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

To: smooth2o who wrote (217490)	11/22/2006 2:22:23 PM
From: combjelly	Respond to of 275872

"Great, but doesn't mean that buyers are shifting to low end notebooks." Well, they are buying more of the low end notebooks instead of the high end ones. A lot more. Else the the ASPs wouldn't be falling. Given that the ASP of the Taiwan ODMs was $601 in Q405, there just aren't that many high end notebooks being made in Taiwan. Now granted, that is the price they sell to the OEMs and not the consumer, but...

To: smooth2o who wrote (217490)	11/22/2006 2:23:19 PM
From: jspeed	Read Replies (1) \| Respond to of 275872

"INTC: Death of the High Priced MPU" www1.investorvillage.com " ... Why The Big ASP Drop? We think that there are two important drivers of the ASP declines, 1) that the high-end MPU is providing more functionality than the mainstream consumer needs or is willing to pay for, and 2) after struggling in 2002, AMD has emerged as a tenacious competitor, with both a product cycle and enough capacity to supply the largest PC OEMs for the first time in perhaps a decade. Chart 4 below shows that on a unit basis, AMD has been gaining share in all three MPU segments: server, desktop and notebook. The analysis follows simply from the market share – more share translates to greater competition and greater pricing leverage from the OEMs on the MPU vendors. Do We Expect The ASP Erosion to Continue? We think the question as to whether Intel’s ASP erosion will continue is a function of whether or not its customers believe that having two strong competitors is healthy for MPU pricing. Chart 5 below suggests that it is. This chart shows the ASP of Intel’s solution over time, as well as the ASP of the PC over time. Between 1998 and 2002, PC and Intel ASPs declined at the same pace, suggesting an equilibrium in terms of profit distribution between them. However, between 2002 and 2005, Intel ASPs were quite stable while PC ASPs continued to decline, suggesting that Intel was capturing a disproportionate amount of the value in the market. Why was it able to do this? We think for two reasons: 1) to Intel’s credit, it developed a superior notebook MPU solution, which added utility and generated unit sales of PCs, and at the same time, 2) AMD was on the ropes, trading down to $3.50 per share, it was resource constrained and could only afford to focus on the Server MPU, ceding the high-growth notebook market to Intel. Interestingly, the chart also shows a material decline in Intel ASPs during 2006. We think that this is a reflection of AMD reemerging from 2002 with its financial house in order, a competitive product lineup and capacity to supply large OEMs. From an OEM standpoint, they saw Intel MPU ASPs decline for the first time in years. Bottom line, we think that this chart demonstrates the advantage that OEMs have to support multiple suppliers in the market, which would also support the notion that PC-OEMs increasingly source AMD in their PCs. Chart 6 below illustrates how the ASPs of AMD and Intel MPUs have converged over the past eight years. We think that it reflects PC OEMs’ opinions about the competitiveness of the two companies. It is clear that the ASPs of the two companies have been converging; we wouldn’t be surprised to see them intersect sometime within the next two years." ...