2.02.2007

AMD's alarming strategy

Watching the trend:

While AMD’s market share rose 4% from the forth quarter its ASP's and revenue share dropped from 29% to 18%. AMD’s ASP is now at $75 compare to Intel’s $130. Of course Intel has a much larger overhead but bear in mind that the other departments pay for themselves like Flash and Chipsets.
Intel isn’t greatly affected by AMD’s market share gains in 2006 because Intel’s shipment to Apple is not included in this numbers.
AMD cannot continue gaining share in the same pace as they are dropping their ASP’s. But in reality AMD doesn’t really have any choice as Intel will continue to ramp Core2 parts and push AMD down even further in the value segment.
A rate of 13 basis points drop per quarter in revenue share and ASP's is something AMD simply cannot continue.
At the end of the day Intel is ending up with the money continuing to produce higher end parts while AMD will be working extra hard just to break even.
It’s an unsustainable strategy that will have long term implications to its future investments.

2 comments:

Scientia from AMDZone said...

It will turn around when Barcelona is launched.

Roborat, Ph. D. said...

Scientia from AMDZone said...
It will turn around when Barcelona is launched.


The problem is large die low yield quadcore is on a collision course with AMD's plan to take market share. Barcelona will have a negligible impact to AMD's finance in 2007. Too little too late.