Intel Corp (INTC)

[Dan3]

AMD to cut prices by 2/3s on most chips.

With output from 3 times as many FABs as they had last quarter (from 1 to 3) AMD is slashing prices next week:
http://images.dailytech.com/nimage/2094_large_amd_pricing_1023.png

Intel is expected to exit 2006 with NGA parts at a run rate of 40%. So they'll likely average less than 20% over the next two quarters (ramp likely will accelerate a bit rather than be linear). The other 80% of Intel's production for the rest of the year will be Netburst parts facing that new AMD pricing.

Not great for AMD, by any means, but given Intel has 10 times as many employees to pay, this is going to be a tough year for Intel.

Intel hasn't faced this kind of financial pressure for a long time. Their working capital is down more than $5 Billion in the past 2 quarters and they're starting to accumulate some debt.