Replies to post #72470 on Advanced Micro Devices Inc (AMD)

[woggut]

How will the ASP drop to $52 affect product already in the channel? Will Intel have to make refunds to the channel inventory holders?

That's the way it worked in the electronics distribution business (back in the 90's anyway), the distributors get price protection. That's why the OEM's who do a buy/sell get pissed about bigger than expected price drops, they have to mark inventory to market. Makes sense if you think about it, otherwise distribution would be too risky to be a viable market. You'd be sitting on inventory depreciating at 10-20%/quarter, and subject to dramatic price drops. The manufacturers need an inventory buffer so you don't end up "backordered to the fab", disrupting your planning processes. The components are too specicalized (and change too often) to have a viable futures market.

In the past AMD didn't recognize revenue from distribution until it sold through to an end customer. Intc was apparently more aggressive on revenue recognition. Of course, Intc could have done a "deal you can't refuse".

[mas]

I find that figure very hard to believe but anything is possible I suppose. Intel is not imploding, just using its excess 65nm capacity to deny AMD marketshare. Sort of like the scorched earth policy of the Russians when they retreated to Moscow waiting for the Siberian (Core 2) reinforcements to push the Germans (AMD) back. It's been obvious to me for sometime that with all this excess capacity on both sides fighting for the same large but finite market, prices would be slashed pretty close to the bone to sell products. AMD could be in for some stiff trouble starting from Q4 as Core 2 ramps and 65nm and K8L are MIA to combat it. If I was holding AMD now I would sell before Q4 earnings and at the same time switch to INTC before their Q4 earnings as that will be the big share price switchover as last Q4 was too. Things may change again once big L3 cache dual-core K8Ls come on stream but that could be another year away at least which again may manifest itself in the share price in Q407.

[chipguy]

Watching Intel implode is not a pretty sight.

Apparently the last time you got up to get more potato
chips someone switched your TV from the nightly business
report to the sci-fi channel. Most people would have been
smart enough to notice.

[CombJelly]

"How will the ASP drop to $52 affect product already in the channel? "

Distributors have the right to return product. OEMs don't and Intel might hold the line. But, they might also have to swap out product like AMD had to. Given they are going to ditch XScale, I think they are seeing that in the future.