Intel’s recent announcement of another round of price drop in July must feel like another stake through the heart of AMD’s struggling business. If AMD lost a massive amount of market share last quarter due to Intel’s dominant product portfolio, for example a C2 Quad Core at $500, one can easily expect the hurt it will do to AMD’s if that same product drops half price. Without an existing competitive product when Intel’s price cut arrive, it’s easy to predict another decline in revenue and ASPs for AMD for the 2nd half of the year.
Without decent competition and a healthy demand for C2’s, Intel’s change in pricing can only be due to a healthy process resulting to an increased supply of top-end CPUs. Always remember that Intel prices it products at the point of ‘maximum revenue potential’. It is ridiculous to even consider that Intel is reducing prices across the board in response to a low-volume competing product that is only going to ship at the late end of the year. This reasoning would only be valid if, 1) Intel reduced prices only on directly competing products, 2) if Intel is dumb enough to reduce prices months in advance of competition and lose revenue.
There is also an increased chatter of a possible 45nm ramp pull-in from Intel. 45nm material suppliers have already increased guidance for Q2 based on orders from an ‘undisclosed’ customer. It doesn’t require a lot of thought who’s the only Fab running 45nm this year. Pulling in the price drop from the original schedule of October to July further reinforces that Intel is executing well ahead of schedule. If Intel has started loading 45nm this quarter, counting 15 weeks from wafer starts to customer built, I’ll leave it to your imagination what can be done at the start of Q4’07.