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Bruised but not broken, AMD fires off another volley of price cuts across Core 2 Duo's bow

With only a month until the most anticipated AMD product launch in five years, the company is pulling out all the stops to get competitive before the Back to School buying season.

The AMD-Intel price war, now almost into its second year, was cited as one of the contributing factors to the $611 million dollar loss AMD posted in the fiscal first quarter of 2007.  Following that loss came a 400 employee headcount reduction and a $2.2 billion cash-for-stock deal.

Almost immediately after posting its Q1 loss, Mercury research declared that Intel managed to recapture all of AMD's marketshare gains from 2006 in the first three months of 2007.  JP Morgan directly attributed the Intel traction due to aggressive pricing.

Effective Monday, July 9, 2007, AMD will enforce the following pricing among its channel:

AMD Athlon 64 X2 Pricing
Model


Current
Pricing
July 9
Pricing
6000+

$229
$169
5600+


$179
$149
5200+


$169
$129
4800+


$129
$109
4400+


$115
$89
4200+


$102
$79
4000+


$99
$69

With these new prices cuts, AMD will also significantly trim its retail CPU portfolio.  All single-core Athlon and Sempron models currently in the channel will officially reach end-of-life status (EOL).  The ultra-low cost Athlon 64 3500+, Athlon 64 3200+, Sempron 3500+ and Sempron 3200+ will continue to exist in high growth markets: Brazil, Russia, India and China.

In addition, the Athlon 64 X2 3800+ and 3600+, currently priced at $79 and $69 respectively, will also reach EOL status.

AMD roadmaps confirmed that other low-cost single-core processor families like Lima have already been phased out, just three months after launch. The company is still slated to introduce its 65nm Sparta family, based on the K8 architecture, in September 2007. 

The company's next-generation architecture, occasionally dubbed K10, will officially launch the last week of August for server platforms, and sometime late in the holiday season for desktops.  AMD has not issued pricing notifications on these processors yet.

AMD fired the first volley at the Intel price war when the company dramatically slashed processor prices -- just days before the Intel Core 2 Duo launch.  Since then, both companies reduced pricing of last year's products to less than 33% of last year's street price.

Memos released to DailyTech from AMD distributors confirm that the July 9 AMD price cuts are directly aimed at pre-empting the July 22 Intel price cuts.  These upcoming Intel price cuts will cut current Intel quad-core almost in half.


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Its the Fabs
By Operandi on 7/8/2007 6:07:09 PM , Rating: 2
It seems to me the problem is the fabs.

For as long as I've been following this stuff (7 years or so) Intel has always had the fabrication advantage, allowing them to produce their chips at lower cost vs. AMD.

K8 won out in the end due to superior architecture but the Pentium 4 still remained somewhat competitive due solely to Intel's more advanced fab plants. Now that Intel has more than a competitive architecture along with superior fabs AMD is in a bit of trouble.

K10 should be able to compete with Intel but it needs the fabrication backend to do it.




RE: Its the Fabs
By Ringold on 7/8/2007 8:55:21 PM , Rating: 2
And Jim Cramer says AMD has too many fabs! I think Cramer has taken a step in to something he needs to look in to a bit more there. Consumer processors are commodity parts with a value set by performance, but by brand. Both brands have a small cadre of die-hard loyalists, and in fact I'd say a slim majority of tech geeks always have a soft spot in their heart for AMD as the underdog, but in the end we're all buying C2D right now. If AMD cut production it wouldn't be able to do anything at all with prices, it'd simply give up economies of scale and revenue. :\


RE: Its the Fabs
By Smurfer2 on 7/9/2007 8:04:32 AM , Rating: 2
quote:
And Jim Cramer says AMD has too many fabs!


Yea, I agree, he needs to look at this closer. When AMD has agreements with 3rd party fabs to produce chips, I don't think they have too many fabs.


RE: Its the Fabs
By darkpaw on 7/9/2007 9:15:03 AM , Rating: 2
Maybe what he means is that they should be contracting out more instead of having the financial burden of building and upgrading their own fabs.

I don't pretend to know which is the better route, thats what the financial people get paid the big bucks for, but I'm pretty sure this is what that guy meant.


RE: Its the Fabs
By Oregonian2 on 7/9/2007 1:46:23 PM , Rating: 2
For their primary CPU line of products, I thought they themselves really had only one FAB site, the one in Dresden ?


RE: Its the Fabs
By Screwballl on 7/13/2007 12:05:27 PM , Rating: 2
Didn't AMD just sign on with a company or two about adding a few more large fabs???
Would be nice to see them kick things into an increased distribution level that would be a bit more competitive to Intel.


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