AMD shortages
AMD has stated often that they have a current capacity of about 12.5M processors a Q, that’s probably a theoretical limit at the end of 05. Having been involved in manufacturing production (not semiconductors) I can tell you that the last 10% is very difficult to achieve, but the profits, at that point, in a high fixed cost business are tremendous as variable costs are the only things that reduce selling price. Further, AMD has been consistently, over the last few Q’s, saying that they have been producing at max capacity, even as demand has continued to increase through out the year. Actually, I've been most impressed with the way AMD has managed to handle the supply problem. Rev "E" must have been a dozy as 90nm alone wouldn't explain the relatively few supply problems that have been reported so far. Overall, at the end of 05 I suspect that AMD is probably producing at a capacity of probably about 11.5 to 12M processors a quarter and selling everything it can produce.
The question seems to be whether AMD has been able to keep up with increases in demand even as it has been able to increase production through 190nm and Rev "E" changes. Personally I think we'll find out that in q4 AMD depleted its' inventories and was shipping as fast as fast as the chips hit the loading dock. While one would have preferred that production met supply, that's not a bad scenario for the introduction of fab36 production. Again, with the INTC shortages and fab36 coming online just as demand seems to be ramping, the stars seem to have aligned in AMD's favor once again. Not that I expect much out of fab36 until late in q1, but given seasonal trends AMD should be able to continue meeting demand at present levels until fab36 starts to contribute.
Anyway, they’re at least 2 flavors of shortages. The one we're all familiar with is where we go into a store and can't find the computer we want. The other, more insidious type of shortage, occurs when AMD can't guarantee to supply an OEM. This not only results in reductions in the numbers of processors produced by AMD, but also limits the production of expanded OEM products, product lines, and new products. Again, I think this has been the bigger problem as I doubt that AMD would want its' credibility marred by over promising, as it has done in the past. It's more a case of what might have been than apparent shortages.
This is not the sort of issue that can be solved right now. Only in hindsight will we know the true extent of the supply issue. If say AMD is producing and selling 25% more processors at this time next year one could make a strong case that currently there is lots of demand that is not being met with supply.
AI
