Intel Corp (INTC)

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Hector Interview, Part 2

Part 1 Here: #msg-21370304

Operator: Your first question is coming from Tim Luke of Lehman Brothers. Please go ahead, sir.

Tim Luke: Yes, I was wondering if you could give us some color on the contributions of your 65nm ramp, particularly with respect to commanding higher premiums for your products. It seems like your competitor has been gaining share recently, and I was hoping you could shed some light on how you intend to address this.

Hector Ruiz: Thank you so much for asking. First of all, let me start at a high level. Our manufacturing strategy has not changed and our aspirations for continuing to gain share over time have not changed either. In the near term, we’ve had an outstanding performer out of Fab 36. The ramp as well as the yield, as Dirk mentioned, on 65-nanometer have been phenomenal, been outstanding.

Tim Luke: Yes, thanks for that, but in particular I am wondering if you have anything different planned in terms of your product strategy. Do you have anything in the pipe - anything at all - that will allow your customers to want to pay more?

Hector Ruiz: First, customers want us to succeed. The unit growth and new customer acquisitions just reported are clear indications of this. Large OEMs, distributors, enterprise IT decision makers and users of PCs and other digital technologies around the world agree that competition in the processor industry is good and healthy for our industry. They like what AMD is doing, have a taste of what things are like with a stronger AMD, and crave the innovation and choice that we bring to the table.

Operator: The next question is coming from JoAnne Feeney from Midwest Research. Please go ahead.

JoAnn Feeney: it’s been a while since you’ve talked about the lawsuit with Intel. I’m wondering how that’s progressing, if there is any new information there and how you see it impacting the competitive environment, both here and globally?

Hector Ruiz: We’re really well into this process. The discovery is intense and frankly we’re really pleased with the way things are going for us. We believe this is something that we are going to win hands down. We feel confident about it and the feedback from customers around the world if anything has strengthened in terms of their desire to make sure that this thing opens even further this fair and open competition space. We feel pretty good.

Operator: We have time for one final question. This one is coming from Chris Danely of JP Morgan. Please go ahead.

Chris Danely: I guess if this keeps up where you try to gain a lot of share but you end up losing money still say in three or four quarters, would you guys choose to maybe pull back a little bit and focus more on your more profitable segments and less on market share? How does that sort of work out?

Hector Ruiz: Pull back? As in exit the processor business and leave the world in the thralls of a single monopoly?

Bob Rivet: I'll field this one. You see, the only good factory is a full factory. I think I probably say that every conference call, and so the mission is to sell the factory out and get the most revenue you can for that output. A niche strategy doesn’t work in our business when you own that kind of machinery, plus it doesn’t work against the kind of competitor we’re dealing with and leaving profit pools un-attacked. So we have to work our way through that. Clearly our goal is to have unit share, dollar share and profit share.

Chris Danely: But my question is, how do you intend to achieve this share? Our market research seems to suggest a luke warm response to Barcelona, and yet Intel is poised to ramp on 45nm, and plus they have their new micro-architecture launching next year. How do you plan to address this, and still maintain your plans for winning the market in all the respects you describe?

Hector Ruiz: Barcelona is a world class micro-architecture, and it has won the respect of mainkind for its first ever native quad core implementation. The performance and power efficiency characteristics can't be beat, and we are leading the competition by more than 40% in all relevant benchmarks. The competitor promises future products, but let's see if they actually deliver to their promises. We have Barcelona today, but their first native quad core is still more than a year away, and until then, they are still relying on a 10 year old bus architecture. Our products have 600 million - almost a billion transistors - higher than mankind has ever created in a native quad core before. And customer designing the fastest supercomputers in the world demanded our products when they had competitive products to choose from. Which proves that in a world without illegal monopolistic tactics, customers demand what we sell. We are making great ground in terms of returning to profitability, and we will inform you as we make further progress. That is all.

Operator: Thank you. This does conclude today’s teleconference. You may now disconnect your lines at this time and have a wonderful day.