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

To: wbmw who wrote (238658)	8/12/2007 3:41:22 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 275872

>> AMD doesn't have to wait until Q4 to sell 25M CPUs. They can do it in Q3, It is very easy to estimate AMD's production capacity one quarter ahead. The basic method is that every processor they sell in q3 had to be in some form of inventory as stated in the q2 report. (Similarly, every piece they sold in q2 had to come from inventory declared in the q1 report). At end of q2, AMD had $892, inventory. Down $46m from q1. They said $30 was due to reduced value. That leaves $16m due to actual reduction in units. Which means, that if AMD was not "demand-constrained" in q3, they cannot sell more units than in q2 (since in q2 they enhanced their sales from inventory that had been built in q1, when they were "demand-constrained". There is an unknown in this model, which is that fab 36 capacity has not yet plateaued. So the rate of capacity increase must be worked in. Let's say that is 15% per quarter increase of fab 36. That translates to about 10% of total capacity. The result of this model is that at most AMD can sell 10% more units in q3 than in q2. Assuming same mix of silicon area per part, and same yield as previous quarters. If we account for mix shifting to larger dice, then the result is fewer units, though possibly higher revenue. So my model says at most AMD's q3 units will be 17 m. I think this result can also be extrapolated to q4, which will be limited to 19m units. But really one has to wait for q3 inventory figure to have confidence in q4 estimate.