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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Barry Grossman who wrote (44254)	1/7/1998 1:02:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Barry - Re: Slater expects AMD to ship about 15 million processors in 1998...What do you think of the chances of this happening?" I'd guess that AMD could ship 10 or 12 million K6's this year, if they execute properly. The WILL to make these chips is there - but does AMD have the necessary equipment to EXPAND production - CMP polishers, wafer steppers, C4 bump fab equipment, VLSI Testers and handlers? Further - AMD's 0.25 micron process isn't even in production yet! The units they have shipped are SAMPLES FROM THEIR Sunnyvale Submicron Development Center - read the press releases from yesterday: {===========================} amd.com "JANUARY 6, 1998--AMD today announced that it commenced initial shipments of AMD-K6 processors based on 0.25-micon process technology during therecently completed quarter (Q4, 1997). The initial shipments, which were fabricated in the company's Submicron versions of the product." {============================================} Remember - they have to SELL these chips, not just make them. They now have Compaq as a customer as well as IBM - their two big OEMs. But Intel still has Compaq and IBM as customers as well as EVERYBODY ELSE - HP, Dell, Gateway, Micron Electronics, Packard Bell, DEC, Intergraph, Legend, etc. As Intel transitions to the Deschutes, they will offer Pentium MMX's at attractive prices just to maintain market share - limiting AMD's sales. With Compaq making an obvious statement by replacing many (but not all) mid range Intel CPUs with AMD's K6, Intel will be more than agressive in making sure Intel's other customers - Compaq's competitors - receive favorable pricing to match/beat Compaq's K6 PCs on a price/perfromance standpoint. So Intel is not without some leverage to use against AMD through Compaq's competitors! HP's recent announcement of a $799 PC with a 200 MHz Pentium MMX chip is an excellent example of that strategy already being inplace at Intel. On the flip side, what will the ASP be for AMD's 10, 12 or 15 million K6's be this year? Intel keeps driving down the price of the low end of their Pentium II line - $268 currently for a 233 MHz - and if they knock it down bt 33% per quarter and AMD has to maintain their 25% GAP between Intel's pricing, you can easily predict that AMD's ASP's will drop to below $100 by mid-year. Also, the 0.25 micron process from AMD still looks "weak" - only 266 MHz parts were announced but IBM and Compaq were not shipping them yet! Do you wonder why? That leaves Intel with an enormous performance advantage that will be widening in the not too distant future. Paul