Replies to post #3993 on AMD strictly moderated (AMD)

[chipguy]

Another thing, often argued about on this board and used by the AMD fans in their logic, is the false assumption that AMD was capacity constrained. AMD made it clear, they were NOT capacity constrained.

Didn't they say they reduced Opteron pricing in the latter
part of the quarter? Doesn't sound capacity constrained
to me.

[wbmw]

IMHO, many really good points that I agree with. So I will just comment on a couple things I felt differently about:

Re: Inventories is an area I have questions about. While the value of inventories are down, which usually is positive, they did not mention if units were down respectively. Is it possible they anticipate lower ASP's going forward and valueing the inventory accordingly? Later, they said they want higher inventory, which if my reasoning has any merrit, implies they want higher ASP (obviously). None of the analysts pinned them down on inventory units vs. dollar value. I dont recall a ASP projection for the future quarter.

They actually made a very good story about inventories. They said they loved being lean, and that they are trying to see how lean they can get. This is a good thing generally when capacity limited, but as you said, this isn't the case with AMD. It sounded like they were at or near capacity, though, because they continued to brag about higher desktop and mobile ASP. They also claimed that in some quarters, it makes sense to build inventories if you don't think your factories can meet demand. This might happen towards the end of the year.

As for ASPs, they did not give exact figures, but still mentioned that they are striving for the $100 threshold. This continues to amaze me, since almost everything on their price list is well *in excess* of $100. I think AMD continues to seriously discount some parts. It sounds like they have discounted Opteron this quarter to gain additional market share. It's a good thing that they did gain more market share, but I wonder at their current ASPs how low they are actually offering these parts....

[smooth2o]

imho: Mentioned goal of 30% of market (unit? value?) within 3-5 years from now.

That's not the only thing that whacked me. Having a "goal" of 30% MS in 3-5 years isn't very good. What's that mean, 2% per year sustainable MS growth in a market growing at 10%+ in an envronment where they don't have the performance lead?

Also, the cash generated is not enough to build 45nm $4.5B fabs. It's clear that AMD does not have a business plan to go forward. I see them in heavy debt and in the red again in a few years after the real impact of NGA, lost MS, Intel's pricing power, poor utilization and the impact of a new advances in 2008 from Intel. These things are only 2 years away.

AMD could be a great niche player in the botique processor market. For that, they need to take the hit on Fab36 and get it to full utilization for a number of years in order to build cash. Then, build a 45nm fab and go into high debt again. Now, they need a new core, not just a few improvements here and there. Before they get to these areas, they need to realize their station in life.

Smooth