that socket to delay VIA's production of integrated chipsets for AMD. This year Intel not only faces midrange and high end competition from AMD, it also faces low end competition from VIA's Cyrix line of Celeron level processors. And VIA's Cyrix line is a drop in for Intel motherboards since Intel gave up exclusive rights to its Celeron/Pentium III architecture. Wall Street may not understand microprocessors, but Wall Street does understand when your competition's costs go way down and your costs stay the same or go up, and you suddenly face two competitors instead of one. So far, Intel is still in great shape in the mobile, SMP, and Fortune 1000 markets. But Intel is suddenly at a big disadvantage in the consumer and small business markets, and the other sectors are now being targeted by AMD. At the same time, Intel's huge investment portfolio is a drag on earnings instead of a benefit. Dan