Re: I agree that AMD's price positioning is a mess. But beyond that, where are all these parts coming from ?
It suggests that AMD oversold their partners. Grey market products are products that were resold from one vendor to another, with the first vendor eating a loss.
Say AMD sells Dell 1M units, and Dell foolishly believes that coming out with more AMD skus is the best idea since sliced bread. However, the realistic demand for all those new AMD skus was 700k, not 1M, in spite of Dell's best efforts to promote the product. So Dell is stuck with a bunch of parts it can't sell quick enough, and they know that new products are coming out, and they can't possibly keep up.
They may decide to take 150k of those parts and put them at deep discounts and resell them into existing lines. And then they may take the other 150k and sell them into the channel at a loss (or, considering the deep discounts that Dell gets from AMD, perhaps break even). You can even pretend that one of those vendors is Newegg.com. So Newegg purchases these tray parts from Dell, and advertise them on their site at lower prices.
This is a doubly bad thing for AMD.
For one thing, AMD is limited in what they can sell to Dell. Dell is overstocked and will accept no more parts from AMD. Secondly, AMD can only sell so many parts to Newegg's distributor, because now Newegg.com has a fixed demand for AMD parts that is now being spread to much cheaper grey market items.
Is that a bit clearer...?
Re: If you recall, q2 was surprising in its unit AMD strength, and q3 also, but to a lesser extent
Q2 wasn't all that surprising. AMD had a terrible Q1 because they sold most of their units to Dell in Q4, but Dell was late in introducing the items. This left AMD depleted of their inventories, meaning that in Q1 they had less excess to meet demand. And obviously, Dell wasn't accepting any more orders. Relative to Q1, Q2 looked great, mostly because AMD caught up with their manufacturing throughput, Dell started shipping systems and asking for more parts, and everyone was happy. Even though AMD's parts were less competitive, the backlog contributed to their throughput. Arguably, the extent of the backlog can somewhat explain their Q3 numbers as well.
Also, AMD got a new design win mid-way through the year - Toshiba - which enabled record mobile growth in the 3rd quarter, easily overcompensating for Intel's stronger Santa Rosa platform. I don't expect we'll see AMD's mobile growth continue for much longer. In fact, I expect it to retreat fairly quickly.
Re: Because there is another puzzle, which is how can AMD have so much production capacity to have so much over supply, while their unit share has increased due to large low end sales ?
Figure that each 65nm fab can roughly supply ~25% of the CPU market, give or take a couple of percent. AMD has one, and Intel has three. Intel is servicing 75% of the market, and AMD about 25%. Occasionally, AMD can stock pile parts for quarters with high demand, and they also have the foundries for extra flexibility.
While AMD's share has gone up in some areas and down in others over the past year, they have still failed to exceed about 25% of the market, and I don't expect them to be able to exceed this without a second major fab.
AI
