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September 22, 2000
Advanced Micro Devices
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Letter to CNBC from me!
I have been following Intel and AMD for many years. Intel's warning was inevitable.
For quite some time, Intel had problems that has prevented them from matching AMD's Athlon's clock speed and performance. Intel has used one-time gains to mask poor performance to the point that last quarter performance was dominated by one-time capital gains.
AMD is currently shipping all Athlon Processors at speeds of 800 MHz and above. Over half of their processors are shipping 900 MHz and above. Here is a link to a website that shows the availability of most major PC components:
Click on the Processor category and see how many vendors are supplying processors and the speed grades. Up until recently, AMD has been out selling Intel 10:1 in 1 GHz Processors.
AMD has been living for years with Average Selling Prices (ASP) under 100 dollars (last quarter their blended ASP was in the mid $90's). Over the same time frame, Intel has been living with ASP's above $200. Clearly, the gap between these will close as AMD introduces competitive products in the Mobile and Server Space.
AMD is ahead of Intel in process technology with their brand new facility in Dresden. Already, AMD has indicated that yields and speeds are higher in Dresden. All of their chips at 1 GHz and above are coming from Dresden which currently is shipping at 1/4 capacity. Dresden will be rapidly increase production this quarter so that 1 GHz and above Athlons will be shipping perfectly timed for the peak Christmas Season.
By Q4, AMD will be shipping most processors at 1 GHz and above. While at the same time, Intel will be shipping most Pentium III processors at 800 MHz and below. Even though Pentium 4 processors at 1.4 GHz and 1.5 G Hz will start shipping in Q4, the die is twice as large and due to lower yields means that Intel can only produce 1/4 the number of Pentium 4's per wafer than Pentium III's.
Intel technology is second rate! The Pentium 4 due to its large pipe line is slower clock for clock than the Pentium III and the Athlon as well. The higher initial clock rate will help and the new Floating Point instructions will allow Intel to claim better performance, but none of the existing software supports these instructions yet.
At the same time Intel releases the Pentium 4, AMD will release the first Mustang Core (new Athlon design) which will support higher clock rates of 1.2 GHz, 1.3 GHz and 1.4 GHz.
Soon, even Dell will have to buy from AMD just to stay competitive. Gateway has already indicated that the Athlon percentages will be increasing.
AMD's Duron processor is 15% smaller version of the Athlon (less cache). Because Duron uses the same bus as its bigger brother Athlon (code named Thunderbird), it is often 30% faster than Intel's Celeron.
Intel's Celeron is a castrated version of the Pentium III (actually the same die with half the cache disabled and forced to communicate over a 66MHz bus). Duron is currently shipping at 750 Mhz for marketing reasons, but still retains the 200 MHz Front Side Bus (FSB). Intel ships the Celeron at 700 MHz maximum speed clock speed and disables the cache for marketing reasons. Because of the Duron's smaller die and superior architecture, AMD will be able to move the Duron up to 900 MHz and beyond way before Intel at a lower cost.
Only recently has Ashok Kumar began to realize the size of Intel's problems, while he manages to disperse vitriolic comments about AMD. Of course, if you research Kumar's comments about AMD you will find that he has consistently underestimated AMD's performance by a factor of 2, while usually overestimating Intel's performance, especially when removing what has proven to be one-time capital gains.
Kumar has insisted than Intel "would not let AMD achieve of 20% market share" and yesterday pronounced AMD as "Road Kill". It is clear to any objective Analyst or investor, it is Ashok Kumar's Analysis of AMD's chances which is Road Kill. Kumar, a former Intel employee, still looks at Intel through rose colored glasses.
Kumar fails to realize how badly Intel has neglected its main business when it focused its huge resources on the boondoggle referred to as "Itanium". Currently sampling as high as 733 MHz, yields have been so poor that numerous delays have been announced and will continue to be announced. No objective benchmarks have been produced, because they would be embarrassing. Many who have seen the Itanium refer to it as "the refrigerator" apparently due its odd shape and peculiar resemblance to your favorite kitchen appliance. The similarity to your kitchen appliance stops at the price tag, but maybe not the performance.
Expect Intel to start peddling a new performance standard not based on clock speed as the Itanium is introduced. The justification is the "efficiency of the architecture" pointing to Itanium ability to execute six instructions. An odd flip-flop from the company the pooh-pooh'd Cyrix P-Rating when they had a "more efficient" architecture.
By the time, Intel starts, I repeat starts, production of the Pentium III and Pentium 4 on its 0.13 micron process, AMD Dresden FAB will at near full capacity producing Mustang cores competitive with all Intel Processors including servers and the Itanium. AMD's Itanium competitor is their "Hammer" series as one of the Websites noted is probably aimed in "Intel's kneecaps".
The Hammer series is the new x86-64 open-standard being advocated by AMD which is an evolutionary design. The key feature is that it will operate on old code transparently, but allows a growth path to 64-bit computing. With Biotech explosive growth and need for massively fast computers capable of manipulating huge datasets, the X86-64 will be a welcome affordable solution. Coupling the x86-64 with AMD's open Data Bus standard will allow massively parallel architectures to be developed.
I will separately attach my earnings model with another e-mail, so you can see where AMD is headed. The only "Road Kill" you will observe will be associated with Kumar's massive ego!
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