AMD price cuts semaphore a signal

THE LATEST Intel results tell you more about AMD. Intel's growth in stocks in the warehouse, even with a big write off points to AMD having too much stock too - see this.

On the surface it looks like AMD is getting hammered in the market and can't sell chips to save its life. If you look closely though, that is far from the case, the chip prices cut so far are only for 1xx Opterons, and even then, they are the old 'dead' socket. This may be short notice, but it is far from panicky.

Let's toss one more thing for background. AMD is still capacity constrained, according to sources, and the speculation includes rumours that the Xbox 360 eating Chartered wafer starts.

This may or may not be true, but AMD is really causing heartaches for several Tier Two and Three vendors with supply problems. Allocation is part of the game, but firms are moaning about it.

So, if AMD can't make enough, why price cuts? Simple, the parts cut are Opterons on the old 939 socket, and they are a dead end. This means AMD has a warehouse full of them, and firms are not buying the components.

This may be good news because it looks like the server vendors moved to new components very quickly, leaving AMD with a shortage of CPUs and an excess of old chips. Since there is a lag between finding out what demand really is and how many chips are in the oven, this move may have caught AMD by surprise.

AMD hints that demand for 940/1207 Opterons is stronger than they were expecting.

Although we won't know for almost a full day, it seems likely that AMD will announce slower sales on older parts but are clean out of the new ones. If this means a short term dip with good long term prospects, it will be able to take it. µ