AMD profits, aren't we forgetting something?

I was reading in the other threads a lot of discussions on AMD product pricing, specially the suspected low-price 100-140$ Phenom 9100 and triple cores.

Supposing AMD loses money on each of these processors. Suppose this on every Dell machine as for example.
But each AMD CPU needs an AM2 mobo with chipset, which in part -in the case of Dell alone- could be an AMD chipset, as I don't really know any better alternative for a new rig.

Could AMD compensate in the sale of the whole combo? (lets say, money they lose on the CPU be recovered by the chipset).

Also, is every user buying those fancy ATI cards when they decide to go AMD 700 series motherboard?

Maybe AMD has a point on pricing their CPUs so low. Also, nobody really can confirm AMD losing money for this.

Whats your thought on this? is AMD being saved by the spider combo tri-equation?

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Message edited by thefumigator on 02-18-2008 at 02:42:42 AM

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thefumigator wrote :

Could AMD compensate in the sale of the whole combo? (lets say, money they loose on the CPU be recovered by the chipset).

Offering below-cost price CPUs in order to encourage OEMs to sell AMD systems and not Intel systems? Isn't that pretty close to what Intel were dragged into court for in the EU?

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Reply to MarkG

thefumigator wrote :

I was reading in the other threads a lot of discussions on AMD product pricing, specially the suspected low-price 100-140$ Phenom 9100 and triple cores.

Supposing AMD looses money on each of these processors. Suppose this on every Dell machine as for example.
But each AMD CPU needs an AM2 mobo with chipset, which in part -in the case of Dell alone- could be an AMD chipset, as I don't really know any better alternative for a new rig.

Could AMD compensate in the sale of the whole combo? (lets say, money they loose on the CPU be recovered by the chipset).

It could, but it would fall into the category of "predatory pricing", and as MarkG said, is exactly the reason why Intel is being sued by AMD.

So in other words, no, AMD cannot lose money (at least manufacturing cost) on each CPU they sell, and attempt to recover it from chipset sales.

Quote :

Also, is every user buying those fancy ATI cards when they decide to go AMD 700 series motherboard?

You'll be amazed, that majority of the card purchasers actually use Intel chipset. Since the greedy Nvidia did not license Intel SLi, Intel chipset is only left with Xfire as a multi-GPU solution.

Quote :

Maybe AMD has a point on pricing their CPUs so low. Also, nobody really can confirm AMD loosing money for this.

Whats your thought on this? is AMD being saved by the spider combo tri-equation?

Actually, if someone is bored enough to flip through AMD's 10-k, it'll be clear whether AMD is losing money on CPU sales.

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Reply to yomamafor1

As far as losing money on CPU sales i doubt they are. Even if Yields are sucky it probably only costs them about $100 to make a quad core phenom. Thats after taking yield losses, and licensing % for SSE instructions into account, just to be safe I give a 15% tolerance on that number. That sounds about right since it costs Intel around $50-$75 to produce any of it's CPU's except for maybe the newest generation.

You gotta figure in the fact that the 9100e and the tri cores are probably going to be used to cut yield losses even more. What you have to watch out for on AMD's quarterly reports are things the cost of sales section. Thats where the crosslicensing % and things like advertising are factored in. I think thats likely where AMD loses money at, also due to the fact they don't seem to advertise mainstream other than what the computer OEMs themselves advertise.

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Reply to Mathos

thefumigator wrote :

I was reading in the other threads a lot of discussions on AMD product pricing, specially the suspected low-price 100-140$ Phenom 9100 and triple cores.

Supposing AMD looses money on each of these processors. Suppose this on every Dell machine as for example.
But each AMD CPU needs an AM2 mobo with chipset, which in part -in the case of Dell alone- could be an AMD chipset, as I don't really know any better alternative for a new rig.

Could AMD compensate in the sale of the whole combo? (lets say, money they loose on the CPU be recovered by the chipset).

Also, is every user buying those fancy ATI cards when they decide to go AMD 700 series motherboard?

Maybe AMD has a point on pricing their CPUs so low. Also, nobody really can confirm AMD loosing money for this.

Whats your thought on this? is AMD being saved by the spider combo tri-equation?

'losing', you mean? Nah, its just loose change to AMD. Its quite clear from the massive quiet that we are currently hearing from their marketing spin doctors that AMD have over-hyped themselves into near oblivion, and they don't really care.

Tri-cores are apparently rejects of Phenoms with the third core disabled, due to another 'erratum' that AMD won't admit to. Would I buy one? I'm on a 939 platform. I have to change MB either way, so at this point in time I wouldn't.

Message quoted 1 times

Reply to croc

croc wrote :

'losing', you mean?

Oops... corrected (wow, same error 3 times, my english is bad...)

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Reply to thefumigator

Mathos wrote :

As far as losing money on CPU sales i doubt they are. Even if Yields are sucky it probably only costs them about $100 to make a quad core phenom. Thats after taking yield losses, and licensing % for SSE instructions into account, just to be safe I give a 15% tolerance on that number. That sounds about right since it costs Intel around $50-$75 to produce any of it's CPU's except for maybe the newest generation.

You gotta figure in the fact that the 9100e and the tri cores are probably going to be used to cut yield losses even more. What you have to watch out for on AMD's quarterly reports are things the cost of sales section. Thats where the crosslicensing % and things like advertising are factored in. I think thats likely where AMD loses money at, also due to the fact they don't seem to advertise mainstream other than what the computer OEMs themselves advertise.

LOL!!! Do you have any links?
Sounds like you are pulling numbers out of your nether region :>>>

------------------------------ If its good in theory but not in practice,
its not good theory.
Reply to zenmaster

thefumigator wrote :

I was reading in the other threads a lot of discussions on AMD product pricing, specially the suspected low-price 100-140$ Phenom 9100 and triple cores.

Supposing AMD loses money on each of these processors. Suppose this on every Dell machine as for example.
But each AMD CPU needs an AM2 mobo with chipset, which in part -in the case of Dell alone- could be an AMD chipset, as I don't really know any better alternative for a new rig.

Could AMD compensate in the sale of the whole combo? (lets say, money they lose on the CPU be recovered by the chipset).

Also, is every user buying those fancy ATI cards when they decide to go AMD 700 series motherboard?

Maybe AMD has a point on pricing their CPUs so low. Also, nobody really can confirm AMD losing money for this.

Whats your thought on this? is AMD being saved by the spider combo tri-equation?

I don't think it's AMD's plan to try and sell cheap to maximize the sales of other components.
Rather, they are just pricing as they have to, to find a market.

While it may be below production cost, it may not be lower than (Production Cost - Idle Cost).
Equipment, even when unused, as well as rent/mortgage, utility bills, wages, etc... are all part of production cost but will also be there even if they are not producing chips.

The result is they will simply lose less by selling at those prices than ceasing production.
Also, by maintaining market share, they are protecting future business when they may be more competitive.

------------------------------ If its good in theory but not in practice,
its not good theory.
Reply to zenmaster

Fry's has been selling the AM2 6000+ for $111 USD and I suspect that AMD is still makeing some profit on them.
The same 3Ghz stock C2D is a better chip...but it is also 10 X's the price on Newegg this week and Intel is makeing a mint off each one,yet I would expect them to not be saleing very many at that price.
When I was young I was told a quick nickel is better than a slow dime.

The 90nm 6000+ (and all 90nm's) are ending production at the end of the year and all Fab's are either 65 or 45nm untill 2010 when the projected 32nm project is planed.

Message edited by ZOldDude on 02-18-2008 at 03:40:22 AM

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Reply to ZOldDude

MarkG wrote :

Offering below-cost price CPUs in order to encourage OEMs to sell AMD systems and not Intel systems? Isn't that pretty close to what Intel were dragged into court for in the EU?

It's harder to prove, because, unlike an OEM rebate, it's not contractual.

Still, AMD won't be doing that. I keep seeing these threads by people who want AMD to die. They have some aspect of their self worth wrapped up in AMD stock tanking with Intel as the only desktop CPU company around. At any rate, I don't think most of these people understand anything outside of the tech involved.

AMD's working it's way out of the ATI buyout hole by selling inexpensive processors that do well in OEM PC's. They are not selling below cost, anymore than Intel was during the last price war. Since we don't have the actual cost of each processor in hand, all this is worthless.

They can sell low powered Phenom's to notebook vendors too, as the 780G chipset looks good. ATI is also doing well, so I don't see AMD in the red come 2009. The markets they are aiming for are actually more important than the enthusiasts who just can't stomach an AMD CPU having an errata and being 14% behind a year old Intel Q6600.

Reply to yipsl

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