Intel Corp (INTC)

[jhalada]

Alan,

I agree they can maintain revenue...
if they can generate enough silicon. AMD should get about 1 X2 die for every 3 Athlon 64 die... thus to maintain unit output they need to triple silicon output. Now, as you have noted, as ASP drops the potential volume will increase, so to actually maintain revenue at the lower ASP's will require more than 3X the silicon area. That is going to have a pretty dramatic effect on gross margins and profitability for AMD... no?

Good point. But AMD does not need to convert 100% of its capacity to X2 and some Turions. Only Athlon 64s that are not already X2. Let's say 20% to 30% of output. So let's say you are right about 2x die area. It would mean AMD will need 140% to 160% of its Q4 or Q1 capacity, to ship Q4 / Q1 equivalent of units.

Q2 posed no problem as overall units are down, and Fab 36 output contributed somewhat. Capacity should not be under pressure in Q3 either, as there will be low end Chartered output, and more substantial Fab 36 output. Costs will likely go up. Q4 to Q1 2007 should go back to normal, costwise as AMD transitions X2 production to 300mm 65nm.

Prices and unit volume are big unknowns.

Joe