Advanced Micro Devices Inc (AMD)

[jhalada]

Buggi,

AMD throws volume
at "any price" on the market just to sell out all the new
capacity which will come online.

That was Intel strategy, while awaiting Conroe, which Intel supporters thought was brilliant. AMD is probably going to repeated, while awaiting K8L.

I am not so sure that the strategy is so great, because the depressed ASPs are hard to recover. OEMs will be resentful to price increases, and will resist attempts of them gaining the driver's seat to Intel going back to the driver's seat.

Another problem I see is that it was hard to sell high performance at substantial premium (outside of performance sensitive niche) last time around (SC), and this time around (DC -> QC) it will be even more difficult.

I think what was helping AMD last time it had performance lead was not only the performance lead, but substantially better combination of thermal envelope and power management - which made AMD CPUs much more OEM friendly than Intel ones - but I am side tracking...

Back to possible strategies, AMD does not have many options other than price everything they can manufacture to sell. Intel did have an option when during the Intel initiated price cuts to not cut prices (so aggressively) and let AMD bump into its capacity limits and stay there, with much higher overall profits to the industry.

Intel's strategy was to sacrifice its own profits in order with the reason of limiting AMD profits (and unit market share losses, which were really bad PR for Intel).

As far as AMD not having any other options other than price everything to sell, the reason is that unlike AMD last time, Intel this time is not going to bump into capacity limit, since Intel is (likely) carrying extra capacity.

As far as Intel limiting AMD profit to limit AMD capacity, I think that cat is out of the bag now, and we are entering uncharted territory. With Q2 demand seasonality, AMD capacity growth and 65nm conversion (substantially in Q2), AMD capacity is likely to exceed 30% of the market demand...

Joe