New Desktop

After years of being mobile, I finally decided to get myself a cheap but capable desktop from a custom build site. The system is intended to become a home file server, video editing and casual gaming. The specs follows:

MOTHERBOARD: GigaByte GA-EP45T-DS3R Intel P45 Express CrossFireX Chipset LGA775 FSB1600 DDR3/1600 Mainboard w/GbLAN,USB2.0,IEEE1394a,&7.1Audio
CPU: Intel® Core™ 2 Quad Q8200 @ 2.33GHz 1333FSB 4MB L2 **Overclockable S&S*** Cache 64-bit (Read the reviews and I am already hating this CPU)
MEMORY: 4GB PC12800 DDR3/1600mhz Dual Channel Memory (G.SKILL NQ Series w/Heat Spreader ***Overclockable XXX***)
VIDEO: ATI Radeon HD 4870 PCI-E x16 1GB DDR5 Video Card
OPT DRIVE: SONY DUAL FORMAT 20X DVD±R/±RW + CD-R/RW DRIVE DUAL LAYER
HDD: 1TB SATA-II 3.0Gb/s 32M Cache 7200RPM Hard Drive (I know i should get 2 HDDs each for OS and Data)
Total < $1000

OS: Vista Ultimate (i get free SW from MS)
DISPLAY: Dell 22" 1900x1080p S2209W ($236 from Dell)

The Intel Core i7 platform at the moment is quite expensive and it was one of the main reason why I chose the lamest of all the 45nm Quad core. The CPU / Motherboard will be the next upgrade path I take in a couple of years and choosing one at the bottom of the table should hasten the transition. And since it is the video card that does most of the work these days I had to go with AMD's 4870 - best value for money if you ask me.

Feel free to criticize and show how one can do better without breaking the bank.

AMD Bankcrupt in 2009

Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly, and Advanced Micro Devices files bankruptcy. - Doug Kass, "20 Surprises for 2009".

"AMD ends 2008 (until we see fourth-quarter results) with $1.3 billion in cash, four times that amount in debt, and an operating loss of $1.9 billion over the last four quarters. Add to the mix an unprecedented slowdown in global economic demand and AMD's own tenuous market share in servers and PCs, and it becomes increasingly difficult to see the company's failure as an outlying event". - Michael Goodman, The Street.

2008 was supposed to be the year AMD's went bankrupt but was averted by a unique financial agreement with an entity that was enjoying record oil revenues. But the realities on the ground are changing and rapidly getting worse. While Intel continues to spend on 32nm, AMD on the other hand will look at someone else to make the several billion dollar gamble. The bet includes the following: a) that market demand is there to recover the investment, b) AMD will have viable products and c) AMD is still around (with an x86-license) to design chips. Terrible odds if you ask me.

Bad For Intel, Catastrophic for AMD

Intel Corp. said late Wednesday that it expects financial results for its current, fourth fiscal quarter to be "below expectations," as the technology bellwether grapples with a flagging economy.
The chip maker said it now expects fourth-quarter revenue to be $9 billion, "plus or minus $300 million," which is lower than the company's previous expectation of between $10.1 billion and $10.9 billion.

Never mind Intel, at targeted gross margins of 55%, it will do just fine. The recuperating AMD will be the worst hit. Yet again, we can expect AMD to break it's promise of returning to profitability in the second half of 2008. We all saw what happened to AMD when Intel's gross margins drops close to 50% and needs to clear inventory. It's safe to assume things won't be different.

For now you can expect AMD to make noise and show its impoverished investors (AMD @ $2.57/share) that it is taking the necessary steps. It already announced laying off 500 employees. Soon they'll be talking about 32nm and reviving Bobcat. It's about being too little too late for AMD these days.

AMD comes out the closet, says no longer a real man

"Real men have Fabs" - Jerry Saunders, former AMD CEO.

After all the dodging and lying about not having any plans going fabless, AMD finally admits that it is in fact going to sell its fabs. They intend to remain a minority share holder and team up with a company who haven’t got a single clue about semiconductors. But none of that matters because they have lots of money to spend. And in a time when the usual lenders are looking for a some kind of a bailout themselves, it’s either this arrangement or Chapter 11 for AMD.

"On Oct. 7, 2008, AMD and the Advanced Technology Investment Company announced the intention to create a new global enterprise, The Foundry Company, to address the growing global demand for independent, leading-edge semiconductor manufacturing. There is a strong shift to foundries occurring – particularly to foundries with the capacity to produce devices using leading-edge process technologies. With The Foundry Company, AMD will be able to unlock the value of its world-class manufacturing capability – by making it available to a growing community of fabless semiconductor companies. " - AMD's New Global Foundry page.

There's a lot already said about AMD's move. The best one that highlights the concerns more clearly is from Fabtech:

Another aspect that concerned me was the notion pumped out by AMD that demand for leading-edge foundry capacity was something that was in strong demand. Ask SMIC, Chartered or UMC how much of its capacity is allocated to 65nm-and-below production and you will find it is very small... Also, if demand for foundry capacity was that strong, then why are wafer ASPs in decline and the major foundries cutting CapEx each year?... Even worse is the fact that SMIC has struggled since birth to actually turn a profit, so why should we think that a new foundry start-up in Europe (and the U.S.) will fare any better?

The "growing trend" to go fabless is a decision forced upon companies due to the rising cost of running a Fab. This alarming trend have been identified by Intel in the late 90's. AMD knew this day was coming and set a goal of 30% market share just to avoid ending up where it is now. It's entertaining to see how AMD is making it all appear as if it was an advantageous choice.

How can it be advantageous when AMD will now have to ask another company to spend $Billions every time it wants new equipment for a new process technology. How can it not be disadvantageous when your main competitor do not have such bureaucratic problems. Short term, this move by AMD will buy them time for the next year or two. Long term, I can only see AMD becoming the next Transmeta. When The Foundry Company starts losing large sums of money they will become cost conscious and that's when problems begin. Against Intel's "tick-tock" execution, AMD will only struggle to keep up.

Strong Demand for Intel's Atom

Citigroup analyst Glen Yeung reiterates his Buy rating and $29 price target on Intel (INTC), citing channel checks that revealed strong demand for INTC's Atom processor:

"Field checks from Japan suggest Intel has ordered 20M Atom flip-chip packages for 3Q08 and 25M for 4Q08. This is orders of magnitude more than our modeled 2M and 2.5M units in that timeframe. These figures do sound aggressive to us (and some is likely inventory build) and so we believe a substantive haircut is appropriate. Nonetheless, even at half these levels, Atom is running well ahead of our expectations. We conclude that Intel's relatively aggressive 8.8% 3Q08 revenue growth guidance, while still prone to macro factors, looks more achievable in light of Atom strength".

I may have to give anecdotal evidence in support of Glen Yeung’s report. The lead time for ordering Atom processors from distributors have now gone up to 6 weeks! It's beginning to look like last year with Barcelona but only different. Atom demand has just gone through the roof as if every single technology firm has found some clever use for the low power microprocessor. Hopefully, Intel meets demand for the coming Christmas season. The concern about sales cannibalisation should be limited to computers below the performance range of Core 2 Duo, which as it stands today, equates to all of AMD’s SKUs.

AMD Loses another $Billion in Q2'08 while Hector gets the boot

Bogged down by biased press and unfair benchmarks, AMD today reported second quarter 2008 revenue from continuing operations of $1.349 billion, a seven percent decrease (-7%)compared to the first quarter of 2008 and a three percent (3%) increase compared to the second quarter of 2007. As part of its previously communicated review of its non-core businesses, AMD decided to divest its Handheld and DTV product businesses, and therefore is classifying them as discontinued operations 1 for financial reporting.

In the second quarter of 2008, AMD reported a net loss of $1.189 billion, or $1.96 per share. For continuing operations, the second quarter loss was $269 million, or $0.44 per share, and the operating loss was $143 million. The results for continuing operations include a net favorable impact of $97 million, or $0.16 per share as described in the table below. Loss from discontinued operations was $920 million, or $1.52 a share, including asset impairment charges of $876 million, or $1.44 a share.

It may appear that AMD has mastered announcing earnings report in the midst of deflated expectations. Surprisingly, nobody seemed to care that AMD lost $270 million in the quarter and wrote off another Billion from its books. That's the AMD we're all familiar with, beating expectations the wrong way round.

But let's focus on the good news! No, Hector leaving can either be good new or bad news depending on which side of the fence you're sitting. His announcement in the midst of the report may have caught a lot of people by surprise, but like he said, it's been planned and talked about before. The real good news for AMD is that their new product line-up are gaining momentum. They never said which direction but still we're assuming it's getting design wins and a bunch of orders. AMD is also confirming together with Intel that the PC market is healthy. In fact it is so healthy that AMD just might lose a lot less in the 3rd quarter and probably break even in the 4th. AMD's promises might not worth much these days but this time the numbers do support it.

As for "SmartAss-et"(c), AMD didn't come out with any announcement but instead gave away a few more clues in the form of an easy riddle. They said, investment in the microprocessor business involves 3 things: process development, factories and chip design. And they said that, implementing smart-asset will take away two of those things. It doesn't take a genius to figure out that the two are investment in process development and factories. If AMD gets the deal then that would leave them to only focus on chip design . It does confirm that AMD is planning to go fabless. We've been discussing this several months ago while at the same time the blogger across the street thought that asset-smart was some kind of process improvement.

No bankruptcy for Intel in Q2’08 - Shocker!

In fact they even went out and beat the general consensus by 3 cents. Demand for microprocessors have been very strong for the last 18 months that it's always a wonder why one company can take all the profit while the other member of the duopoly loses $Billions.

Intel Corporation today announced record second-quarter revenue of $9.5 billion, operating income of $2.3 billion, net income of $1.6 billion and earnings per share (EPS) of 28 cents. "Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year," said Paul Otellini, Intel president and CEO. "As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe."

Results for the quarter included significantly lower NOR flash memory
revenue along with restructuring and asset impairment charges of $96
million. Results for the first quarter of 2008 included the effects
of restructuring and asset impairment charges that lowered EPS by 4
cents. Results for last year's second quarter included tax items that
increased EPS by approximately 3 cents along with restructuring
charges of $82 million.

Guidance remains strong and unchanged from previous estimates for the remainder of the year.
-- Q3 Revenue: Between $10.0 billion and $10.6 billion.
-- Gross margin: 58 percent plus or minus a couple of points.
-- 2008 Gross margin: 57 percent plus or minus a couple of points, unchanged.

The desktop - laptop crossover for the consumer space happened in Q2 driving mobile ASPs down. Fortunately for Intel, they have another cross over happening in Q3 and that is the shift to 45nm. They expect unit cost to dramatically decline providing even more pricing advantage over AMD. The moment when Intel begins to recover investment spent on 45nm starts now until peak production volume. Only the company ahead on the process curve enjoys these returns. AMD on the other hand will spend billions on 45nm just so they can catch up. This is why Intel makes all the money.

Then again ,what we've seen since C2D was released is a general shift of financial analysts favouring Intel. These revenue, profit and margin benchmarks clearly favours Intel! All these making money thing doesn't represent real world.