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To: Tony Viola who wrote (160895)	3/2/2002 12:25:16 PM
From: dale_laroy	Respond to of 186894

>You work for AMD marketing or what?< No I'm psychotic, er. make that psychic, well maybe both. Think about it. 1) AMD claims that they will have 315 Athlon XP candidates at 130nm and increase to 400 Clawhammer candidates at 90nm. Why would they shift their capacity estimates from Athlon candidates to Clawhammer candidates if they were not planning on a major shift in production mix. 2) AMD planned on phasing out K6-2 shortly after introducing TBird, but because of market demand AMD continued producing large quantities of K6-2 processors up to six months after they had planned on discontinuing production. Unlike Intel, AMD realizes that they have to produce what the market wants. 3) With the phase out of Fab25, AMD will become capacity constrained with the 130nm transition at Fab30, unless most of their capacity is used for Athlon XP while Duron is outsourced to UMC. Shifting capacity to Clawhammer will constrain capacity, since Clawhammer will have a significantly larger die size than Barton, and the move to AMD's SOI process technology will reduce percentage yield. At 130nm AMD will be able to get only about 20% more Clawhammer processors from a wafer at Fab30 than they can Athlon XP processors currently. Because AMD's emphasis is on increasing market share, AMD will sacrifice some margin on Athlon XP versus Clawhammer to maintain market share. AMD will therefore maintain a price progression for Clawhammer similar to that of Palomino. Clawhammer systems introduced in H1 2003 will be priced similarly to Palomino systems introduced in H2 2001. This will be in spite of the normal trend of system prices dropping over time. Paying H2 2001 prices for H1 2003 systems will discourage more than a few consumers from embracing Hammer. Of course, these H2 2003 systems will be overall more capable, with DVD-RW replacing CD-RW and the latest integrated nForce graphics replacing Via's integrated graphics, but for the time they will be upper midrange systems. 3) While AMD is placing emphasis on market share, they are not blind to profit margins. If demand for Clawhammer is strong enough to drive profit margins significantly higher, AMD will meet this demand at the expense of Athlon XP. However, AMD will need to realize at least 10% higher revenue per wafer for Clawhammer versus Barton to shift production. Furthermore, OEMs will essentially have to contract for Clawhammer processors 3 months in advance of the introduction of a new Clawhammer based product line. With enough such contracts, AMD would make Clawhammer production a priority, but AMD is not about to produce large numbers of 130nm Clawhammer processors in the hopes of being able to sell them. 4) With the transition from 315 Athlon candidates per wafer at 130nm to 400 Clawhammer candidates per wafer at 90nm, AMD's unit capacity will far outstrip market growth even with total transition to Hammer. This will mean that AMD will no longer be capacity constrained and will be aggressively pushing the transition to Clawhammer in order to keep unit production in line with overall demand. This will not be difficult since, at the 90nm node, Clawhammer should clock 20% higher than Athlon XP. This means that the low end speed grade fallout Clawhammer 90nm processors would actually clock nearly as high as the peak speed grade 90nm Athlon XP processors. AMD will develop overcapacity at Fab30 long before the transition to 90nm is complete, so the slower 130nm Clawhammer processors will be priced very aggressively versus the same speed grade 90nm Athlon XP processors in order to more effectively shift demand to Clawhammer.