An intense price war looms between Intel and AMD, if Needham analyst Edwin Mok's note to investment clients is anything to go by: AMD has engaged in "frantic price cuts" following their weak start to the new year, he says, though it isn't at all clear what it might mean for everyday buyers.
With three cuts in as many weeks to volume buyers such as Dell, Mok says AMD is improving takeup.
For people playing the shares, however, his advice is to avoid the two big names in desktop processors.
"Intel will likely feel pressured to respond with cuts of its own," Mok said. "We would avoid both names here, as believe lower prices and higher capital spending may continue to limit margins."
AMD's had a bumpy year, with its share price falling from over $40 to $14 in the last 12 months. Intel has remained steady. Mok spies No. 2 desktop maker Dell behind the cuts —"Clearly, this OEM is playing AMD and Intel off one another,"—and when you remember that AMD's two biggest customers are HP (Now the top computer seller in America) and IBM, any discounts given one place will surely also apply at the other.
I'm a little wary: the exact price cuts aren't obvious, and it looks like the suggestion is it's all big-business volume deal stuff at hand — if so, the benefits will come from buying branded systems and servers, and not chips at Newegg.
That said, it wouldn't be out of character for AMD to get rid of old chips from old fabs — wasn't there a pre-Sempron time when Socket 754 was looking moribund and those first-gen A64 chips went dirt cheap?
AMD-Intel Price War Looms [IBTimes]
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