ATI at Credit Suisse, May 2, 2006

[Geo]

Usual caveats: What I found interesting, as best I heard it.

Credit Suisse - Dave Orton, May 2, 2006

$2.6B/yr company.

3,640 headcount

$15B/yr markets

100 million/yr handheld units

20 million units/year DTV

Mercury 73% notebook

Desktop 45%

gpu 55-60% revenues

chipset 20%

Handhelds 12%

45-60% gross margins on the consumer business (DTV/handsets)

Working with Mercury to reclass as price points instead of architectural. Mercury subsegments are currently meaningless, in his view.

"Channel" (That's retail, right?) is opportunity to get back above 50%. OEM is strong. (Sort of a PCIE/AGP point).

Notebook expects 65-72%

Workstation. Key midrange design wins next couple quarters. 65% margin business. Currently 40% in volume but only 20% in revenues (i.e they have the low-end currently) of that market.

Expect to continue to grow units in chipsets over next three quarters. "No" presence in retail on chipsets currently because of supply constraints currently. That's the opportunity going forward. Consistent with what they are hearing from Intel.

Cellphones. 35 phones today. 12% of the business. 50-70% growth yearly. Expect it to continue. "Low-40%s" margins business. DTV in the low 50%s margin-wise.

DTV. Some odd comment about 120hz LCD and "getting closer to the glass" re market opportunity for ATI. 50% growth expected next year or two. (Anybody know what the heck this is about?)

Forecasting & Inventory has been the problem on GPU margins, not competition.

Q/A

Chipsets & Intel? We worked with Intel developing their slide. .13u SB600 over the next three months, and more capacity. "Broadwater" vs ATI decisions already made re predictability. Working with Intel thru March of next year.

Chipsets margins? Designed to be $25, but market would only pay $18. Believe they can do a $15 chipset and still get 30% margin. 50% cost is in packaging.

NB vs SB? Lost 1.3M SB units to a fab problem. Catch up by end of July.

"Ordering silicon today for July" (i.e. two months out).

Bringing new capability to low end of gpu business in the fall (what's that about?).

Cal 4Q is 28-30% historically. Cal 2Q is weakest.

 

[_xxx_]

NB vs SB

NB and SB stand for what exactly?

Thanks for the summary!

 

[karlotta]

NB and SB stand for what exactly?

Thanks for the summary!

NorthBridge, SouthBridge. The SB issue i hope isnt for te r600....

 

[_xxx_]

Oh, should have known

Thanks!

 

[Geo]

NB and SB stand for what exactly?

Thanks for the summary!

Yeah, Northbridge and Southbridge. They had/have an oversupply of Northbridges in inventory right now because of a fab accident on Southbridges. They sound *really* supply constrained on chipsets. Several pointers to that, including that one. He also said that Intel would be happy to have even more if they could make more, and that their main challenge in retail is they don't have enough supply.

SB600 was pointed at as easing those problems.

 

[Maintank]

I thought their SB was buggy? I cant even think of a single MB that uses their SB. It is always an ATI NB + ULI SB.

 

[IgnorancePersonified]

Does anyone know if intel makes ati NB and SB's or if Ati uses another fab altogther? I know intel uses thier chipsets but not sure how far the relationship extends.

 

[Geo]

I thought their SB was buggy? I cant even think of a single MB that uses their SB. It is always an ATI NB + ULI SB.

You buy a lot of pre-built boxes? One of the points was that they aren't in retail nearly to the degree they want.

 

[Bouncing Zabaglione Bros.]

I thought their SB was buggy? I cant even think of a single MB that uses their SB. It is always an ATI NB + ULI SB.

The SB is a slower on sustained USB transfers, so things like external USB hard drives will be a bit slower under certain types of operations. Apart from that, it's not what I would call buggy. Supposedly it's being fixed in the SB600 that replaces it and should be shipping about now to motherboard makers, and shipping in motherboards in June. I expect to see SB600 first in AM2 motherboards.