Some Better Numbers . . .

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HKEPC has detailed breakdowns on how many desktop CPUs AMD sold the first half of the year, and what they would like to sell the second half.

We used to see these estimates years ago, but this is the first time we’ve seen them in many moons.

We bolded desktop because these numbers don’t include notebook and server chips. Notebook chips sales probably amount to about 2.5-3.0 million per quarter at the moment, server chips, around a half-million.

So AMD is making about 12.5 million CPUs at the moment, and apparently think they can make another five million desktop CPUs by the fourth quarter.

Adjust the notebook and server number upward a bit, and total CPU production would go from 12.5 to around 18.5-19 million.

Which Straw Broke The Camel’s Back?

Sadly, but inevitably, some took yesterday’s article as simply me “blaming” AMD for an oversupply of CPU.

I guess they didn’t get the title “Adding Fuel To The Fire.” We already have the fire; Intel has and continues to make tens of millions of CPUs nobody terribly wants to buy. That’s why CPU prices are half what they were three months ago, and it is by no means clear that that will be enough to clear out the inventory.

Now AMD wants to add another 7% or more to supply during the Christmas quarter. The question is not, “Whose fault is this?” That’s a “which straw broke the camel’s back” argument, and no one reading this and certainly not the one writing this cares about the answer.

The question that at least a good chunk of the readers and certainly the writer would like to know is, “Is this going to lead to a price collapse?” You know, like the ones we see in memory every few years? There will probably be more oversupply in the CPU shortly than existed when memory prices collapsed.

A few might also ask, “What happens to AMD if Preslers cost $49 after they spent everything in their piggy bank to buy ATI?” but most are interested in question number one.

Yes, eventually Vista will sell extra boxes, but Santa isn’t bringing that this Christmas. That could make for a pretty Grinchy Christmas for the box-makers.

Will Intel get crazy if they can’t move the old stuff? Can they be patient? Can they afford to be patient? At what point do they stop looking for customers and start to look for landfills?

Yes, whatever financial pain strikes will be at least five times worse for Intel than it will for AMD, but that’s small solace when the other guys can take twenty times the punishment you can.

I think people are underestimating this situation because while AMD has been in these types of situations before, Intel hasn’t, and while AMD has gotten sick in the past without affecting Intel, it’s a different story when it’s the other way around.

I think the odds are over 50% we see a price collapse in the next six-nine months.

Ed


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