A strategic case why Intel will lose to AMD

Let's assume Intel makes all is money $60bn from cpu chips. Let's assume this can be quartered with the following equal $15bn categories: R&D, fab plant capital, unit cost and profit. To keep things simple the first two are fixed costs that do not change with volume. Let's assume TAM is 250m units per year with monopoly ASP $240.

AMD has 10% of the staff so $1.5bn fixed costs in R&D. It doesn't have a fab so no fixed capital costs but these costs have to be assumed as a variable per unit of $120 (Intel per unit capital and unit costs).

Let's also assume duopoly pricing ASP OF $200 per unit.

Ok clever Intel people is there a market share where AMD is profitable but Intel isn't assuming fixed market of 250m units?

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Intel losing to AMD? Are you out of your mind!

Never gonna happen

Losing, what does that mean.

Is it embarassing to any one at proud and arrogant intel that the latest AMD CPU is manufactured in an older process node that is inferior yet the die is smaller and competitive with Intels latest CPU on what Intel says is the best process on earth? intel process and design and management should be embarrassed of such victories.

Kind of like your High School Varsity team beating the Junior Varsity and somehow feeling proud.

Yeah shout that from the rooftops intel fanboys 😂😂😂😂😂😂😂😂

Intel has never lost to AMD in the past and never will in the future.

@MpjE1JB-rto Got it right the reason 14nm isn't hitting goal , 10nm hasn't shown up and 7nm slow schedule is that Intel no longer gets value from scaling. They neither have volume nor need. TSMC and Samsung are leaving them in the dust like Intel left IBM and others.

One needs deep pockets and volume to play and these days intel thinks buying companies at billion dollar premiums is the secret to success. 10nm ramp will crater TMG and require drastic measures and big ACTs 😉

@oqw OP here yes I made the stupid assumption R&D costs, aka employees we fixed.

Great a post with a bunch of stupid assumptions.

Intel severely underestimates the need in the market for competition. OEMs and cloud providers actually underwrite AMD and ARM R&D as in their interest. Share loss to AMD will magnify ASP impact and cause knee jerk personnel moves and disrupt culture further. But it doesn't threaten Intel being profitable. That will come only from the lack of new business beyond PCs. How many 7 nm fabs service the PC business? What happens when we can't fill the fab? Memory chips? Low price IOT chips? Foundry for Apple? All of these come with much risk, and all permanently change profitability.

The poor business prospects will eventually come to spin out fabs like AMD did - probably merge them with TSMC. Incredible turmoil to come to all of us when that happens. Watch for new CEO and board takeover as the signal this is ready to happen.

Intel is full of idiots I'm from Qualcomm and we can do basic math

Intel

(200 - 60)x = 30e9

AMD

(200 - 120)x = 1.5e9

Therefore Intel has to ship 214m units to break even, AMD only 19m. Intel is in big trouble.

Only idiots are jumping on the Ryzen hype train. Intel already has competition in that price/performance range. It's just not as obvious. And when Intel shrinks, as Intel does and AMD's outsourced fab plant doesn't, Intel goes back on top on all metrics by great margin.

And AMD isn't turning any heads in the DC.

If there's any loss theory to be had, it's against ARM.

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A strategic case why Intel will lose to AMD

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