Conroe and Merom only accounts for about 5% of total Intel's production mix. Why Intel is doing so?

http://www.overclockers.com/tips01005/

This has been discussed many times, but it's mainly to sell the large Netburst inventory. The Conroe shipment numbers vary anyways:

http://www.hkepc.com/bbs/itnews.ph [...] &endtime=0

So basically, retail will transition to Conroe faster than OEMs since OEMs keep their own inventory they need to get rid of and they have to update their product line and advertisements which takes time. Intel's saids that there isn't a shortage of Conroes and they expect to deliver 2 million Conroes by the end of Q3.

So basically, retail will transition to Conroe faster than OEMs since OEMs keep their own inventory they need to get rid of and they have to update their product line and advertisements which takes time. Intel's saids that there isn't a shortage of Conroes and they expect to deliver 2 million Conroes by the end of Q3.

Then, Intel is not even using 50% of their fab capacity or they still produce Netburst-based product. Both results are not realistic.

Intel's critics blame them for not supporting multiple CPU generations on a single socket/platform. They say that AMD, for example, ensures good upgradability because AMD supports sockets and platforms for longer periods of time.

Now, what Intel is doing is, they are ramping up the production of Core 2s at a slow pace at first. This ensures that people who still have older platforms will not find themselves without a CPU to upgrade.

What will happen if Intel stopped their whole P4 and PD production all of a sudden and started producing Core 2s only? What about the people who are still stuck with older 915 and 925 and 945 platforms? What about the motherboard manufacturers with their stockpiles of older motherboards? What about the dealers with their motherboard stockpiles?

Intel is obviously following a very different strategy from AMD. I don't know what the exact figures are, but reports indicate that AMD is focussing solely on AM2, and S939 production is very less. So, what about future upgradability and longer platform support and all those arguments here?

I think Intel is ramping up Core 2s at a pace they think is perfect. Enough so that much of the demand can be met; but still producing enough P4s and PDs that people with older platforms and dealers with older motherboards & DDR memory are not left in the cold.

Of course, the people here will be of the opinion that Core 2s are all that is worth buying from Intel. But then, how many people know that something called Core 2 even exists? I bet many people will think that Pentium Ds are better because Core 2 starts with a 'C' and therefore is a new range of Celerons...

So, I don't think this is such a bad strategy from Intel. They are obviously transitioning to the new architecture, and are moving towards 100% Core. But really, 100% Core 2s immediately is not a right thing to do, now. Intel will slowly get there, but just not now.

But Intel still has a reservoir of inventory......

But Intel still has a reservoir of inventory......

Maybe they think they need more...

Also, probably, transitioning requires lots of changes to their fabs and all... And all this requires time... Maybe someone like Jack can explain about technical aspects of moving to a new architecture...

$4.3 billion to be exact.

$4.3 billion to be exact.

So, they really are desperate to ... "monopolise the market" once again and destroy amd (this time more permanent than before) that they would slash their own throats ..... knowing full well that they can take the brunt and AMD can't.

Interesting.

The purpose of this post is NOT to support Intel, but provide a little thought to the entire process.


Obviously some computer manufacturers (Dell, HP et al) will have inventory of motherboards etc that will require older P4 and D chips. And for the upcoming Xmass selling season it may be beneficial for Dell etc to have a very low price computer on the market. Hells Bells, most of my mom's friends do not NEED anything more than a P4 for web surfing and sending me pictures of their ugly single (6x divorced) female children for my marriage consideration. So maybe, just maybe, Dell et al are still ASKING for P4's to be made?

Then there the issues of providing chips to support previously built equipment. The nice dear friend of my mom who has a 2 year old P4 computer may actually blow out the P4 chip. At that point the customer may choose to buy a fine upgraded computer with a Core or advanced AMD chip, or the customer (listening to the advice of her idiot son who claims to be able to fix anything with a bottle of super glue and piece of duct tape) will desire to replace her blown P4 chip.

In other words, Intel is stuck making P4 & D's for a period of time. And as long as the orders come into the plant in want would be termed reasonable numbers, Intel is going to continue to making those chips.

The only thing we can do, is preach the benefits of modern chips, be those chips from Intel or AMD, and hope that my moms friends listen to us, rather than their idiot sons.


PS: I can already anticipate Dells strategy in the coming months. Core based computers will be given free Vista upgrades (free meaning Dell builds the cost of the upgrade into the cost of the computer), while the older P4 chips will be offered on low price computers with the option to BUY the Vista upgrade. All things considered, the customers will not see the difference between free upgrade (included in the price of the unit) and paying extra for the upgrade, the customer will just see the $ spread between the units. And as I already said, many people do not NEED anything better than a P4. So Dell gets to sell off P4 computers loaded with XP at a "low price", and Core computers with Vista upgrade at a "high price".

PSS: Dell HP et al also are in a funny position regarding Intel. It is possible, not trying to start rumours or anything, just possible that Intel may buy back excess inventory from smaller vendors for a small but significant restocking fee. Then Intel resells the parts Dell HP etc for installing in consumer products. GASP, yes this kind of stuff does happen. Sony is rumoured to have bought up the residual stock of Konica Minolta dSLR inventory from various small camera stores and sold the stock to WallyWorld. Regardless of whether the rumour about Sony are true, WallyWorld suddenly had a huge inventory of KM cameras that Wally was selling at huge discounts.... where did those cameras come from, if not Sony or KM?
In this scenario, Dell HP etc are not going to be eager to dump off their P4 inventory, as they may already be aware of additional inventory that is coming their way. Thus, to complicate matters even more, Intel still has to make more P4's, until the buy back occurs.

Another information, US$4.3B inventory is not that huge compared to the US$8B revenue in Q2 2006.

$4.3 billion to be exact.

Pulling numbers out of your donkey again!

$4.3 billion to be exact.

Pulling numbers out of your donkey again!

It's from Intel's Q2 financial report.
http://download.intel.com/intel/fi [...] cialslides

$4.3 billion to be exact.

Pulling numbers out of your donkey again!

Oh, god. Were you a donkey in your past life. :x

Look at the above post.

Next time grow a brain and ask nicely first of where the info came from , before accusing people of being stupid.

$4.3 billion to be exact.

Pulling numbers out of your donkey again!

Oh, god. Were you a donkey in your past life. :x

Look at the above post.

Next time grow a brain and ask nicely first of where the info came from , before accusing people of being stupid.
Agreed.

$4.3 billion to be exact.

Pulling numbers out of your donkey again!

Oh, god. Were you a donkey in your past life. :x

Look at the above post.

Next time grow a brain and ask nicely first of where the info came from , before accusing people of being stupid.

Agreed.... But I think here the person's track record was important...

Here's the deal folk... Conroe and Merom are NOT the only products being manufactured by Intel. While they are the newest and best, chip companies do not switch product mixes overnight like I think a few of you believe. OEM's place orders for computers many months in advance to ensure there is a good solid supply, and in some cases these purchases are for 1 - 2 quarters down the road.

It is true that Q'2 inventory was ~ $8B... and it is also true that inventory has come down to ~$4B some 6 weeks later. The reason for this decline is a mixture of A) Intel dropping the price to make room for the higher end Conroe and Merom chips, B) this is now the all important back-to-school season, and C) OEM's want to ensure their supply of value or budget line chips for the holiday season. Some may see this as odd that inventory is shrinking and while Intel keeps their factories loaded up on. It is the basic supply and demand model, but more importantly, Intel is working on the global demand.

Each and everytime the Intel or AMD lower the price on their chips, consumers in the US, the European Union, and Japan receive more for the money. In the emerging markets of China and India decrease in chip prices mean more consumers will be able to purchase their first systems. People on the boards tend to think of the major Tier One OEM's as Dell, HP, Sony, Toshiba, Acer, IBM, Gateway, Levano, etc. as the *ONLY* players in the PC game. Each of those companies keep inventories on hand to meet demand. In smaller emerging markets, there are literally thousands of OEM's locally that are not as large as the Tier One OEM's, but are now ordering significant volumes of chips at the reduced prices to market locally.

Nine or ten years ago I paid $3500 for what was then the top of the line computer system; A Compaq Presario 4850 or 4950, I can't recall. It was the first Pentium II 300MHz available at a box store and it was the ONLY computer that had a new technology called a DVD drive. It had 36MB of RAM and a 6GB HD. Granted, $700 of that purchase total for for what was then the first 17" CRT monitor. I'd aslo like to add there were no such things as CD-RW's either. And again... this was about a year or two before the business model of dirct ordering that Dell and Gateway pioneered enabled lower cost systems.

My point in sharing this the cost of things come down in price significantly as time goes on and technology improves. There was no such thing as sub-$1000 computer then, in fact, there were very few computers that were sub-$1500. Today you can walk into a story walk out of bestbuy with an e-Machines computer (not that I would want to) for $299.98 with 100GB HD, 512 MB RAM, DVD/CD-RW and 17" CRT. By all standards, the above system is still pretty crappy and something, but to people in emerging markets that have never owned a computer, it is perfect.

The point being is that Intel and AMD are on the cusp of a changing business model. There is a shift from charging a premium on chips to making a little bit of money per chip but dealing with larger volumes to make a profit. I think many people reading here don't really grasp that concept.

If you say that Intel only has 5% of their production mix is Conroe, I would say that figure is about a month old becuase I read that here a week before the launch. Since then Intel has published press releases stating that it would produce 1 million Conroe chips in 7 weeks time. Grasp that concept... it took one year to make 1 million chips when the Pentium brand was first launched. Intel will ship 2 million chips by the time the 3rd quarter ends on Sept 30th. From bare silicon to packaged and boxed chips takes 8-10 weeks to make a single chip To have enough material already in the line across multiple factories to produce 1 million cummulative completed chipes means has more than 5% on Conroe especially when you consider they are doing additional wafer starts in each fab above and beyond what they had been expected to meet demand for the rest of thes quarter and beyond.

All that being said, I would expect Intel Q3's report (due around the 3rd week in October) to be mediocre at best when you couple the average selling prices being lower, writing off any inventory excesses that may exist, and charges taken for selling the XScale line to Marvel in addition to the lay-offs in May and July. Beyond Q3, I think it is a whole new ball of wax.

$4.3 billion to be exact.

That figure will include raw materials, goods in process, and finished goods. It's not like Intel has $4.3B in retail chips waiting to be sold. The figure by itself is useless. It has to be taken in context by looking at other financial ratios.