Business Week on INTC vs. AMD

[HenryTo]

Let's see if Intel can pull another rabbit out of the hat:

http://yahoo.businessweek.com/magazine/content/04_48/b3910050_mz011.htm

Historically, Intel has nearly always been able to deliver when they're backed into a corner - but whatever the case may be, this intense competition between Intel and AMD can only be good for businesses and consumers (unless you were an Intel investor, of course).

[HenryTo]

A "geek debate" on INTC vs. AMD. Warning: Some of the posts may be offensive or seem amateurish to some readers:

http://www.dailytech.com/article.aspx?newsid=550

[HenryTo]

By the way, I had neglected to disclose that I had closed out our Intel long position on Thursday afternoon (leaving on the short directional play on AMD). When it comes to what we do in our own portfolios, we actually do eat our own cooking.

Take care,

Henry

[HenryTo]

Thanks, cl001 - I'll check it out going forward.

I would say that investing in either INTC or AMD just for their microprocessor businesses is risky at this stage. I don't think the IBM analogy applies here. IBM was nearly buried because it stuck to their old way of doing things as well as their old technologies. My guess is that INTC will only be buried by external forces - and not by a combination of IBM and AMD.

Andy "Only the paranoid survives" Grove took INTC to a whole new level by shedding its memory chip business (which the Japanese and Taiwanese were outcompeting them) and focusing on developing microprocessors - which it did extremely well by recruiting the best talent and riding on the wave of the PC boom. Today, INTC still has an advantage primarily because of its brand name, intellectual property, and its high amount of capital - although as cl001 said, AMD is currently beating the heck out of Intel on the desktop market. The key for AMD here is to make a smooth transition to the 65nm process (I think AMD priced itself out of the market by releasing its newest processor with a price tag of over $1,000).

Going forward, INTC will only stumble if they do one of two things:

1) Continue to focus on the microprocessor business and fail to find the next wave to ride on.

2) Consistent failure to find the next wave of new techologies that INTC can leverage with their talent, brand name, and intellectual property. At this point, it seems like Paul Otellini is going in the right direction. Go onto any computer hardware sites like tomshardware.com and you will find that they are essentially proclaiming the end of Intel's reign - which is partially true to some extent - as long as you only focus on speed alone in the desktop market. That's because geeks and engineers only focus on speed - which also used to be the culture at Intel but that is no longer the case. What they have ignored is that under Otellini, INTC added 20,000 jobs in 2005 - and many of these new employees are no longer engineers. In fact, Otellini is the first non-engineer to run the company. INTC is also set to release a record number of new products in 2006. The new partnership with Apple will continue to add brand value to Intel.

At this point, AMD is still only focusing on microprocessors - sure, they have a lot of room to grow simply because they can take market share away from INTC. But at the end of the day, as long as INTC can keep up with AMD on speed alone, I think INTC will be a better investment than AMD in the long-run. I think the risk for Intel at this stage is NOT to make the leap from microprocessors - since the business of microprocessors is no longer showing any where as much growth as it used to.

[cl001]

Henry, you are brave!
Well, in the short term AMD is probably overbought while INTC is oversold. But in the long run it is hard to say. AMD is ahead of INTC in both desktop and server CPU technology. INTC is only leading in laptop and chip set. AMD will attach INTC in the laptop base this year. Remember how MS and INTC almost drove IBM into bankruptcy? The same thing may happen to INTC. The only thing helps INTC is, say you guys correctly predicted, AMD doesn't have as many fabs as INTC, it can't produce enough processors. This may change once AMD moves some production to IBM, for example.
Well, I accumulated significant shares of arsd.pk lately. It is a chemical company that rides the exploding material price. Its main business is chemical plants in TX, though they have mines in Saudi Arabia that are not in production. You may be able to check it since it is not far from you, Henry. It earned 26c last quarter vs stock price of 1.5, very cheap. I was told that they were planning to be listed on OTC in Q1 of this year. Here is some DD,
http://sec.freeedgar.com/displayText.asp?ID=4013513

[HenryTo]

Good call, cl001! Care to give us more predictions going forward?

Went long INTC/went short AMD this morning. Let's see how that goes...

[cl001]

INTC vs AMD? I had the last laugh!
End of discussions?

[HenryTo]

Something to cheer about for INTC investors. AMD desktop processors are nice but I personally would not purchase a laptop with an AMD processor in it.
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Market Pulse: Intel exec says laptop demand at "high end" of forecast
Thursday June 2, 2:41 pm ET
By John Shinal

SAN FRANCISCO (MarketWatch) -- Intel Corp. executive vice president Sean Maloney on Thursday told an audience of financial analysts that demand for the company's computer chips used in laptops is "at the high end of expectations." Maloney, who heads the Intel unit that designs chips used in mobile devices, made the comments in San Francisco. Intel is scheduled to give an update of its expectted second-quarter results June 9.

[HenryTo]

Looks like the Holy Grail is the dominance of notebook chips - as opposed to desktop chips which is now getting more irrelevant by the day. AMD really needs to break into this and the server market in order to gain any traction going forward.
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Original Link: http://www.theinquirer.net/?article=23055

Intel panics and announces Merom

Silence of the LANs


By Charlie Demerjian: Friday 06 May 2005, 10:15

INTEL HAS FINALLY let the cat out of the bag and announced the Merom clan. I say finally because it is pretty much an open secret that they are coming. Intel was forced into this by a lack of current product and a rash of bad PR. The PR was mostly self inflicted, and I actually prefer the honesty that came forth this week to the usual answering of tangential questions.

I don't know what exactly it "announced", or if it was any more than a code name, but they are 'outed' now, so now the speculation about what they are begins the beguine. Luckily, if you are reading this, it also ends. There are three chips. Merom, the mobile part, Conroe, the desktop, and Woodcrest, the Xeon. They will be followed by Whitefield, essentially a four core follow on to Woodcrest. All of them, except Whitefield, will be dual core from the start.

All of these parts will be completely new from the ground up. The talk of them being Pentium M based is complete bull because these are next generation "brains of the computer". They have all of the features of the current chips, all the *Ts (Socket Ts), and a few more, and of course are 64 bit. The most surprising bit is that they will not have on die memory controllers on Merom and Conroe. Woodcrest will be FBD (fully buffered DIMM) enabled, so look for the potential to have stupidly large amounts of RAM on it.

The chips themselves throw out the failed P4 "Netbust" architecture and are based on the Pentium M philosophy of shorter and more efficient pipelines. I have heard 12 or 13 stages from several people. Don't look for clock speeds anywhere near that of Netburst products, more in the 2.5GHz range for the desktop parts. That is not to say that they won't be fast, as Intel so thoughtfully said two American IDFs (Intel Developer Forums) ago, they will be four "issue" wide, and undoubtedly have a better "front end" and cache setup than any of the current chips. Look for a large IPC (instructions per cycle) advantage over the current PM cores, and a truly huge one over P4 parts.

All will be FSB (front side bus) based until Whitefield brings CSI (common system interface: ring enabled HT) to the party. The FSB will clock faster than the current chips, but even Intel hasn't figured out by how much yet. Here is some predicitive speculation. This is the weakest link of the chips, but if you look at the Twin Castle and Blackford results, Intel has more than the engineering talent to minimise any deficiencies over HT or CSI. DIB (dual independent bus) effectively provides the same topology for a two socket system as a P2P layout. They will do all right here.

Merom and the rest are why Pat Glesinger can grin when he goes to bed at night. It's not just the fact his wife makes him a nice cup of cocoa. He and the rest of the Chipzillites will bring Intel right back to competitiveness on the core front. When the followup cores with CSI come in, AMD will have a lot of sweating to do. They had better have something damn good in the pipe, because if they do not, Intel will steam roller them.

If you are wondering about the rather anaemic 65 nanometre Pentium 4 based dual core offerings, wonder no more. This is all because all the engineers were pulled off the projects to make Merom a smashing success. The PRs were gagged. The early word is all thumbs up and ahead of schedule. The 65 nanometre process, it appears, is well beyond healthy, and has some surprises lurking.

The chips will be "out" starting in late 2006 with Merom, followed by Conroe, then Woodcrest. We expect them to be publicly shown at the next Spring IDF, and perhaps Chipzilla will lift the veil and show off a couple of early early samples at Fall IDF, if there is one. Nut Intel may not have functional silicon by then.

Intel is back on the scene late next year, barring "execution problems". If you see an Intel exec smiling, it is because she or he knows what is coming and has stopped looking at her or his girlie Rolex.

[HenryTo]

Looks like another paper launch here but I think Intel will be stealing the thunder from AMD here unless AMD comes out with more than a paper launch sometime next week. Following article is from Tomshardware.com:
---------------------------------------------------------------------------

First Intel dual-core PCs to ship on Monday

By Wolfgang Gruener, Senior Editor

April 15, 2005 - 19:48 EST

Santa Clara (IL) - Intel made it official on Friday: The company confirmed that system builders will start offering dual-core computers next week. The PCs will be based on the Pentium Extreme Edition 840 processor.

AMD won the Gigahertz race five years ago, so Intel apparently did not want to second with the dual-core introduction again. Intel's PR department announced in a surprising email that dual-core PCs will be shipping from OEMs on Monday, April 18. System builders participating in the launch will be Dell, Alienware and "a couple of others", according to the message.

Intel however defines this "launch" as consumers being able "to fulfill their PC orders starting". Accordingly, the official launch of the dual-core processors will not happen on Monday.

Intel did not provide further details. Monday's introductions are also likely to be limited to the high-end Pentium 4 Extreme Edition 840. Dell and Alienware already announced systems that integrate the processor. Pricing has not been officially unveiled yet, but Intel is reported to position its Extreme Edition at the very high end and around $1000 per processor - resulting in PC system pricing starting at about $3000. (THG)

[HenryTo]

A first glimpse at the new Dual Core INTC desktop chip:

http://www.anandtech.com/cpuchipsets/showdoc.aspx?i=2388

A hands down winner if one is always multi-tasking or need to encode media files. Official launch is sometime within the next couple of months.

[HenryTo]

Intel to cut Pentium M prices on July 24th in response to AMD's rollout of the new Turion 64 mobile CPUs (by as much as a third on the high end ones):

http://www.digitimes.com/mobos/a20050314A7039.html

Given the fact that the dual core mobile processors from Intel won't be out until next year, it looks like that this year may be another tough time for Intel? Any thoughts?

[HenryTo]

INTC was up earlier in AH trading (about 2.3% or so) but is now flat. Tomorrow will be interesting, for sure.
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Associated Press
Intel Narrows 1Q Revenue Forecast
Thursday March 10, 5:01 pm ET
By Matthew Fordahl, AP Technology Writer
Intel Narrows First-Quarter Revenue Forecast, Says Gross Margins Exceeding Expectations

SAN JOSE, Calif. (AP) -- Intel Corp. narrowed its first-quarter sales forecast Thursday to the high end of its previous estimate and said gross margins were exceeding expectations largely because of lower startup costs associated with a new manufacturing technology.
Intel now expects first-quarter sales to be between $9.2 billion and $9.4 billion. In December, the company predicted revenue of between $8.8 billion and $9.4 billion. The company does not provide earnings guidance.

The new estimate exceeds Wall Street expectations. Analysts expect the company to earn 28 cents per share on sales of $9.15 billion, according to a survey by Thomson First Call.

Intel's gross margin -- the closely watched difference between sales and the cost of the products sold -- is expected to be about 57 percent, compared with the previous forecast of 55 percent plus or minus "a couple points."

Intel's strong financial performance continues even after it faced numerous product delays, outright cancellations and criticism for letting smaller rival Advanced Micro Devices Inc. take the lead on some technological fronts.

That appears to be changing in 2005. Just a few months into the year, the maker of the Pentium 4 chip has released a number of processors that can address more memory than previous generations and maintain full compatibility with older software. AMD has been offering such a chip since 2003.

Intel and AMD also are in a race to release their first processors with two computing engines on a single chip. That's expected to improve performance when multiple programs are running on a system at once or when a single program is designed to take advantage of it.

Notebooks based on Intel's Centrino wireless technology also have seen strong acceptance by both businesses and consumers. AMD formally launched its Turion mobile processors on Thursday, though it's unclear how competitive the model will be against Centrino's long battery life.

Intel's updated forecast was released after the financial markets closed. Earlier, shares gained 1 cent, to finish at $24.85, in regular trading on the Nasdaq Stock Market. In the extended session, they gained 59 cents, or 2.3 percent

Intel investor relations: http://www.intc.com

[HenryTo]

Thanks for clearing all that up, Greg - I think!

On the subject of INTC vs. AMD, yet again, following is an article from Sudhian Media on AMD: From Clarity to Confusion: AMD’s Model System Needs to Go:

http://www.sudhian.com/showdocs.cfm?aid=655

I admit - I used to follow microprocessor news quite a bit and everything right now is just too confusing and too much to keep up with. It has continued to be the marketing that counts, more than ever. I remember when the Athlon first came out for AMD. They had a good chance to take market share away from Intel (which they did to some extent) and now the story of AMD being a true competitor is slowly fading away yet again.

The current "cream of the crop" desktop processors from AMD tops Intel's - but for how long? More important, how will AMD compete in the mobile market going forward?

[gregf]

Being in sales, I hope there's an uptick!

I'm in the enterprise segment - so, I am only selling 64-bit platforms. I don't pretend to be an IA32 server or desktop guru because I'm not.

I haven't seen any benchmarks released (because there ain't no boxes yet!), but, they're saying Montecito will be 2x what we have today with the single core Madison processors on a per-processor basis. Montecito is being designed by the former Alpha chip design team. A 4-way Madison is about 40,000 TPC per processor. Of course, as you scale up, that number moves down. The 64-way number is around 1-1.5M which works out to be about 20,000 TPC per proc.

Microsoft has been shipping a 64-bit version of windows for over a year on Itanium, fwiw. You're, I think, referring to a specific version for the 64-bit extensions - which, my understanding is there will be specific versions for AMD as well as INTC as they are not the same.

So, right now there's a lot of confusion over the 64-bit extensions stuff . I don't know of any ISV's that are going to the trouble to port a 32-bit app to take advantage of the 64-bit extensions specifically. It's expensive to move from 32-bit to 64-bit - if you want to do a 64-bit port you'd want to run on a box that's got 64-bit throughout. There is no comparison between what a fully 64-bit Itanium box can do overall and what any AMD or Xeon class system can do - Itanium rocks on overall system throughput.

Most customers who want 64-bit capabilities are running non-trivial workloads that are mission critical - that usually translates into a big iron UNIX box that's > 4 procs. While there have been numerous IA32 boxes with >4 procs, they've never been much on volume, as in noise level. I think most of the 8-way boxes are for bragging rights to be the big dog in the IA32 space, LOL. I believe the AMD Opteron is limited to 4 procs by it's architecture - there may be some future gens that go beyond 4, but, I don't follow that so closesly,...AMD is really, I believe, targeting the meat of the IA32 server market which is 4-proc boxes. These are the SQL and Exchange server platforms of choice and where the bulk of the business happens,....
JMHO.

[HenryTo]

Hmmm... have you seen any of the benchmarks of the new dual core processors?

From the look of things, both Intel and AMD are definitely onto something here in terms of a performance leap. Combined with the fact that MSFT will be launching a 64-bit version of Windows in a couple of months, we may see an uptick in IT capital spending? What do you think, Greg?