Advanced Micro Devices Inc (AMD)

[bobs10]

True, it's difficult to see how AMD could cause INTC much pain without having a lot more capacity. A price war would undoubtedly hurt INTC more than AMD, but to do so you need the capacity to back up your lowered prices. But, sigh, there are only a few areas where AMD has the kind of clout to cause INTC to even think about lowering prices. So far INTC has wisely refused to get into a price war.

Given AMD's capacity constraints, AMD has evidently also decided not to push sales through pricing, preferring to milk the market. AMD's superior products will probably be sufficient to create enough demand so that AMD can sell everything fab30 can produce at relatively high prices. The problem is that by q2/q3 of next year AMD isn't going to be able to meet demand. In the short run AMD will fix this by raising prices, but then it loses a golden opportunity to gain market share.

By the end of q3 AMD should be making gobs of money, but they will need it when fab36 comes online and the mother of all price wars starts. Of course that assumes that INTC will have caught up with AMD by then in product design. If not AMD just meets the built up demand and starts taking market share again.