Things aren't all that rosy at Intel

Things aren't all that rosy at Intel

Summary: I'm starting to wonder just how much of a price war there is going to be between AMD and Intel, given that both chip makers are experiencing a shrinking bottom-line.

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TOPICS: Intel
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I'm starting to wonder just how much of a price war there is going to be between AMD and Intel, given that both chip makers are experiencing a shrinking bottom-line.

Intel has reported a 56% slump in quarterly profits, down to $885 million from $2 billion for the same quarter last year.  To top this off, analysts are worried that stock levels at Intel have been running too high and that Intel will have to sell off products at a cut price to clear the levels.

It's tough to see how this is going to play out between Intel and AMD.  Intel is undoubtedly the stronger company, it has a substantial amount of cash behind it (in fact, if you subtract Intel's total debt from their cash and short-term investments, they still have more cash and cash-like assets on the balance sheet than AMD took in as total revenue for the last year).  Also, Intel's profit margins are better than AMD's (20% compared to 6%) but I still wonder if we are going to see the massive price war that some were expecting, because it takes two to make a good price war and I don't see either company wanting to spook their investors too much.

Topic: Intel

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3 comments
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  • What if they held a price war

    ... and nobody came?

    Price saber-rattling is more like it. Intel has to flush its bloated stock of NetBurst chips, and if that happens to hurt AMD I'm sure Paul won't lose any sleep.

    On the other hand, AMD isn't making much money from the low-end chips where Intel is doing most of its business so tossing some loss leaders out won't cost them much and may end up hurting Intel more than AMD, while keeping AMD in the game.

    The real money for AMD is in the server space, and right now they're still on allocation there.

    In other words, there's more noise than action in this; it's a price war that neither side cares all that much about.

    Also, you might look at margin rather than profit -- in the semiconductor space it's a more reliable predictor of where things are headed.

    Then there's Dell ....
    Yagotta B. Kidding
    • In the four socket space yes

      Intel won't have their Core2 based 4 socket product out till 2007 (and they won't say when in 2007). So AMD has some breathing room here at least in the 4 socket space.

      The problem is that the 2 sockets are getting so bloody fast that it makes you wonder why you need a four socket system from AMD or the newer four socket systems based on 65nm Netburst-based XEON MP Processors. Four sockets have always been a rip off as far as I'm concerned since they never deliver anywhere close to double performance of a 2 socket system running at higher clock frequency.
      georgeou
      • Memory matters

        There's a lot of the server space that depends more on sheer quantity of memory than on processor speed. That's another thing that AMD quad-socket systems bring to the party, and the reason that AMD (which has twice the memory capacity even in a two-socket system) is in such demand.
        Yagotta B. Kidding