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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tim Higginbotham who wrote (40400)	10/30/1998 10:24:00 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 1573682

Higgie, RDM said an ASP of $150 NEXT year. That would be boosted by the K6-3 and the K7 which will sell for a lot more than a K6-2. This may indeed happen and probably has to happen for AMD to keep margins or build them. Jim

To: Tim Higginbotham who wrote (40400)	10/30/1998 4:29:00 PM
From: RDM	Respond to of 1573682

I would like to explain my $150 ASP for AMD in Q4/99 analysis. I would agree that the current environment yields a $100 AMD chip price. However this is based upon a performance level of 350/450 (75%) of Pentium II throughput. I expect next year that the throughput ratio will raise for the bulk of each makers chips. Intel currently must be shipping Pentiums at a rate more than 20M/quarter for a revenue of more than $5B per quarter. This indicates that their ASP is around 5000/20=$250 per chip. They an alter the pricing profile by offering cheap Celerons due to having a 450/350 advantage. Next year, I believe that the performance advantage of Intel will narrow perhaps to 600/550 (110%). If AMD is at a 550/600 (90%) performance level they should be able to command a higher price relative to Intel than they have enjoyed before. The recent trend has been AMD/Intel ASP of 100/250. I propose than in an environment in which AMD is no slower or possibly faster that they should be able to hold or gain share with AMD/INTEL ASP of 150/250 rather than then 100/250 ratio currently experienced. Of course this is an optimistic scenario with all kinds of implicit risks. However, crazier things have really happened. If AMD chips outperform Intel chips Sanders will not under-price Intel.