Advanced Micro Devices Inc (AMD)

[woggut]

How will the ASP drop to $52 affect product already in the channel? Will Intel have to make refunds to the channel inventory holders?

That's the way it worked in the electronics distribution business (back in the 90's anyway), the distributors get price protection. That's why the OEM's who do a buy/sell get pissed about bigger than expected price drops, they have to mark inventory to market. Makes sense if you think about it, otherwise distribution would be too risky to be a viable market. You'd be sitting on inventory depreciating at 10-20%/quarter, and subject to dramatic price drops. The manufacturers need an inventory buffer so you don't end up "backordered to the fab", disrupting your planning processes. The components are too specicalized (and change too often) to have a viable futures market.

In the past AMD didn't recognize revenue from distribution until it sold through to an end customer. Intc was apparently more aggressive on revenue recognition. Of course, Intc could have done a "deal you can't refuse".