Advanced Micro Devices Inc (AMD)

[kpf]

Paul

Not sure you can trade up the shares you win in a competitive environment. What could be possible is to increase gm by means of lowering cost a tad over time. But even this is questionable in my book. So the benefit is really limited to building critical mass imo primarily.

Beyond, there is a side-effect to consider from AMDs strategy: It might disturb its competitors inventory management. I see AMD going for business in pricepoints Intel probably intended to ship P4. They still have more than one fab manufacturing it, so their inventory issues are likely to stay as long as AMD continues its path. Utilization of Intel will continue to suffer and make AMD look successful in competitive terms. Paul indicated Intel does not intend to aggressively defend business hurting its ASP in the best interest of shareholders. So what applies for AMD on the server side applies for Intel on this: They gotta live with it and concede unit shares in lower desktop and mobile pricepoints and bite the bullet of underutilization charges for a while longer.

Bottom line, it really looks like competition. No Nash-games.

K.