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

To: eracer who wrote (217821)	11/28/2006 10:05:16 PM
From: combjelly	Read Replies (1) \| Respond to of 275872

"That could mean a flood of cheap chips which could hinder Intel ASPs even with Core 2." The cost won't be that much cheaper. The only change in cost will be the die cost, everything else is the same. While die cost is probably the single largest cost, it is likely dominated by all the other costs combined. Still, it could easily knock $10 or more off the costs. The first part is much more important. It does mean there are a lot more chips possible from the same capacity. Fab36 should be producing more square units of silicon than Fab30 at this point. Between the shrink to 65nm and the denser L2 cache, especially if they focus on yield at the expense of top speed or low power, AMD can greatly increase the number of chips produced. With Chartered 65nm process ready to go(thanks muzosi) and AMD is not doubt preparing to switch their Chartered production over, AMD will be ramping to potentially a lot of chips come next year. The $10 or so per chip helps. But selling 2 or 3 times the number of chips at a lower margin wouldn't be a bad trade off. So you are correct, a flood of cheap chips could result. But it wouldn't because of the lower costs, it helps some, but AMD will now have the capability to accept a lower margin for greater sales and still make more money. The looming problem for Intel is "how much is the Conroe premium worth?". Yes, they outperform the K8. But this isn't the days when a fast processor was 300MHz. The 65nm K8 desktop chips will have decent performance and decent power consumption at 65 watts. How much of a premium can Intel get for Conroe over K8 X2s? In another market, notebooks, the answer has been "not a lot". Turion has been a wonderful success story for AMD. Now true, Core isn't Merom. But Merom seems to have made a trade off of more power consumption for more performance and that probably isn't going to win it a lot of friends. It looks like AMD is betting that the same formula will work on the desktop. Now granted, it is all they have. But there isn't any obvious flaw in the formula. Yes, for the moment, they have ceded the top end. Now 4x4 enables them to hang onto some of it, and might enable them to carve out a new segment. It would be very interesting to see how an I/O monster like 4x4 does on the market.