Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Dan3 who wrote (152648)	12/16/2001 1:37:13 PM
From: wanna_bmw	Respond to of 186894

Dan, Re: "If you compare your estimated cost for Tualatin (Same size as Athlon) with your estimated cost for Northwood, you get the 40% cost advantage that Sanders was saying AMD expected for next year (even with Intel using 300mm and AMD using 200mm wafers)." For Tualatin, I also assumed 90% yield (quite an arbitrary number). Sanders might be over-estimating yields as well - or he might be underestimating Intel's yields. While I don't think that AMD's yields are as bad as 27%, I do think there is a grain of truth to Paul's and Elmer's arguments. Intel probably has more dice per wafer at a given size, so this advantage may partially or fully outweigh AMD's size advantage to give them both similar dice per wafer (and thus similar cost advantages). But, like your point was, this may be moot, due to the far larger costs involved in Capex, R&D, and administrative. Re: "The cost advantage is what allows AMD to survive while it's ASPs are so much lower than Intel's." It seems that AMD's cost advantage stems from the fact that they are a smaller company, which allows them to get away with more dexterous dealings. They couldn't, for example, work so well with Motorola or IBM if they were as large as Intel - Motorola and IBM would see them as potential competitors, and thus keep their research to themselves. Also, as the size of a company grows, so does the overhead. Look at AMD's expenses this last quarter, and compare it with expenses over the past few years. It is higher, because AMD has grown in market share over the past two years. Much of Intel's expenses are bound to be less efficient - you simply can't have a $6-8 billion per quarter business and not have some gross inefficiencies. As AMD grows, so will theirs increase. Finally, as AMD moves into newer market segments, if they want to keep up the fast pace of microprocessor design, they'll need more design teams to create infrastructure and support for their various products. In 2000, all AMD was working on was getting their Athlon line out the door. Now, AMD has Athlon, Duron, Athlon 4, Mobile Duron, and Athlon MP. Next year, they will have to support all of these designs, and make room for Hammer. It is also said they are working on numerous Hammer chipsets, which increases the work that must be done. In order to support all these projects, it soon becomes a management nightmare. So many projects rely on other projects to transfer data on bug fixes, support, and other information, that when the number of projects increase, so does the difficulty of managing them well. Intel has had similar difficulties, and now so will AMD. While AMD's huge success with the K7 has doubled their market share or more over the past two years, it will certainly be harder to do the same thing with the K8. AMD still has few OEMs that are offering to carry their products, they have few ISVs to offer support and optimizations for their micro-architectures, and they have few partners to offer support for designing and validating a platform for their products. It's still important to remember that AMD now requires a lead in both price and performance to maintain their current market share and growth over Intel. Falling behind, or even reaching parity with Intel will potentially cost them market share. Sanders is still waging the battle because he feels confident that Intel will continue to falter, and give AMD room to expand. It's well accepted that AMD mostly cruises off the shortfalls of their competitor. If Intel doesn't falter, and AMD falls short instead, even their more efficient and well laid plans may fall apart to Intel's momentum. AMD isn't fighting a sleeping giant any longer. The giant is now well awake, and ready to meet the competition with more realistic expectations. wbmw