Going forward.
Incidentally, a great CC with lots of information and for once good questions from the analysts.
One of the things I found most interesting was the comment by Dirk that AMD was not capacity constrained in q1. I read this to mean that AMD is not yet ready to go head to head with INTC in the pricing area. The best way to look at what AMD has planed for INTC is to think of the way a boa slowly crushes its' meal, rather than a baseball bat to the head. So, I expect q2 to be kind of like q1 with AMD letting INTC have the low-end again and concentrating its' efforts on 300mm, 65nm, and the raft of new products coming in q2/q3.
By q3 though things really start to get interesting as this is the strongest time of the year for demand and AMD will then have all its' ducks lined up. At that time I expect AMD to start exerting increasing pressure on INTC in the low-end of the market as AMD uses its' considerable cost advantages to eviscerate huge hunks of market share from INTC’s hide.
What cost advantages? Well, besides the fact that INTC is a fat pig with way too many employees and a bloated infrastructure, by some time in q3 AMD will be at 300mm and 65nm and getting much better yields/binsplits than INTC. So far AMD has managed to take large hunks of INTC's market share with nothing more potent than 90nm and 200mm and a very restricted capacity. Imagine what happens to INTC's margins when those impediments are removed and INTC can't keep its' fabs full while AMD is running at near capacity in a fixed cost business. All right, perhaps the much better yields/bin splits thing at 300m and 65nm is somewhat of a leap of faith, but I'm not at all convinced that INTC's current 65nm/300mm process is competitive with AMD's 90nm/200mm process.
Personally, by the end of q3, I think INTC will be having a very difficult time trying to compete with AMD in the low-end of the market. In the high-end of the market cost is much less relevant so we might see a flip/flop again in market positioning if NGA is the homerun that the INTC fans think it will be. Under that scenario, the worse case would see AMD again relegated to bottom fishing as INTC reclaimed the high-end. Personally, I find it much more likely that all NGA does is restore a more competitive environment in the high-end which still leaves AMD with its' lower cost structure advantages.
It's not like this is some sort of secret. I'm sure INTC is already feeling the pressure, as contracts need to be signed way in advance. Perhaps we'll get more of an inkling as to what INTC's response will be in the upcoming CC? Right now I don't see how INTC can compete with the huge amount of capacity AMD has coming online combined with AMD's much lower-cost structure, but maybe INTC has a plan?
From AMD's point of view the boa is hungry.
