"Will ATI Be Broken Up?"

Too much discussion that will not change a bit of whats AMD plan is...

I'm pretty convinced AMD has not spend all their money just on ATI's chipset only.

My guess AMD is fighting Intel - because intel has everything that AMD does not. But now they will be equal - except AMD has High-end video cards and intel does not.

AMD had no choice but to by ATI in order be worthy/equal competitive or even surpass Intel. "Except intel has alot more money and resources then AMD"

Plus - "I don't care" AMD will produce high-end video cards to continue challenge Nvidia, even CPU-GPU combo that will come out.

 

Yes, that's what I said and I stand by it. A 30% gross margin is terrible for a semiconductor business: the NRE costs are very large and the only way to recoupe that is either by selling gigantic volumes or by high margins, but preferably both. Have a look at AMD, Intel, Broadcom, Marvell and pretty much any other semiconductor company and you'll see that most of them have margins above 50%. Even the 40-45% of Nvidia is considered relatively low by industry standards. 30% is terrible. You're entirely free to disagree with me about this, of course, but you'll find yourself in lonely company. That's one thing.

I don't only think that. I'm absolutely sure about it: ATI wrote it every 3 months in their SEC filings, as they're required to do by law. Not only that, until 6 months ago, they were also writing numbers in RED at the bottom of their income statement. And, surprise!, for semiconductor companies, income comes almost entirely from the volume of sales and the profit margin. Low margins -> losing money. Do you see the connection already?

(To be honest: margins were creeping up in the last quarter and they were now in the low 30% instead of below 30% as they were a year ago.)

Ah, you're confusing gross margins with profits. That explains a bunch. (Maybe you should first try to understand what you want to talk about before talking about it? There's wikipedia, you know.)
Their profits weren't low. They were negative until recently.

Gross margin is the money received for sold goods divided by the cost of sold goods. The latter being (roughly) wafer costs, packaging costs, shipping costs etc. It does not include R&D costs, marketing and sales cost and what not. Since those fixed costs are so high, you need high margins to cover them before you can actually start making money.

And a final comment: high-end products are almost always the high margin products. The cost to produce a 1950XTX is only marginally higher than a 1950XT (or whatever name they have), but they can asks tens of dollars more for it. It's far less cutt-throat than the low end markets, where OEMs try to squeeze each and every dollar of a supplier.

And, once again, I don't believe at all that AMD will cut the high-end line... for the reasons I've mentioned before.

 

Just to underline the ridiculousness of this statement. From ATI's press release last year (Xbitlabs):

They probably exists, but I can't think of a market where high-end products carry lower margins than low-end products.

 

Nvidia has picked up large quantities of OEM business this year their margins have expanded dramatically. Not saying margins are higher or lower in any one segment, just that oem does not preclude higher margins than at/amdi had/has.

 

Margins fluxuate all the time. So just because they drop a little lower doesn't mean the company is doomed. That was my point, period. You can quote all the numbers you like. In fact you even said yourself ATI's number were coming back up. I can quote many sources and articles that think ATI shouldn't have sold out and didn't need to. Not so lonely company after all.

Again, margins fluxuate. And as you said, margins were in the 30% range instead of below 30%. Thanks for helping my argument.

I didn't confuse anything. You confused what I wrote, again. Adding in words I didn't say, again. Here's my quote. "I was saying I don't think ATI should have sold out and that they could still operate at low profits.(even IF 30% is low for some people)" Profits do include R&D cost, marketing, sales costs and what not.

Yes I know the high-end cards have higher profit margins and the mid and low-end have lower margins. People want and are willing to pay for new tech. So far stating nothing I don't know. And this wasn't my argument whatsoever, keep talking about it if you want to though.

Again, I think you're wrong about this. I believe AMD will phase out high-end cards and try to intergrate them into their processor cores after 2007. They may keep some mid and low-end cards around for a couple years or so after 2007, but that's it.

 

I think everybody gets your point.
It's just that nobody sees a valid and rational argument to sustain it.

Why the graphic division of AMD would quit its higher margin market ?
Most of the costs are R&D, which fuels all the lower end products So they would have to cut R&D drastically which would annihilate any reason to buy ATI rather than buying VIA, SIS or building their own team.
You don't buy a whole beef when you just want a steak.

The only time I see AMD leaving the high is in a few years if the MPU takes over the market and R&D can't be shared between MPU and discrete solutions and if the discrete market gets too small or competitive.
That makes a lot of if.

 

If that were the case, AMD would have left all of ATI's products unchanged, including their website, etc. Just buy the company and utilize the bits and pieces that can improve AMD and give ATI use of some AMD fabs., etc. AMD are already ruining ATI's good image simply by this type of accuiring. If AMD were going to get rid of high-end cards after R600(as I think they are) would they really tell you? Would you buy an R600 knowing your card will most likely never see another driver improvment, etc? The 9700 pro is faster now than it ever was at it's release because of driver revisions. If you buy an R600 and they produce nothing after that...

Of course we'll have to wait and see, but my money's on the buy as a whole and use the parts senario. If ATI's the best steak in town, then yes, you buy it.

 

Wish the sky would quit falling, it's giving me a headache.

 

Ok, no more doom and gloom. It's a happy day today!

 

So you think they're scratching the products because they're scratching the brand ?
Why only high-end then ?
Why not all the video products ?
Why not the chipset business ?
The focus on high-end part is the main reason why they didn't kill the brand yet

Where do you see former ATI products will be made in AMD fab ?
They're capacity constrained at the moment and will be for a while.
They might one day produce chipset and IGP themselve, but they're not stopping all the other product lines juste because they have to work with TSMC.

I'm sorry but I only see fear here : they killed the brand with their dirty green, now they're going to kill the good stuff.

 

Sorry, where is the brand killed?

 

Is it frustrating to live in a world surrounded by fools unable to grasp your creative style of argumentation?

 

Nope, the world is full of fools unable to grasp even the simplest things. Why should I worry about them?

 

Oh I just had to.

New AMD May Withdraw from Discrete GPU Business – Analyst.
Analyst Sees No Future for ATI’s Discrete GPUs

http://www.xbitlabs.com/news/video/display/20061029130237.html

 

Yes I have. Just posting a different article. It's making the rounds. Thanks tho.

 

I hope AMD doesn't make the mistake of getting rid of ATI's high-end chips. Maybe we can all sign a petition, "Save ATI Graphics!".

 

Didn't you see the website went from red to green, and didn't you notice all those folks around HQ painting all the walls green?

 

Yes, why don't you go start that up....