A Price War For AMD (AMD)
October 19, 2007 by Douglas A. McIntyreAMD (AMD) had another big quarterly loss. But, it was not as large as in Q2 and gross margins improved a bit. Maybe the chip price wars are ending and AMD can move back toward a profit.
Probably not. According to The Wall Street Journal: "IDC, a market-research firm, estimates AMD accounted in the second quarter for 23.1% of unit sales of x86 microprocessors, the most popular variety of calculating engines for personal computers and server systems — up from 18.6% in the first period."
AMD said that it thought it had improved share even more in the third quarter.
Intel (INTC) is going to want that share back. With its lower cost base and rock-hard balance sheet, it can afford to cut prices again. Rumors are that it is already getting aggressive with pricing on its high end chips to combat AMD’s new Barcelona line.
A drop in gross margin point at Intel more than $3 billion over the course of a year. At AMD, that number is more like $600 million. But, on its revenue base and with loads of cash Intel can take that hit. AMD can’t.
And, Intel is going to want that market share back.
Douglas A. McIntyre
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