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AMD's "Frantic Price Cuts" May Pressure Intel
kog777 writes in with news of a Needham analyst report alerting their clients to a possible price war between AMD and Intel. Analyst Y. Edwin Mok notes that AMD has cut its prices three times in three weeks. He says that Dell has been playing off the two chipmakers against one another to drive costs down. He suggests that bargain-hunting clients avoid both AMD and Intel stock for now. As an aside, Mok notes that so far Vista is not causing a spike in demand for chips. This story hasn't been picked up very widely; other coverage is at Seeking Alpha.
Isn't that what competing companies supposed to do? This has been happening for a long time. During the 1990s AMD was selling their chips for cheaper prices then Intel. Then around the Early 2000s AMD finally got a good reputation and better then Intel's so Its prices went up (Increase in demand). Now with Intel Core Chips which perform very good and are relatively inexpensive Intel Chips are getting more demand. So in order to keeps AMDs line selling they will Lower the prices on their chips. Now Intel will choose wether the demand for their chips at there prices will still work with the market or they will need to lower the chip prices. Now a word of waning about Price Wars, The consumer usually wins at first then they they slowly get screwed as the war lingers. Lower Price Chips means less R&D and Less Good Improvements and More Quick Patches and Fixes. So quality will drop. I know people want to think of a perfect world where we get Top Quality Products at Discount Products, But in reality that is not the case, I am sorry but the $400 Dell Laptop is Lower Quality then the $2500 MacBook Pro. There may be a feature that is better but overall you are getting less.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Please, mr dell, start a price war between RAM manufacturers next! I live in perpetual obsolescence thanks to the dramatic cost of DDR and DDR2! Won't someone think of the child processes!
the analyst industry is quite amazing - all you have to do is repackage common knowlege as something special and people will pay you for it!
seriously - AMD and Intel are normally out-of-phase in product intros. it's been this way for many years, so we have to assume it's deliberate. Intel made a major improvement by souping up the Pentium-M line into Core2, and has gained a nice lead in some, even most, benchmarks. mainly due to some fairly narrow improvements that AMD hasn't yet answered, like 1-cycle throughput SIMD operations. AMD's current offerings are largely unchanged since the original Opteron intro (2003?), except for smallish tweaks like bigger caches, faster memory, doubled cores. AMD still does well for applications which are sensitive to memory bandwidth, for instance - part of the original technological jump of the K8.
AMD is about to introduce their response to Core2, and it seems quite promising based on the hints AMD has provided. Intel's not in a position to respond immediately, since 45nm production is some way off, and it (Penryn) will apparently be just a shrink of the current Core2 design.
in short, it's only sensible, sound business practice for AMD to drop the prices of their mature, high-yielding, partly-outsourced half-gen-old products. performance is still competitive with Intel's products - at a time when Intel's yields are probably not yet mature. in a way, this sets the stage for AMD to introduce its next-gen parts at a more comfortable margin.
or they are getting good deals from the 90nm fabs as they drop prices to compete with the 65nm fabs (I believe AMD outsources a lot of their fab work.)
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you believe wrong.
Intel, amd and IBM are the three last big behemoths of bleeding edge chip fabrication. And to keep up IBM and AMD signed a deep alliance at the beginning of the decade.
First outsourcing for chips from AMD was last year and it took 5 years and a failed deal to arrange.
Normally in these conditions partners are NOT fungible. As in THERE ARE NO 65nm merchant fabs in the world who can compete with Intel or AMD
They are clearing inventory. The point is: what will the price of the new parts be??
In the chip industry this is the way price wars erupt. You make MORE space than necessary in your listings and the new parts start lower than where the older parts started.