Advanced Micro Devices Inc (AMD)

[bobs10]

Since the Earth still sucks I assume no force has repealed the laws of gravity. Same goes for the cyclical nature of the Semi business. The semis have always followed the rule that if it’s good, do it until it isn't. Fortunately it seems that the semi producers have gotten a lot smarter than they were in the mid 90's and the boom and bust cycles are getting less and less severe. 2k was a different situation brought about by once in a century conditions of demand.

In the latest cycle most of the semi producers, with the notable exception of INTC, have refrained from the capacity binges that plagued markets in the past. It remains to be seen if INTC was right and everyone else was wrong, but so far the extra capacity may have been a godsend to INTC considering the production problems they have had.

Any way, the point is that just through the act of the market thinking it has figured things out it has changed things. Another form of the Chaos theory? All I know is that things hardly ever work out the way the market figures and this time around will be no exception. There are just to many unknowns for someone to be placing bets today about what the semi market will be 6 months or a year from now.

Hindsight is better than 20x20 it's accurate so we'll have to wait and see if the market timers are right, but as far as AMD goes the cycle is becoming less and less important.

What AMD has always lacked, and INTC had, was critical mass, which lead to a steady customer base. That's not something that is going to be remedied over night, but as AMD starts to take more and more market share it will become less vulnerable to the cycle and like INTC produce profits come rain or shine.

Personally, I think we're on the threshold of an explosion in demand for smarts (processors), but that's another post.