Replies to post #25700 on Advanced Micro Devices Inc (AMD)

[Jules2]

Posted by: sgolds
In reply to: Dan3 who wrote msg# 25698 Date:2/9/2004 9:58:31 AM
Post #of 25699


Dan3, that would seem to be a strange way to interpret Intel's apparent decision to become more competitive in flash this year. Let's focus on a couple of things that article says, and see what it means:

But Intel is taking aggressive action to redress this in 2004, according to Van Hees' colleague, Joe D'Elia. He said that Intel is knocking on customers' doors once again.
...
Spansion can increase its memory capacity by 25% a quarter, and will have 25% additional capacity in the market in mid-March, according to iSuppli figures.

Sounds like a bloody price war is shaping up for late in the year as Intel drops price to win marketshare, and capacity starts to exceed demand. I don't like it. The speculation that Intel may be exiting the market in 2005 seems like wishful thinking, there is no direct evidence. They can sustain losses in this area for years if they think it is strategic. Also, both Intel and AMD are working on replacement technologies for flash, one of those new technologies may be ready to leave the oven soon - that would change the whole game.


sgolds

Your post has merit IMHO. However loosing money in flash like they did with intanium...well, even rocks on the seashore get smooth after a period of time. At some point investors will notice.

Regards

Jules

[j3pflynn]

sgolds - ditto re: Intel flash exit.eom

[Dan3]

Re: that would seem to be a strange way to interpret Intel's apparent decision

Could be. But that speculation was from the article, it wasn't my own.

I suspect that the flash division at Intel has been allowed to write off some it's fixed costs, which will let them lower prices, but they've also been told that further investment will only come if they start making respecatable profits (with the new, lower cost structure).

I'm not sure Intel can make it in a low margin business like flash. Over the years, AMD has become a very efficient producer, since it had to survive when its competitor was getting $175 for parts AMD was getting $60 for.

Intel's marketing and administrative cost structure may result in the flash business being an area that they are better off letting fade away.

We'll see how it works out over the next couple of years.

[gollem]

sgolds, aren't the amounts in bits continuously growing? Is this amount of growth by intel a deviation of the normal growth?