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

To: Elmer Phud who wrote (123850)	6/16/2004 2:59:18 AM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

Elmer, Intel should be producing at least that many processors from each of their 300mm fabs if they are running at full capacity (what is their capacity anyway?) and have good yields. Do you know if they are running at full capacity? Underutilized fab capacity is not preferable to lower margin production: Message 20224540 I will also tell you that processors are not the only products running on 300mm wafers. Good point. There may be other uses for the state of the art 90nm silicon, worht its weight in gold. For example, this particular product, Sponge Bob Square Pants Bikini Bottom Boat Race amazon.com could benefit from such silicon. So if you don't know what products are running in those fabs and you don't know the capacity of the fabs and you don't know if they are running at or near capacity, how are you to estimate anything? Well, you said it makes no sense not to run at capacity, I told you that it makes no sense to use the highest end process technology for low margin production (non-CPU) production. Therefore Intel must be suffering disastrous yields. Or could it be that making and selling more, at lower prices, would not increase revenues by the amount greater than the increase in production costs? That's still well below the capacity of F30. How do you explain that? Is it demand limited? At volume of 10M processors of average die size of say 100 to 120 mm^2, would probably be close to production limits (with good yields), IMO. So limited demand for both K7 and K8 has been the reason that output was less than potential, in your view. You're the first person here who is willing to acknowledge that possibility. I have been saying it for over 3 years now. I think K8 was demand limited right through Q1, and now, in Q2, we may have an unexpected surge in demand, which AMD can barely fill, given the number of wavers they started. The new 90nm supply will need to generate new and greater demand, assuming there is 90nm supply. Supply will need to generate new and greater demand... I guess we are all supply siders now <g>. (Both Reagan and Nixon turn in their graves, Reagan smiling, Nixon not) The way I see it is that there are 2 entities out there, the old $70 ASP AMD and the New $150 ASP AMD. The 130nm K8 just seeded the market of the new AMD, 90nm K8 will deliver the volume. I am not too concerned about the sum of units sold by the old and the new AMD. I am mainly interested in the New AMD going up. Back to 90nm supply generating new demand: yes it will, to a degree, but 130nm is already doing fine, at least this Q. 130nm just can't deliver enough of the supply longer term. The areas where the new demand will be generated is mainly in notebooks, blades and servers, which will benefit from somewhat lower power consumption. I think it's time to address the point that AMD will need to take market share from Intel if they are to make any reasonable headway. Unitwise, it is not really necessary for AMD to take market share away from Intel for AMD to do well. The overall market is growing well (BTW, even in post 9/11 NYC, the recession was just today declared over as the city grew by 7% (annualized) in the last quarter). But the bigger conributor is AMD moving up with ASPs. Where Intel's ASPs will go, I don't know, maybe stay the same, possibly even going up. One indicator where AMD will likely make headway is $ market share, but in growing market, Intel may not even notice. Joe

To: Elmer Phud who wrote (123850)	6/16/2004 7:53:27 AM
From: Dan3	Read Replies (1) \| Respond to of 275872

Re: processors are not the only products running on 300mm wafers So, you're claiming that the reason why Intel hasn't had any $700 3.4ghz P4s to sell for the past 6 months of "shipping for revenue" is that they decided to use their new production lines run $1.99 network chips instead? I think you're wrong.

To: Elmer Phud who wrote (123850)	6/16/2004 9:20:17 AM
From: porn_start878	Respond to of 275872

Elmer confused in excuses <eom>

To: Elmer Phud who wrote (123850)	6/16/2004 9:19:56 PM
From: fyodor_	Read Replies (2) \| Respond to of 275872

Elmer, re: Fab capacity, actual output, demand, margins... Without wanting to get too involved in this (at least) 5-year argument (I distinctly recall this discussion from when I first started reading SI in '99), I do want to make a subtle point that I believe is being overlooked: It is actually easily possible to be both demand-constrained and still be able to sell many more processors (at same prices)! The reason is simple: AMD could well be demand constrained at one end of the performance spectrum, but nowhere near that at the other. This argument would work for either end, but for the sake of argument, let's say they are demand constrained at the high end. AMD has to make money on every wafer that goes through the factory. But the resulting processors bin roughly according to a Gaussian distribution. In other words, there will always be far fewer high-end chips than low-end chips. In order to make money, AMD needs to reach a certain "wafer ASP". Low-end chips would sell for less than the average, high-end chips for more. (No kidding). However, if AMD is demand-limited at the high-end, they are suddenly faced with a problem of satisfying demand at the rest of the spectrum without losing money; even if they are charging the same prices for these parts as before, they would lose money, since there would not be a similar sale of high-end parts to bring the total "wafers ASP" up over break-even. As it pertains to the current discussion, this presents an easy, elegant way in which what AMD has said can be reconciled with what we see (and your BOTE calculations). -fyo