Intel to Spend $2B To Stay In The Game

hexed_2050 writes "AMD has declared dominance in the gaming and server microprocessor market in 2004, and Intel needs to respond.. fast! This is why Intel has planned to spend 2 billion dollars to upgrade their eight year old, Fab 12 plant in Arizona. "Part of what I do is put the emphasis on how fast we respond," explains Robert Baker, Intel's top manufacturing executive."

Comments

Nice

[Aggrazel]

Say what you want about Intel, but I'm happy to see they are investing $2 billion in an American plant, instead of sending those jobs away. Course, it could be that with the dollar falling they couldn't afford as much in other places... another reason why I think the value of the dollar going down isn't necesarily a bad thing.

Re:Nice

[Momoru]

People that are anti-bush administration like to say its a negative thing that he is "letting" it fall, but really his economic team has been purposely talking down the dollar for years, its a sneaky way of fighting outsourcing of jobs and the trade deficit, because asian currencies are pegged to the dollar, and they are so heavily invested in it, that they either need to float their currencies (to curb inflation) or invest in more dollars to keep the dollar value high. Its a win-win for America and and a lose-lose for the developing world which is overly dependant on the dollar, and the low exchange rate.

Re:Nice

[zeux]

... except that this is very risky because OPEC countries are losing purchase power with the falling of the dollar.

Don't forget that they do 60 to 70% of their business outside of the dollar zone and that a dollar losing 1% also means that they lose 1% of their purchase power on 60 to 70% of their imports.

That's one of the reasons why they let the oil prices go up this year (to compensate for the loss) and that's another reason for them to look into the switching to the petro-euro instead of the petro-dollar. That would be catastrophic for the US.

Read my sig to get further details.

Re:Nice

[zeux]

Also the dollar is still the worlds reserve currency.

This is changing too, and this is very bad for the US too. 2 weeks ago China said that they were now getting Euros along with Dollars as their reserve currencies.

Russia and North Korea did that too. If this trend amplifies, be ready for a huge inflation in the US.

Re:Nice

[Martin Blank]

They didn't "let" prices go up this year. The prices went up because of speculation over political instability in Venezuela, Russia, Iraq, and Nigeria affecting output. It got to the point where the various OPEC nations were pumping veritable crap out of the ground (stuff that has less of the useful hydrocarbons) in order to boost the overall numbers to try to push things down. OPEC knows it has a PR problem, since it's seen as a bunch of money-grubbing sheiks that only want to bilk the world for cash. Quotas were set as high as the nations could reasonably pump, and some nations even went higher, risking damage to equipment, in an attempt to push things down.

Of note to the conspiracy theorists is that prices didn't start dropping until well after the election was over, although many were predicting an October surprise with OPEC providing some massive drop in oil prices. In spite of their views, the prices continued reaching record levels, and it wasn't until news came that oil consumption in China was being slowed by additional tariffs Beijing placed on imported oil in an effort to slow consumption growth, followed by word that US oil use was down and that on-hand stocks were growing, that prices began to come down.

OPEC is happy when oil is around the $35 per barrel range. It's not so expensive that they get slammed in the press, and not so cheap that they make no money.

Re:Nice

[cperciva]

Can you please explain how a switch in the world's reserver currency leads to huge inflation in the US?

As soon as the dollar ceases to be a reserve currency, banks around the world will sell off their US dollar reserves. That puts a large number of USD onto the international markets, pushing the price down.

Anything imported into the US -- or locally manufactured using imported parts or raw materials -- suddenly becomes more expensive.

Re:Nice

[Dot.Com.CEO]

The only thing keeping your economy afloat, despite of HUGE deficits and insane economic policies (cutting on taxes while increasing on military spending etc.) is the fact that all first and second world countries base their own economies on the dollar, partly because there was no alternative before the euro came into play, and partly because it was a Marshall-era remnant.

The moment the dollar loses that unique place, as a pillar of financial stability, economies around the world swap dollars for euros at an ever dropping rate. The dollar is 1.36 euros now, while two and a half years ago it was 0,85 or less, I cannot remember. Generally speaking, this trend has not been worse only because the Chinese (of all countries) are supporting the dollar buying enormous amounts of it on the markets.

The way your economy is going, and the way the euro guarantees its own stability through various WORKING mechanisms of the ECB, it is undeniable that in the next twenty years or so the Euro will be where the dollar is today. And since your whole economy is supported by outside economies, it is very probable it will collapse. Why? Well, its exchange rate will hit the floor and will bring huge price hikes to anything that is not made 100% in the US. Which is, everything.

So, when you vote for "less taxes", you put one more stone in the end of the great American empire. I, as a European, shake my head and wonder whether you Americans have any idea what is happening in your country...

AMD must be loving this.

[Grey Ninja]

I remember back when AMD announced a 64 bit desktop CPU. The common consensus was that they were completely daft, and other than the rabid early adopters who buy anything... it wouldn't do all that well, given that PCs are still tied to 32 bit software.

Now fast forward a year or two, and AMD is on top, and Intel is trying to play catch up. I never would have dreamed this would happen. I really have to tip my hat to AMD.

Re:AMD must be loving this.

[Glock27]

I remember back when AMD announced a 64 bit desktop CPU. The common consensus was that they were completely daft, and other than the rabid early adopters who buy anything... it wouldn't do all that well, given that PCs are still tied to 32 bit software.

The only thing that saved AMD in this regard is that AMD64 chips run 32-bit code faster (for most software) than any of the Pentiums. Microsoft seems to have helped out it's old partner Intel by delaying Win64 until Intel managed to clone AMD64. Heh, that is quite a switch - Intel cloning AMD. ;-)

At least Linux for AMD64 has been available for some time...and it's great to see Sun pushing Solaris for AMD64 also.

Now fast forward a year or two, and AMD is on top, and Intel is trying to play catch up. I never would have dreamed this would happen. I really have to tip my hat to AMD.

Yes, all this and lower power consumption (than P4) to boot. There should be some sweet notebooks and servers coming out over the next few months also, as the true low-power Athlon64s and Opterons roll out.

Re:AMD must be loving this.

[DrEldarion]

Yes, they really did a quite incredible job with the Athlon 64. Not only does it run 32-bit code, but it runs 32-bit code better than their 32-bit-native processor? That is EXACTLY what's needed in the 32-to-64-bit transition, and they executed it excellently.

Is that really the problem?

[confusion]

It seems to me that Intel's problems are not just of the fabrication sort. They've fallen behind with innovation, which is where AMD is starting to kick their butt. Sure, Intel needs a plant to back up new designs, but if they can't get their heads back in the game, that plant isn't going to do much.

Jerry
http://www.syslog.org/

Re:Is that really the problem?

[rokzy]

reminds me of a Dilbert cartoon:

PHB: "we're a large company an can't compete with these small, nimble companies. the good news is that at this rate we'll soon be the smallest company around."

Marketspeak

[Thunderstruck]

I wonder if this isn't just Intel trying to reverse the spin on AMD's announcement.

1. AMD announces they're top dog.
2. Intel decides to minimize the effect of this by bragging about how much money they can spend.
3. Neither is looking at any immediate, dramatic, change in business because processor sales follow seasonal patterns more than Ad campaign release dates.

Intel is not going to disappear

[Anonymous Coward]

I heard the same thing after ATI came out with R300. nVidia is going the way of 3DFX. Now AMD seems ahead and those that think Intel is the evil empire are praying for it to disappear. It ain't going to happen. I'd venture to say the long-term prospects are better for Intel than AMD. For consumers, the pitched ATI/nVidia battle has been good. Same thing for AMD/Intel. Tough competition brings choice and lower prices. I hope Intel moves fast. I don't want AMD ruling the market anymore than I want Intel.

Story time

[buddha42]

AMD has declared dominance in the gaming and server microprocessor market in 2004?

What is this "make shit up for the headline" hour? Lets see what a professional news organization has to say: http://olympics.reuters.com/newsArticle.jhtml?type =technologyNews&storyID=6960222

AMD trimmed Intel's share in PC-based servers in the third quarter, taking 8 percent of unit sales, up from 6.9 percent, according to IDC.
...
AMD also saw slight gains in unit share for desktop and notebook PCs. It now has 18.4 percent of the desktop PC market
...
Intel nevertheless held onto its overall dominance of the PC microprocessor market, retaining 81.2 percent of the overall share of units, off slightly from 81.7 percent.

Re:"...how fast we respond"

[dsginter]

is Intel resigned to only "respond" to AMD from now on, never to lead again?

Intel's problem isn't how fast they respond but rather something else entirely: a patent.

That patent is Silicon on Insulator. It is owned by IBM. AMD has been using it some time now and it has allowed their processors to use less power than with conventional silicon. It is rumored that Intel approached IBM in order to license this technology but that IBM wanted to trade tech instead of making a cash deal.

So Intel is playing some cat and mouse with IBM. Right now, the IBM guys are probably laughing at the power consumption of Intel's processors - they're winning. So, in the near future, when you see that Intel has licensed a pretty bit of their technology to IBM, don't be surprised. Intel needs SOI and they're going to pay dearly for it.

Desktop CPUs are only a fraction of Intel

[stratjakt]

They aren't "staying in the game", they are the game.

Wake me when AMD provides complete solutions, chipset, motherboard, with integrated audio and video.

Intel is upgrading because 8 years is a long, long time for a modern chip fab. The "we'll make chips cheaper than AMD" crap is just investor PR.

AMD is only a threat to but one small fraction of Intel's business.

More Intel ideas...

[bje2]

take all the money that's going into those crappy blue man group commericals, and use it for some R&D...i hate those commercials...

Wrong conclusion...

[SharpFang]

AMD got the lead because they offer better performance for the same price or better price for the same performance (or somewhere inbetween). Intel WON'T win the race by spending more money on much faster, much stronger and much more expensive hardware. Do you think they will let these $2B just evaporate? They will try to get it back in processor prices. And that's their way to failure.

Other thing besides competing in CPU prices Intel could do would be to remove overclocking cap (say, by overclocking you void warranty, if they want to protect themselves from people who burn their CPUs) and possibly limit other such monopolist practices that people just perceive as customer-unfriendly.

What standard is AMD usinng to declare "Dominance"

[raitchison]

"AMD has declared dominance in the gaming and server microprocessor market in 2004: I've yet to see an AMD equipped server. If even 5% of all servers are equipped with AMD processors I'll be amazed. This reminds me of when the CEO of Pepsi released a book deatailing how Pepsi "Won the cola wars". I'm sorry if your still #2 in sales you didn't "win" and if you have only begun to break into the marked you certianly aren't "Dominance" For one, I think that AMD is doing great things with their new stuff (been syaing for years they need to do more than just clone Intel CPUs) and that Intel would be wise in paying attention to what AMD is doing but declaring dominance, at least in the server market is kind of like Ralph Nader declaring victory in October.

MHz rather than FPS

[frovingslosh]

is a past Intel decision to concentrate on MHz rather than FPS

Translation: At Intel we decided to put our effort into having a CPU that had an insanely high clock speed, which we decided was much more important than actually getting the CPU to do a lot of processing, which would help contribute to higher frame rates for games and higher output for most users. Our evil competitor AMD realized that it was important to have the computer do something with the cycles they used, and built CPUs that not only did more, but did more at slower clock speeds. We are trying to figure out why this allowed them to win in a market we previously owned, but so far we've only come up with this MHz rather than FPS marketing phrase.

Re:Gamers? Not a key market...

[Glock27]

Gaming is a niche market. The reason AMD can do well with it is that it's a botique market, and they produce so many less chips than we do.

I call BS. Intel has plenty of resources to go after all kinds of different markets. Further, AMD chips do better at many other kinds of applications. Even further, Intel went so far as to rebadge very expensive Xeon chips (Pentium 4 Extremely Expensive Edition) to go after the "unimportant" gaming market. Finally, for most server usage, Opteron vastly outperforms Xeon, especially for multiprocessor servers.

Sure, the world of processors is changing, but Intel is adapting to the overall MARKET, not merely to AMD's strategies and successes.

I hope your company has a high rate of adaptation, it'll need it.

Side Note: How come you anti-globalization folks aren't applauding Intel for expaning a facility in the USA? Hmm? Where are AMD's chips made again?

Yes, that's nice, though I'm quite sure Intel made the decision based on dollars and cents rather than any warm-and-fuzzy pro America sentiment. Good PR doesn't hurt either - and Intel could sure use some. ;-)

It should also be pointed out that AMD could soon be manufacturing chips in East Fishkill, NY if Forbes is right.

Of Bytes and Men...

[Mulletproof]

"Part of what I do is put the emphasis on how fast we respond," explains Robert Baker, Intel's top manufacturing executive

And it gives me goosebumps just wondering what the other part of his important job is... Aside from the fact that you should have been proactively whooping AMDs cache to begin with, not responding to their dominance.

Re:"...how fast we respond"

[Anonymous Coward]

I think they might respond by pulling legacy 16-bit support completely out of their chips (which I'm led to believe is costing them about 30% of their chips' "capacity" (as measured by power consumption and real estate) and replacing it with an emulator.

Um ... Intel has been doing something like that since the Pentium Pro, and all out that since the P3. The instruction set you put in and the instruction set it actually runs are totally different beasts. The internal micro-ops even get access to more registers (check out "register renaming")

Complacency kills!

[Mr. Cancelled]

Intel screwed itself out of a market, clear and simple.

When AMD began offering cheaper, but equally capable CPU's (Thunderbirds, Celerons), Intel chuckled about how they ran much hotter than their Intel counterparts. All the while AMD was eating up the low-end PC market.

When AMD began telling the world about their 64-bit plans, Intel chuckled about how the world wasn't ready for 64-bit. Additionally, they pushed their way-overpriced 32-bit Xeon's whenever anyone brought up 64-bit server CPU's.

When AMD began talking Opterons, Intel talked about their outrageously overpriced, and seldom utilized Itanium technology.

And when 64-bit AMD chips began to outsell Intel chips, Intel dragged their feet on adding 64bit extensions to their own chips.

Intels attitude seemed to be one that dooms nations, individuals, and companies: They were too arrogant and complacent!

They knew that they were the CPU kings of the world. They knew that the same company that had stolen the low-end PC market could never threaten their corporate market. They knew that 64bit CPU's were not needed yet, and they knew that they could basically put out what they want, when they wanted to, and that people would beat a path to their door, simply for the Intel brand name.

And now they know they were wrong.

Face it... Nations fall when they ignore the barbarians at the gate. People fall when they think they're more important than they are, and companies fall when they ignore the competition, and their target markets needs.

Intel wasn't developing what people wanted, they were developing what they thought people needed. There's a huge difference there. When creating art, you can do things your way. When manufacturing product, you do so to create what the market wants. Intel got it backwards, and their current state shows what happens when you do: Roadmaps tore up, lackluster sales, and a company that's now trying to re-invent itself, just to stay competitive in a market that it once owned.

Intel screwed up! It is the 21st century's IBM in a way, and as IBM had to do in its day, Intel must now change in order to stay alive in this industry it created.

Bank for your buck

[gandell]

The reason I'm looking at AMD for my next upgrade is price. I simply get more for my money with AMD than with Intel.
Intel's spending 2B to upgrade its facilities, but who's paying? We are, that's who. So if chipset prices go up again, AMD will still be on top for the cheapskates among us.

They're missing the point entirely

[melted]

When XBox 2 comes out neither Intel nor AMD will be the main players in the gaming market. The main players will be IBM, NVidia and ATI.