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Stephen DiFranco, AMD's Global Consumer Channel VP, speaks on supply issues

All may not be so rosy over at Sunnyvale. AMD is reportedly experiencing a supply shortage of its processors. While some may point their fingers at Dell gobbling up supplies, AMD's Global Consumer Channel VP Stephen DiFranco said, in similar reports at Ars Technica and Tech Reportthat "Dell is really not a factor," and "hasn't really had much of an impact yet."

DiFranco reasons that notebooks appeared on Dell's Web site only recently, and desktops no more than two months earlier, thus having minimal impact on demand so far.

When Dell announced it had finally made the leap of faith to use AMD processors, the Texas PC maker cited that adequate levels of supply as one of the reasons behind the decision to look beyond Intel.

The main reason, according to DiFranco, is that consumer demand is outrunning supply.

"Typically, the channel prefers a lot of inventory in December," DiFranco said. "This year we have seen demand spike earlier than anticipated, and our engineering inventory has been off."

When asked if AMD has any concerns that its users may choose Intel processors if supplies of AMD chips run dry, DiFranco responded, "We don't expect our users to jump brand. Their loyalty comes from many years of dedication, and they're a sophisticated group. We think they will stay loyal over the long term; they're better served by sticking with AMD technology."



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Not so valid...
By Aikouka on 11/10/2006 12:32:59 PM , Rating: 5
I don't know about all that hooplah about brand loyalty. I've been running an AMD since K7 and even paid the high premium for the X2 K8 processor (X2 4400+ was ~$700) when it came out. My latest order from NewEgg the other day included a Core 2 Duo E6600. I think AMD needs to realize that people tended to buy their processors because they had a good price point or they were faster than Intel's closest offering.

Now, you can get an E6300 for a good price, and if you really want to get even more bang for you buck, you can easily OC it. So, yes, the guy is somewhat right... people won't switch because of lack of supply... they'll switch because Intel's current offering is faster. (Note, I'd safely exclude people who're doing simple upgrades (processor only) from this remark. They'd probably simply buy a newer AMD processor to avoid the higher Intel motherboard prices and they could probably stick with their DDR1 and avoid the high memory prices as well. But for a MOBO/CPU/RAM upgrade... I think you know who people will go with.)




RE: Not so valid...
By fic2 on 11/10/2006 12:41:17 PM , Rating: 2
I agree, but with socket 939 EOL this will be coming to an end and people will have to upgrade mb/memory. Next year's upgrades could be tough on AMD.


RE: Not so valid...
By Lonyo on 11/10/2006 1:39:57 PM , Rating: 2
Supplies of cheap X2 939's has pretty much gone, I haven't spotted 3800+'s in the UK, and the others (4200/4600) are increasing in price.
AMD's time has come and gone in terms of cheap performance, and anyone upgrading is pretty much forced to go DDR2/new mobo, and while they're at it, they might as well switch to Intel as well to get better performance/lower power/similar price.


RE: Not so valid...
By GreenEnvt on 11/10/2006 2:49:31 PM , Rating: 2
Quite true, I wanted to find a 939 x2 4600, but couldn't find one that was in stock anywhere local. I managed to find one 4200, so I grabbed it.
Lots of AM2 X2's, but 939 is quite rare now.


RE: Not so valid...
By Spoelie on 11/11/2006 3:28:36 PM , Rating: 2
socket 939 opterons are a steal right now, and in plenty of supply. the definite socket 939 upgrade before switching to another platform. got me the 165 for €160 last week, and in the process of overclocking it a bit :p


RE: Not so valid...
By Nocturnal on 11/10/2006 6:24:06 PM , Rating: 2
Yup. If you check out the FST forum at AT you will see that nobody is selling X2s and if they are, it's very rare. ZZF hasn't had any 3800s or the 4800s in stock for quite some time and I'm guessing they may never get them in stock again. I'm not sure why they don't take the processor down from the site... it leads me to believe that their stock may replenish down the line.


RE: Not so valid...
By retrospooty on 11/11/2006 3:32:56 PM , Rating: 3
Yup... I agree.

I also think making 939 EOL was a bad idea for AMD. If you have 939 and want an upgrade, 2.6 ghz is the max for X2 and Opty. If people had an option in the near future to get a 3ghz or higher socket 939 they very well might, but the only option is socket AM2. So if you have to buy a new mobo,ram and CPU, it might as well be Core2 due at this point.


RE: Not so valid...
By leidegre on 11/10/06, Rating: 0
RE: Not so valid...
By Jkm3141 on 11/10/2006 2:30:08 PM , Rating: 4
You do know it takes years to engineer a GPU and ATI wont be doing any "reverse engineering" of G80 for R600. R600 will get here when it was planned to, in the January time frame and will perform as it performs. Don't judge it when it isn't out yet. Take the G70 vs R520 and G71 vs R580 comparison. ATI had problems with r520 due to 90nm, the same way nVidia had issues with GeForce 5, but it didn't crush ATI nearly as much as nVidia was. ATI did manage to get out a very nice performing card, (X1800XT) and an even better refresh part (X1900XTX or X1950XTX) that were comparable or better than the comparable nVidia parts of the time.


RE: Not so valid...
By HaZaRd2K6 on 11/10/2006 3:14:00 PM , Rating: 2
quote:
(Note, I'd safely exclude people who're doing simple upgrades (processor only) from this remark. They'd probably simply buy a newer AMD processor to avoid the higher Intel motherboard prices and they could probably stick with their DDR1 and avoid the high memory prices as well. But for a MOBO/CPU/RAM upgrade... I think you know who people will go with.)


Quite right. Right now I'm running an Athlon 64 3700+ (single core) and don't have the money to do a full system upgrade so I'm planning on just jumping up to something faster and adding more RAM. That's about it. But next summer when I get around to building a new system, it'll more than likely be a Core 2 Duo system.


RE: Not so valid...
By tak on 11/10/2006 5:08:09 PM , Rating: 2
the question for me is , if you buy a new system now and you want a CPU upgrade in a year,which one would be better for this INTEL or AMD?


RE: Not so valid...
By cochy on 11/10/2006 4:19:09 PM , Rating: 3
Agreed. I've only run AMD chips since K7 as well. Before that it was Pentium 2. But now, come my next upgrade at Christmas, it's back to Intel. Shortage or no shortage. There's no brand loyalty in CPU market. Perhaps only 1% of customers are that loyal, but the rest of us want to get the most bang for our buck (cause it's not cheap to upgrade), whether it be Intel, AMD, or VIA.


RE: Not so valid...
By rotceh on 11/11/2006 6:54:18 AM , Rating: 1
Well sometimes you have to think out of the box, lets see now with the G80 series mobo and video card,, after reading some reviews looks great with the Intel combo but you have not seeing the what is cooking at AMD nobody knows... why do you think they got into ATI.. let's see Nvidia DX10 now on the go but ATI work very close to MS (Xbox) so they have the upper hand on that, now Nvidia talking about getting into programing to use the graphics card ...hello AMD ATI that is what is all about.. they will connect the too and work together so if you dont want to wait and see is up to you...atm anything that all us gaming community or overclockers we have a good system to play anything that is on the market.. 8 or 10 months from now will be different...games will be out vista will fix most of all bugs.. AMD will come out with what ever is working into... then you can really choose wich way you will like to go for if you like to spend your money go for it... but me I will wait and really see what this AMD ATI will take us.


RE: Not so valid...
By Cypherdude1 on 11/13/2006 8:42:45 AM , Rating: 3
I agree. In fact, the Core 2 Duo E6600 or possibly the E6700 is the CPU I will go with next year. The Asus P5N32-SLI Premium, nVidia 590 chipset, is actually a better mobo than it's Asus M2N32-SLI Deluxe Socket AM2 counterpart. The Asus P5N32-SLI has a third PCI-E 8x slot.

Buying an Intel CPU is actually quite amazing because I have used only AMD and Cyrix CPU's since my first Intel 8088-10Mhz CPU. I have not owned an Intel CPU for 18 years.


I don't think AMD realizes just how bad this is
By encryptkeeper on 11/10/2006 12:53:45 PM , Rating: 3
Ok AMD. Your problem here is that there is NOTHING in the channel. That's your biggest source of revenue, as the channel supplies mainly small businesses and the average mom and pop pc store. I just bent over backwards to find a damn Turion X2 processor, because I HATE Intel. But I had to consider getting a core duo because I wanted a laptop, and I didn't want to wait. That will happen to a lot of people. This will probably erode AMD's market share worse than the Core 2 Duo benchmarks.




By archcommus on 11/10/2006 1:18:38 PM , Rating: 5
I'm sure AMD realizes it just fine.

Bottom line, if there are shortages, that means they're getting a lot of sales! So sure they'll lose some sales when they run out of supplies, but I'd expect those sales to resume again once the supplies are back and if the price is right.


RE: I don't think AMD realizes just how bad this is
By Ringold on 11/10/2006 1:39:50 PM , Rating: 3
Thats sort of what I'm thinking.. How is this bad, at least for AMD? If there's shortages, that means...

1) They're moving all their inventory, which is great
2) They're pricing is probably slightly too cheap if demand is swamping supply

and that means..

.. a good quarterly report in the future?

To be honest, that's all I care about; their financial integrity. AMD must be profitable over the long run to stay competitive, so this seems like an all around good thing to me.

Am I missing something? :P


RE: I don't think AMD realizes just how bad this is
By deeznuts on 11/10/2006 2:06:54 PM , Rating: 2
Running out of supply is never a good thing. Period. Always better to have slightly more inventory then demand, just slightly. You have to remember the incremental cost of building one more chip is not much. But losing out on sales is huge, especially if there are good alternatives.

Point 1 is good, point 2 is bad, point 3 which you didn't make is this is a supply problem. Shareholders will not like this, and the quarterly report will read:

We ran out of inventory.

Shareholders and money managers don't like to see this, UNLESS AMD can show that the demand will still be there, and plans to increase manufacturing are in place and will be implemented soon (i.e. really soon).


By encryptkeeper on 11/10/2006 5:30:47 PM , Rating: 2
That's exactly why you try to maintain a balance...sure you can have loss-leaders to get people to try your product, or low inventory on a hot item to get people interested in your product line, but imagine walking into your favorite store of all time and there's NOTHING on the shelves, and they tell you "Sorry, we'll be back in stock soon." You will go somewhere else, and maybe even not come back.


RE: I don't think AMD realizes just how bad this is
By Viditor on 11/11/2006 8:00:47 AM , Rating: 2
Ummm...these shortages are based on shipments from 30-60 days ago, that's how long it takes for shortages or surplus to work it's way through the channel. AMD has already talked about having made a mistake last quarter in the "mix". The problem has been rectified, and shortages should be gone in the next week or so.


By Viditor on 11/11/2006 10:42:56 AM , Rating: 2
As a follow up, here's the interview with DiFranco...
http://tinyurl.com/svoja

"DIFRANCO: I do understand their frustration. We're actually going to ship more processors in the fourth quarter than ever before in the company's history.

CRN: How many?

DIFRANCO: We don't publish [that number], but it is substantially more because we have our new fab up and running, and wafer output is dramatic. What we ship out is a lot, and the majority of it ends up getting cycled in the consumer [arena]. The consumer market will take a lot of inventory between the second week of October and the first week of December. Both OEMs and the channel get less inventory in those weeks because we're mixed"


By LuxFestinus on 11/11/2006 2:06:40 PM , Rating: 2
AMD to ship 65-nm in Q4, Eckstein says
http://www.cdrinfo.com/Sections/News/Details.aspx?...


AMD 65 nanometre chips available
http://www.theinquirer.net/default.aspx?article=35...


.
By Hyperlite on 11/10/2006 12:26:49 PM , Rating: 1
"We don't expect our users to jump brand. Their loyalty comes from many years of dedication, and they're a sophisticated group. We think they will stay loyal over the long term; they're better served by sticking with AMD technology."


uh...lol.




RE: .
By SLEEPER5555 on 11/10/2006 2:44:40 PM , Rating: 2
quote:
"We don't expect our users to jump brand. Their loyalty comes from many years of dedication, and they're a sophisticated group. We think they will stay loyal over the long term; they're better served by sticking with AMD technology."


and isnt that the same mentality that hurt intel? I love AMD but intel is back for now so why would i stick to amd in the coming time.


Uhh Ohhh.
By Dfere on 11/10/2006 1:26:37 PM , Rating: 3
So, there is a shortage BEFORE Dell starts sucking them up. "not a problem"?




Whatever happened to Fab36?!
By Hoser McMoose on 11/10/2006 5:04:32 PM , Rating: 3
Isn't Fab36 supposed to be well on it's way to ramping up production now? With 300mm wafers and following their earlier ramping plans AMD should have *significantly* more production capabilities than they had last year. Admittedly their demand has gone up quite a bit from last year, but not to the extent that production should have gone up.

This suggests to me that they're running into one of a few things. a.) they are selling a lot more 90nm dual-core chips with relatively large dies and therefore fewer dies for a given amount of wafer space. b.) the production ramp is not proceeding as quickly as planned. And/or c.) the yields in Fab36 are not up to snuff yet.

Regardless of which of the above is true, they all point to some production problems at AMD. They REALLY should have 65nm out now or in the very near future, as they are now a full year behind Intel in this regard. Given that the lifespan of a given microprocessor process is only about 2 to 2.5 years, being 1 year late to the game is a BIG deal. A 65nm process gives you roughly twice as many dies, all else being equal, when compared to a 90nm process.

In any case, best of luck to AMD getting these issues resolved. Competition is a VERY good thing and I want to see them continue to do well and pressure Intel.




AMD so Wrong about loyalty.
By isorm on 11/10/2006 9:40:49 PM , Rating: 3
We used to sell almost 99% AMD, but now since no CPUs and no love to the channel, we sell almost 99% intel. I always had AMD going back to mid to late 90s and I know run a Core 2 Duo. No loyalty just wanted stock and speed.




sophistocated users vs mainstream
By StuckMojo on 11/11/2006 3:20:12 AM , Rating: 3
i'm not disagreeing with their statments, but just clarifying:

they are probably justified saying that they wont have their loyal users jump brand. they are thinking that their core user base are overclockers and upgraders and DIY and cost conscious people. this is probably true, at least in the sense that "core" means hardcore or loyal.

however, of the people who acccount for processor purchases, those who are buying them alone as an upgrade are a miniscule percentage, IMHO.

now that intel can validly claim: "cheaper, faster", the lion's share of retail sales (of packaged, big name, pre-built systems) could swing back the other way.

while their "core demographic" may hang in there, their largest customer segment could easily jump ship because they never really established that loyalty to begin with....

that being said, i like amd for alot of reasons...admittedly in part because of the underdog...thing.

also, because as a software developer, i appreciate the good floating point preformance. even when intel was catching up in office apps, athlon compile times kicked their ass.

unfortunately for me, that's the one benchmark anandtech has chosen to leave off the comparisons with the new core 2.


me....i'm loyal to a point. i'll stick with amd until it's clear that there's another celeron 300A :)




APM
By Slaimus on 11/10/2006 4:29:25 PM , Rating: 2
Doesn't AMD have the "APM" system in place just to prevent these kinds of things from happening? It is supposed to only start a wafer when there is an order, and will set the ratio of Sempron/Athlon/Opteron produced.

I guess they haven't adjusted their algorithms to account for Dell, or that they are now making and stockpiling 65nm parts for a release soon




By kenyee on 11/10/2006 7:11:51 PM , Rating: 2
There are hardly any TL-60's (2GHz) being used by Dell or HP, but it's easy to find T7200's from them. There's no loyalty unless you want to upgrade processors w/ the same hardware, but w/ so many socket/memory changes, you might was well start over each time you want to upgrade your system. The only thing keeping Intel from owning the SFF/consumer PC market is an IGP chipset like the nvidia 6150, but that'll be fixed in February...




Bang for buck
By Trogdor on 11/10/2006 4:40:05 PM , Rating: 1
I can understand the spike in demand since the prices were slashed. I bought an s939MB + X2 4800+ because it was priced so well. Seeing as Intel has the performance crown now, AMD had no choice but to go for the price performance route.




You are WRONG
By crystal clear on 11/11/2006 7:47:23 AM , Rating: 1
AMD: Don't blame Dell for our problemshttp://www.reghardware.co.uk/2006/11/10/amd_shorta...

Also-
"The main reason, according to DiFranco, is that consumer demand is outrunning supply."

Wrong/Incorrect- NO,its your production problems -thats the main reason.
Atleast Sony was Honest enough to admit it has a production
problem.

Consumer demand for Intel CPUs has knocked you off the
competition.Let it be Desktops/Servers/Notebooks.
As SIMPLE AS THAT-I am not a Intel guy-I see Real Facts
in the market.
IBM,Dell have already started to move over to Intel,with HP
to follow.(currently Servers)

"We don't expect our users to jump brand. Their loyalty comes from many years of dedication, and they're a sophisticated group. We think they will stay loyal over the long term; they're better served by sticking with AMD technology."

Again-Wrong/Incorrect-WAKE UP to the realities of the market.
Loyalties to Brand names or products are ever changing,
Yesterday was AMD Today it is Intel & Tommorow will be Intel
unless you have something that beats Intel CPUs.
I am talking Performances/Price/Supplies.
Users want Quality & Compettetive Prices,let it be Desktops/Server/Notebooks from High end CPUs to low end or budget catergories.

"Typically, the channel prefers a lot of inventory in December," DiFranco said

You knew it long time ago like anybody in marketing knows-
THEN-what did you do about it?????
Your production failed you -simple as that.

You bungled it-you missed out the major buying season-in short you LOST.

The Technological lead that Intel built in the previous few months plus in the 6 months to come is immense-they give you high performances & competitive prices & plenty of supply(no shortages) -resulting in further lower prices as the market is flooded with Intel CPUs.

These are fact & realities of the market today.




Bang for buck
By Trogdor on 11/10/06, Rating: 0
"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs

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