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

To: Sarmad Y. Hermiz who wrote (219983)	12/11/2006 8:21:34 AM
From: niceguy767	Respond to of 275872

AMD's margins will likely trend in the same direction as the monopolist's. After all, eco 101 does teach that it is the monopolist that sets pricing and therefore defines sector profitability. So, if INTC's margins continue to trend lower so, too, will AMD's...Again eco 101...Theory of monopolies.

To: Sarmad Y. Hermiz who wrote (219983)	12/11/2006 8:23:44 AM
From: pgerassi	Read Replies (2) \| Respond to of 275872

Dear Sarmad: All of your bantering about the transition doesn't make AMD ASPs lower by 40%. AMD ASPs are over $60 and they have never gotten to $100, so by definition they have not fallen by 40%. What you neglect is forgetting that the sweet spot bin has risen from single core at 2GHz to dual core at 2GHz. That ASP is about the same. With more good dies being available per 300mm wafer over the 200mm one even taking into account the larger size of the DC over the SC, AMD still gets more revenue per 300mm DC wafer than they got with SC on 200mm. Going to 65nm makes the die size about the same between 90nm SC and 65nm DC. Intel's statement which is where the 40% die cost reduction came from was not between 90nm on 200mm and 65nm on 300mm. It was from 200mm to 300mm on the same process node. Also note that die cost could double, yet the cost of the packaged CPU would go up between 10-15%. A 40% reduction in die cost affects packaged cost by only 4-6%. The big effect is capacity of a certain fixed sqft of clean room to good dies (same size) per quarter. Taking all of the above, the 40% reduction in ASP for a fixed bin doesn't directly imply a 40% reduction of margin. What happens is a shift to higher bins for about the same ASP. Four years ago a 2GHz Northwood (P4) had a $800 ASP. You wouldn't pay $40 for it now. That's a 95% reduction. Are Intel's margins a negative 45%? No. That bin was EOL a long time ago. Pete