Hello, community.

I think these AMD plans are very important, but I don't understand Japanese.

Help, please.

[update] It wasn't funny to receive a google translation link, but well, some people may think with all goodwill that perhaps one is not aware of that possibility.

Thus, just to be very clear, I need help with the slides.

What was I thinking?

Reviewing my latest post, the summary of the predictions, there is something that I didn't publicly announce, but that I feel I need to disclose in Detail:

When at $42+ AMD started to go down on Conroe/price war fears, I took it as a buying opportunity. And since it kept going down with an impressive stream of good news and only the non-news, non-worrysome Intel developments, I started to invest increasingly aggressive bullish positions, and went as far as to buy some March calls, which went *worthless*, and substantial amounts, like 15% of my whole PF in July calls, that right now are down to less than 50%.

I was sure that AMD was going to beat the estimations, and couldn't find a reason for it to go down on good earnings. Thus, I had a specific moment, the Earnings Report, to speculate in the stock market. When one has precise timing, it is correct to go the route of options if there is a suitable combination of Expiry, Strike Price and Price.

I set up to find such adequate options to gamble. It is important to understand the mathematical theory of options. Time value decays exponentially with time, with the steepest decay the last days of vigency. Thus, you absolutely don't want to hold an option for more than 1/3 the time to expiration from the moment you bought, and in extreme circumstances, up to 1/2. So, if you are fixed on April 12 (AMD earnings) to make a bet on March 12, the proper thing to do is to buy at least June calls, but July would be much better: In case a catastrophe happens, you can sight and assume some losses waiting for another presumably positive jump due to earnings in July, much better than just being below the waterline in June.

Thus, I bought July calls merrily.

AMD reported, beat the expectations by an off-the-chart marging, provided (giving the circumstances) very bullish guidance, but AMD lost another 14%; thus, I screwed it big time with my gamble, because even though the options expire in July, it was for events that will take place this month that I bought them.

By the time the earnings report came, I was already prepared, for an adverse reaction, and fortunately abstained myself of loading more. Although very surprised by the market reaction, I knew that the general principles I described in my last posts still held, thus I followed an adaptation of the plans pointed out, and indeed wrote the covered april calls, with good profits (although I did a preemptive chicken buy-to-close instead of allowing them go worthless).

I was prepared because I understood what was my mistake: AMD became disruptive, thus risky, thus a less desirable investment. If Intel would be today very competitive against AMD, AMD would have flown, because what AMD would be doing is to little by little erode Intel's market. But Intel is in a pathetic situation, it is not that AMD "awoke the giant", it is that the market is already feeling the possibility of an Intel collapse without guarantees about AMD nor AMD intrinsic attractiveness (because it doesn't aspire to be a greedy monopoly but a teeming ecosystem leader).

I should have known better, that AMD could do slightly better than just punching Intel becoming disrruptive.

But "I should have known better" is the lament of all the smart players when they lose with options, anyway.

Still, there is people who doesn't get it, such as Sharikou and AMDACE, who think that AMD should go for the yugular right now just because it has the great chances of succeeding. That would be a catastrophe for all of us who have bullish positions on AMD.

Quarterly review of my forecasts - April

The idea behind this blog is to improve my analysis about what is going on in the technology world. I leverage that knowledge in many ways, including investments and gambling in the stock market. I am the first person interested in finding mistakes, and I find that, in the spirit of the Free and Open Source software traditions, to be fully open allows a multitude of observers to come up with interesting ideas.

I have thought that I should, from time to time, review what I have forecasted with the intention of learning from past mistakes and successes. I may leave something aside by mistake, but so far my forecasts have been:

From an article of Jan 27:
"On the mean time, every company that is in partnership with AMD is doing excellent both in the market and stocks: Rambus, Soitec, Chartered, Innovative Silicon have all jumped ahead as a direct result of a deal with AMD, and perhaps even Broadcom (confirmation in the works) are doing great. Whereas Apple is next to dissapointing, and I guess that Dell would too.

Does anyone want to buy Dell $30 puts for February?"

All of those companies are still doing fantastic. And Dell is worse. Those puts may have given money depending on the exact purchasing and selling moments, in my case, I barely made even because I think that there was some manipulation of the books, what Sharikou calls the "week X", and other details, that spared the real bleed before options expiry. This counts as a mistake, because the right recommendation should have been March. It is suicidal to be imprecise with options, all three parameters while transacting have to be totally accounted for: Price, Strike Price and Experiation.

From March 04, about the price war, I mentioned that there are factors that make us think that costumers will keep preferring AMD products despite price discounts from Intel. Intel discounted aggressively the prices to clear its channel. The measure was so inneffectual that Intel's inventories grew, and allowed Henri Richard to stellarly bash Intel saying that yes, AMD has seen price slashing on Intel on low end products nobody wants to buy. Even with those discounts, AMD's demand proved as strong as to allow Gross Margins to improve 1.2% from 57.3% to 58.5%, larger Gross Margins than Intel's (!!); while at the same time, experiencing a market share increase that according to my latest estimations, was 1.5% to 2%, to reach about 22.75% global market share, that confirms the resilience, that is, the improvement in Brand Equity.

From March 09:
"Learn the game: After a sell-off, stable growth for a while, until AMD becomes noticeable again,
and the roller coaster will begin again, until another sell-off". The sell-off continued with a bump about Dellienware to less than pre-Q4 05 earnings report levels, incredible, as if AMD would have gone backwards. That total irrationality will be substituted by growth during this quarter, although not as high as $40.

About investment, March 31
Comparing AMD and Intel to two farmers, the stern and hard working attitude of AMD is very different to that of boisterous Intel: "Right now, we are in the harvesting season, all of what AMD sawn has grown and is ready to be turned into profits [that's why it is working so hard]. The neighbor doesn't have anything but weeds. There is still a lot of people who has faith in the gigantic neighbor, he says that in the remote corner it has the greatest grain ever grown in these fields, but that just seems to be him once again bragging about what he doesn't have. If his harvest were good, he would be very busy, as we are."

Recently, in "Riding the Roller Coaster", and "Conversation with the Ticker", I pointed out the lack of support for AMD after positive results induces a sell-off on momentum seekers and technical analysts that make it deeper. That's what happened just after the conference call. But this plunge had the benefit of relieving pressure from this stock, because it seems that it is a piece of shit, and that the company is not capable of challenging Intel. Under those two assumptions, AMD grows, because it is carried forward by the long term investors, breaking the downward momentum.

That's why it wouldn't be advisable to write covered AMD short term calls, because there exists a breakout to $37+ waiting to happen, but not even think about writing naked puts, the timing isn't dependable. To go long on options is too expensive too, it would be best to allow the pessimism to be fully incorporated into the 2008 and 2007 call options b4 going long on them. But alternatively, depending on some parameters, it may be possible to go short on Intel and to hedge writing puts if you feel the downward pressure has exhausted to milk some extra change money from your short position.

My predictions about the Core µ-architecture regarding 64 bits (look for points 6 and 10) have been confirmed, indeed the recent Clovertown (dual Conroe) was seen running versions of 64 bits benchmarks as reported by Sharikou. If Intel added the REX prefix decoding to the simple decoders, then Conroe (Clovertown, Woodcrest, and Merom) would run 64 bits at top speed, but just as it was explained, the 64 bit architectural differences play well to Core's emphasis in reordering. If anything, I am surprised that we are talking of a mere 20% advancement in the higher credibility tests done after IDF, I am expecting around 30%, of course that Core has too many defficiencies. One of the things I don't buy is it being better power efficient, and that, without taking into account the bloated memory frequencies and FSB power consumption.

I wonder too who's Intel fooling with the "chinese story" of accumulating inventories on purpose in the case the extremely ambitious transition to 65nm on Conroe has a misshap, but taken at face value, confirms my thesis of the complexities of "Coredump".

On the other hand, Intel "beat the expectations" on the same sense that Dell had a fantastic Q4, they both went up to give back everything they went up and then some more. Nevertheless, AMD wasn't (so far) dragged down.

From "Intel down / AMD jeopardy"
<<
Paradoxically, it seems that a positive result from Intel will ease the pressure against AMD, the market will just say:

"Oh, very well, so Intel is back on track, regaining market share from AMD. We are not going to downgrade AMD because giving back market share was already priced in, but perhaps we can analyze again forward earnings"
>>

I thought the scenario of Intel pleasing Wall Street as moot to discuss, but it happened (very close to the 20 cents EPS and with a murky conference call, as predicted, by the way), thus no AMD tanking.

Another thing is that the market seems that indeed is down, perhaps Intel went too far in Europe, non-processor Intel businesses are also down, Sandisk reported down, the market for silicion manufacturing supplies is also down.

If you are curious to know, I over leveraged before IDF, so I have been painfully squeezing some gains with complex trades, mostly hedging to prevent a margin call in case of a catastrophe, and certainly, the latest reactions to the earnings reports haven't help.

Alpha and Beta's bloody fight for supremacy

For the record:

Intel will report down, and will bring AMD with it.

Why? The money in Intel looks for a greedy monopoly, not a technology leader. AMD is a technology leader, looking to establish an ecosystem.

It doesn't matter whether it is a pack of wild dogs or entire nations, or companies: Whenever Beta is gaining strength and Alpha is weakening, it always happens that the supremacy has to be decided, and a bloody battle ensues.

One of the battlegrounds for companies are prices, thus the price wars. Another is the legal system. The market perception, etc.

This battle promises to be fought on all terrains: Servers, Mobiles, Desktops, Finances, Media; because the challenger is strengthening in all terrains.

Fortunately, AMD's management has been avoiding the conflict and at the same time preparing for it. I always felt fine about their appallingly modest goals, but at the same time they demonstrate not being afraid of the conflic, if necessary.

There are two more things:

How is it possible that Intel is down in a strong market (weak market is bullshit according to my appreciations): Because they had to resort to aggressive pricing to clear their channel, and the problem is far from over because according to my calculations, AMD took 1.5% market share in Q1.

Intel will do their book manipulations and media spins to make it appear that they are close to $0.20 EPS, so expect a murky conference call meeting.

Won't Intel going down infuse enthusiasm for AMD? After all every Intel problem is due to AMD's successes: No, because observers will want to wait until the battle is nearly over, not now, when it is just about to begin.

But still, the market capitalization relationship is very wide, if Intel goes down 1% and all that money goes to AMD, AMD should jump 8%, there would be substantial migration of that sort that will mitigate the previously described dynamics.

And a possible strong bottom is the 200 days EMA ($28+) because at that level the T.A.s will start to cover/load, the long term investors will keep asking: But this company can still sell processors no matter what Intel does, some earnings will come here, it can win the war, etc., etc., providing hard support.

Are you worried... -- READ AGAIN, MAJOR CHANGES

[MAJOR UPDATE]

We have been discussing the Core µ-arch. here.

Let us focus on the complexity aspect and try to put it on perspective.

What has happened with Intel's attempts at complex products?

Let's set up the time frame starting with March 8th 2000, when Intel launched the Pentium III 1GHz (two days after AMD launched the Athlon 1GHz)

2000: Tried the 1.13 GHz Pentium III that wouldn't even compile the Linux kernel, great... embarrasment which was recalled

2000: Let me introduce you to the illustrious lineage of the Netburst µ-architecture, Pentium 4s designed from the ground up to eventually run at 10GHz (Never went over the 4GHz, and that pushing the envelop too much):

Willamette: tied to the showstopper Rambus memory (RDRAM), meaningless gigahertz, hot.

P4 Northwood: Introduced the infamous Hyperthreading, severely criticized by everyone + dog: Insecure, was actually a performance hindrance, quoting Ibbotsons' quotation in that article: "Intel had sold hyperthreading as something that gave performance gains to heavily threaded software. SQL Server is very thread-intensive, but it suffers. In fact, I've never seen performance improvement on server software with hyperthreading enabled. We recommend customers [to] disable it". Intel decided to ditch the feature for good. If you are curious to know why it never worked: because it trashes the caches.

From Wikipedia:
"Overclocking early stepping Northwood cores yielded a startling phenomenon. When VCore was increased past 1.7 V, the processor would slowly become more unstable over time, before dying and becoming totally unusable. This is believed to have been caused by the physical phenomenon known as Electromigration, where the internal pathways of the CPU become degraded over time due to excessive electron energy. This was also known as Sudden Northwood Death Syndrome."

Gallatin (Extreme Edition): Marketing answer to Athlon64's launch better known as "Emergency Edition"

Prescott: "Upon release, the Prescott turned out to generate approximately 40% more heat clock-for-clock than the Northwood, and almost every review of it was negative", wikipedia again.

Cedar Mill: 65nm Prescott with better thermals.

Tejas: Promised for 2005, was cancelled.

Itanium: Sights! don't get me started! This was in late 90's Intel's flagship product in every roadmap. When it became apparent that it was too complex, unsuitable for the consumer market, became a high end proposition only. It was supposed to embody the plans for the 64 bits transition Intel had. Once, after years (!) of delays, it finally came to the market, to demonstrate:

Mediocre to very bad on-chip x86 performance, general underwhelmer, hasn't crossed the 100nm barrier (difficult to manufacture? out of preference at Intel?), difficult to improve.

The Itaniums are very complex µ-architectures. I studied the (then known as) IA-64s so much and decided to forget all about it, is because I finally got to the point that I understood that the µ-architecture was so complex that it was easy to see that it wasn't going to ever be implemented well enough.
There is one issue I am delving about: Intel's apparent incompetence to manufacture new processors. I am still baffled by the fact that Itaniums are not produced at the very least at 90nm processes, by the slow conversion to 65nm...

Intel did try other stuff, such as getting into the 3D Video Accelerators game, much before nVidia's debunked 3Dfx from the top, to colossal failure.

Dual Cores: The embarrasment of the dual-dices, until Yonah. Clovertown: a twin dual core? Are you joking? should I be afraid of a product that intrinsically demonstrates incompetence to do the right thing? [remember, a dual die processor is, for all practical purposes, a dual processor except for the number of sockets]

EM64T: Intel's µ-architectures have two kinds of decoders: The simple decoders, and a kitchen sink for complex intructions called the complex decoder. I have explained that AMD64 defines a much larger register file that improves performance by itself. But at Intel processors, 64 bit code runs slower. There is every reason to think that the 64 bits are emulated in microcode, overwhelming the complex decoder. This is important, because it is very apparent that the 64 bits are not pervasive to the whole architecture. Intel hasn't managed to clone this AMD feature right. It must be very difficult, because Yonah was initially promised to be 64bits and it isn't. This led to yet another embarrasment, Sossaman, which HP decided to skip altogether. Sossaman is a Server Chip (is it?) tied to 32 bits (!!), with low power (both as in less electrical consumption as performance capabilities).

Itanium was complicated on purpose to scare the competition away from it. But Intel over did the complication and became enmeshed by it. In any case, just as a clear thinking mind is able to conclude that Itanium is too complex to ever be implemented properly, a clear mind reaches the conclusion that it is very unlikely that Intel can truly cope with Conroe's complexity.

Let me speak about marginal benefits: The efforts to improve are increasingly harder to do, and decreasingly significant, until the benefits that you can obtain are not worth the effort. Intel decided that the Pentium III was a dead end way back in late 90's, that's why they took the Pentium4 route.

But since the Pentium 4 very early on demonstrated its utter inadequacy for low power consumption, Intel gave the Pentium III one last chance to do the "mobile shift" and the Pentium M was born. Since Intel eventually came to the full realization that the Pentium 4 was utterly inadequate all around, not just about power consumption, they awoke to the fact that they didn't have anything in store, but the Pentium Pro's great grand child, the Pentium M to keep producing something.

But since this architecture was already terminally mature at 1999, there was no other recourse but to apply the brute force approach to it: Gigantic cache, widening of data ways, deepening of buffers, proliferation of execution units, some more transistors to turn off all these numerous execution units that are going to be idle most of the time because it is so hard to keep them well fed, and also, some more dauntingly complex logic to push hard the reordering to try to squeeze some more drops of parallelism to feed something to the execution units.

This petty monster is huge, thus will also demand to apply brute force to other aspects: having so many transistors will be much harder to produce; all of these complexities lead very naturally to nasty complications.

Thus, the bottom line is that Intel would have to execute perfectly a long chain of challenging activities to mass market these very costly beasts that anyway won't be able to sell expensive because AMD will remain very competitive; so, in the best of the scenarios, if Intel succeeds, it may have products that regain the performance crown fleetingly and from which they won't be able to profit much.

Where is the money going to come from to keep the profligate expending in marketing, in building "Copy Exactly!" inflexible fabs, and in sustaining the Wall Street patronage of dividends and buy-backs?

There is a point when marketing doesn't provide the products the market requires because those products need solid engineering to be made. That's why in this whole 7 year period, Intel has been able to only come up with only two worthy products: The Pentium (III) M, and the Corpse Duo, designed by the same team that designed the Corpse µ-arch (Conroe). But come on, politics at Intel must be so intense that it had to be from the outer confines of the company, in Israel, where they found a designing team that will lay out the future of the company. And these boys really, paraphrasing Sharikou, seem to be apprentices when compared to the truly awesome Grand Masters assembled at AMD, the creators of DCA, HTT, AMD64, Pacifica, Presidio, innovations in the Alpha µ-arch., DDR, SOI, sSOI, APM...

The fundamental question is this: Do you really believe Intel will succeed at the Core µ-architecture's complexity contravening important design principles given this track record of failures, and at the same same AMD will stand still having a µ-architecture so well designed with so much room to improve?

I stick to Dr. Ruiz and Mr. Meyer's management, with the Grand Masters designing products, and the German Produktionsleiten operating the factories. In all three dimensions I am going to keep succeeding, I can bear mediocrity at marketing. And I respect Mr. Richard's work, but he has a tough job working for a company so focused on production and engineering that really doesn't indulge in marketing displays.

Intel down will be interpreted as AMD's jeopardy

What would happen if Intel reports bad results?

For sure, AMD will tank. The market will interpret Intel's failure to even meet lowered mid quarter guidance as a crisis that will demand drastic measures, and Intel's desperation, although directly caused by AMD's superior all-across-the-board technology, won't be interpreted as AMD's possibilities, but as jeopardy.

With an Intel fighting for the survival of its monopoly, the market will perceive AMD as a riskier investment, with the extra risk not compensated by the confirmation of superior technology, improvements in brand equity and the demonstrated improved ability to supply and actually *sell* the products. I say this because all of these facts have been confirmed already by AMD's latest earnings report, that produced a 16% plunge (and counting), thus I don't see why the market will appreciate them better after Intel's report than what it is now.

Thus, AMD will go down even further.

Paradoxically, it seems that a positive result from Intel will ease the pressure against AMD, the market will just say:

"Oh, very well, so Intel is back on track, regaining market share from AMD. We are not going to downgrade AMD because giving back market share was already priced in, but perhaps we can analyze again forward earnings"

If the market does that, then it will give AMD a deserved 20x (forward) P/E and AMD will climb to more or less $34, which provided resistance to the thesis of giving back market share, Intel's price war before the introduction of Conroe, and the Conroe family effect on the competitive situation. Of course, this thing is moot because Intel won't report positive results.

But the market is very wrong: AMD has an 8-lane freeway completely clear to sell everything it manages to produce from here to the mass production of Conroe and derivatives, that we have calculated can't happen before 2007. Intel won't recourse to a price war (I comically demonstrated the absurdity of such price war here) other than to clear its channel, thus the margins will keep high, and earnings will soar. By the time Conroe pressure really affects the market, I am very confident that AMD's Grand Master architects, which are vastly superior to Intel's apprentices, will come up with newer appealing products superior to the NGMAs.

And that's accepting the claims that Conroe is superior to the expected FXs for the 2H, which are very dubious; giving Intel the benefit of the doubt about being able to cope with the complexity of the Corpse µ-arch., that it manages to raise the capital needed to build the fabs it needs to mass produce them ("Copy Exact!" seems to have proved extremely inflexible due to the mix of miniaturization levels in Intel products (Itaniums, the flagship high end product is produced at 130nm!!)), and that AMD doesn't kill them before with a smash such as 16Mb L3 caches (based on Z-Ram).

But, as Lord John Maynard Keynes, 1st Baron Keynes of Tilton, famously summarized: "The market can stay irrational longer than you can stay solvent"

Earnings and conference call

Recent update (today 4:46pm)

The official data here

$0.38 EPS, beating consensus ($0.29) by 30%; this can't be possibly "priced in", therefore, other things being equal, this justifies a jump of 30% over the prices after Q4 earnings, you do the math, I don't want to be accused of pumper.

Gross Margin Increased from 57.3% to 58.5%.

ASP up thanks to desktops and mobiles, Operons units up a lot (penetration in server space)

Guidance: flat. Conservative according to management and everybody else. Therefore, huge potential for upswings. Will Intel commit suicide by giving away its processors in a futile attempt to keep AMD from selling theirs? Remember that AM2 and Turion x2 are in store for this quarter, as well as the Analysts meeting, that could unveil "products and technologies that will put the competition in a reactive position", or something like that. It could be quadcores, zram roadmap, who knows what at 65nm, a new invention from the Grand Masters...

Management confirmed that long term projects are well on schedule.

Very lean inventories, demand for the highest end surpassed supply at times

They refused to say what percentage of production will come from Chartered while asked about the dramatic production increases reported (but Management didn't denied the increases either), so, we don't know how much it could be.

And R&D has grown a lot, the company believes so much in its future that it wants to keep being an attraction pole for top flight talent.

Where these positive news?: yes, very positive. But I am disappointed. Should this stock be at $35? no, but Wall Street doesn't want to give AMD the stock price it deserves based on forward guidance.

Is it in any financial, commercial, technological jeopardy? not at all, so you may roll over your options to shares.

Quarter	GAAP EPS	EPS, non cash charge excluded		Year EPS			P/E Multipliers
Q2 06	0.38	0.38
Q1 06	0.38	0.38		Share Price		31.8
Q4 05	0.45	0.21
Q3 05	0.23	0.23		1.44	1.2	Est. Q2	22	27
Q2 05	0.09	0.09		1.15	0.91	Now	28	35
Q1 05	-0.04	-0.04		0.73	0.49	Q4 05	38	56
Q4 04	0.12	0.12		0.4	0.4	Q3 05	95	95

This table tell us that we are trading at 28x P/E. I got into AMD at 100x P/E.

Core Microarchitecture

In summary:
Core is very complicated. It is theoretically capable of executing 4 instructions simultaneously, for which it has been designed a set of features to try to keep those numerous execution units busy.

It will be very difficult to improve the architecture itself (no integrated memory controller ever, nor Hyper Transport), so despite its name, it isn't a new architecture in the revolutionary sense the Hammer/Opteron still is, nor it is conceived to last for a generation.

As soon as 64bit benchmarks come out, look for the comparison between the speed of the same programs compiled at 32 and 64 bits. If the performance at 64 bits is not better than 20% faster, equal, or even slower, then Core is dead at 64 bits, Intel won't ever be able to overhaul the arch. for 64 bits. But be prepared to see a jump of over 40% speed improvement compared to 32 bits.

Chances are that it will be difficult and costly to manufacture, do not expect it to be available in market dominating quantities before 2007

You can also expect the Grand Masters to come with a Grand Slam that could make look Core as primitive and obsolete as we look at pentiumIIIs today.

Core Microarchitecture for AMD investors

These are the points of the summary:

1) Complexity: It is very ambitious. I am sure that Intel will experience delays at development, because there are a number of features that directly interact with most of the µ-arch. This means that these features may generate combinatorially large numbers (millions) of pair interaction problems and running conditions extremely hard to nail down.

2) All that complexity only produces marginal benefits. If you take at face value Intel claims, having widened the µ-arch. from 3 to 4 issuance, in the very best of cases they achieved a 33% performance improvement compared to Banias; but it can be demonstrated that the theoretical maximum is not achieved in practice, not even with superlinear features such as instruction fusion.

3) All that complexity also translates into lots of transistors to support the advanced feautures, this makes the processor larger, costlier to manufacture, and hotter when running.

4) All of the extra features can't be possibly used 100% of the time, therefore they reduce the overall utilization of resources, expect less power efficiency too.

5) If 7 years ago the obsession for higher clock speeds that gave birth to the infamous Pentium 4 was in the opposite direction to where industry was moving, which eventually proved Intel catastrophically wrong; the newest "reordering" obsession (trying to extract parallelism from sequential instruction flows instead of the current industry focus on easing explicit parallelism) is again, the opposite of what the rest of the industry is trying to do.

6) see below

7) Even Hannibal agrees with me in that this µ-architecture just doesn't have room to grow. (Although he mentions that Intel may have 5 years in store with it, he is very explicit about that the improvements won't come architecturally but through miniaturization)

8) This emphasis in reordering (to extract paralellism from serial instruction flows) suits single-threaded execution. Intel supposedly is designing for the future processors fine tuned and optimized to run old fashioned serial and single threaded code. The software community is trying its best to go parallel; this reinforces my appreciation that Intel's NGMA is really a stop gap to contain AMD in 2007-2008 when they can come up with a truly new architecture with internal memory controller and all.

9) No possible way to integrate in this mess the memory controller, it is far too complicated already. So, AMD's main advantage will continue to make all Intel's efforts futile for the foreseable future.



Remember that AMD64 has two different things: a) the architectural difference of having the extended register set, which is more important than: b) the computation in packets of 64 bits


6) The introduction of Instruction Fusion implies a major chance in all the decoders and most execution units already, thus there is every reason for Intel to include the REX prefixes decoding essential for EMT64/AMD64 into the simple instruction decoders rather than the complex sequencer. Thus, the AMD64 architecture won't be "emulated" through microcode as it seems now. Also, since Intel widened so many components, it is totally reasonable to expect normal computation at 64 bits; therefore AMD will not have an specific advantage here.

10) But, there is one issue: AMD64 defines a register file twice the size; this exponentiates chances to do reordering. For that reason alone one could get over 50% performance benefits. Thus, in Core, code for AMD64/EMT64 could actually run much faster than in today's Opterons.

I guess that Intel may be up to something radical such as extending EMT64 with another 16 General Purpose Registers, or extending the instruction set with three-addresses operations to make use of the enhanced width. Today, the whole x86 arch. is two-addresses (it is too technical to explain this issue here in greater detail).

Don't panic if Core processors run much faster at EMT64 than AMD's; this is not something hard to solve for the "Grand Masters" in future generations


In conclusion, I seriously doubt that Intel could succeed being a contrarian to very evident design principles; but further than that, there is an obvious performance improvement when you follow the brute force approach of putting "more of everything" in a µ-processor.

But with larger caches, and bloated execution units, Intel is multiplying costs to obtain marginal performance benefits.

That is the nature of their price war: They will do brute-force chips to (try to) outcompete in performance AMD's well balanced propositions.

Just one trick in store from Mr. Derrick Meyer's team and the whole game is over for Intel; if things keep the same, AMD still will have very competitive products for the mid-performance (and value) segments, and undisputed leadership in 2-way processors and up.

The architectural situation is extremely important because it defines which company is going to make successful products, it is also an issue of long term ample consequences, that's why I think it is so worthy of being carefully looked at. To help myself with the insight some posters at the message board can provide, and also to stirr some discussion, I have posted early drafts of most of what you see here in the last few weeks, posts that garnered good discussion threads, still worthy of taking a look. This summary was posted here at the Yahoo AMD message board

Also, I posted my impressions about the information that came out of IDF here, but I have changed my opinion on aspects such as 64bits since then. And very importantly, the famous Bob Colwell's Stanford Lecture (video link here) (he is the father of the P6 architecture) which I commented about here.

I have already settled on a stance about Core, summarized in this article, but I encourage you to leave comments/questions (with a callsign at least, please!), that may help.

Conversation with the Ticker

I am looking at AMD's ticker every once in a while, and I don't believe what he is telling me. So, we got into an argument, that goes more or less like this:

Chicagrafo: "You've got to be kidding me! Is it down today?"

Ticker: Yep, Chi, it is down.

Chi - How come? Any bad news?

Tic - No, only good news, the usual stuff. Joe Osha bashed Intel, Fraunhoffer-Gesselschaft announced a R&D partnership with Infineon and AMD, a German magazine announced Dual Core Turion Features such as 1Mb L2 x 2, independent core voltage management, DDR2 - 800 dual channel; there are talks to expand/build factories in Dresden to the tune of 5.8 Gigadollars... should I go on?

Chi - Nah, not necessary. What has Sharikou been fighting about today?

Tic - That Chartered is 65nm and that Fab36 started commercial production in late Feb the latest.

Chi - Sounds like right to me, if not, the fact that there is a discussion about it means that at the very least they are ahead of schedule. What about the Hash and Ace?

Tic - Ace has been bullish, and Hash has been quiet, both for a change.

Chi - Cool. That means that we are about to break out with vengeance

Tic - Oh, no, you are down another 2%

Chi - What about the indexes?

Tic - They are all up

Chi - Fuc*, I don't Fu***** understand what's going on!

Tic - Another 1% down

Chi - What are the bashers saying!?

Tic - They are just repeating themselves: the Coredump, Mere-0 and Whocares prayers, saying that AMD is a POS, how much they have won shorting, saying that longs are stupid, bashing Sharikou.

Tic - Oh, another 0.5% down

Chi - Damn! that's 3.5% in a few minutes.

Chi - I will go back in a few minutes, I want to re-check my calculations for Earnings

After 5 minutes

Chi - It is more than $0.49 EPS, that means over $2 year, at 20x multiplier (5% APR on investment) $40 minimum per share. How are we?

Tic - Low 34s

Chi - What the hell?? why?

Tic - It seems that Q1 earnings are a moot point

Chi - Is that so?

Tic - Yeah, you know, the price war

Chi - The price war that can't happen? But if AMD has outclassed Intel so much, that they are not competition, who cares about the prices of the (de)celerons and xeons? Who is going to throw away good money on the rest of the computer to put an underperformer at the center?

Tic - Don't ask me, I am not guilty...

Chi - Aren't you? there must be something in your charts that say that you've to sell AMD...

Tic - Oh, no, it is that the Technical Analysts see that after the multiyear high there is no support

Chi - You're not convincing me, some people in the message board say that the specialist has been manipulating the closing price

Tic - Don't mess with my master. Are you one of those who believe in conspiracies?

Chi - Well, no, I don't; but there's got to be an explanation about why with so great news AMD goes down... do you know well your master?

Tic - Nobody knows well my master

Chi - Man, it is very frustrating all you are telling me, you are not helpful

Tic - I always strive to be of service, but some people wants to kill the messenger of bad news...

Chi - What are you talking about?, you always bring good news about AMD, and absurdly low share prices, there's got to be something wrong

Tic - I am well connected...

Chi - It is a conspiracy. I can't think of any other explanation... Let me check again, who are AMD partners or customers?

Tic - Sun Microsystems, nVidia, Rackable, Hewlett Packard, Soitec, eMachines/Gateway, Lenovo...

Chi - Ok!!, who among them is not doing well in the stock market??

Tic - They are all doing terrific. You interrupted my list, even Google is doing AMD. Just after the news of Google going AMD it was included in the S&P 500 index with an appreciation of 12.5%... Let me tell you a secret: All AMD partners/customers are doing fantastic, because AMD has magical properties.

Chi - What??? do you, the embodyment of cold computer logic dare speaking about magic?? Anyway, tell me who is not using AMD

Tic - Dell, Toshiba, Sony, Apple

Chi - Yeah, I know about Dell, you may remember that I also have bearish positions against it.

Tic - Yes, I remember. May I remind you that your bearish positions in Dell have given you most of your non-ethanol related recent gains?

Chi - Very kind of you. Well, Toshiba has been pushed over by Acer, right?

Tic - Indeed

Chi - Perhaps in this April, due to the lawsuit, the Japanese may start their new yearly cycle doing AMD, am I right?

Tic - I have no news on the subject

Chi - Thank you. What about Apple?

Tic - Doing very well

Chi - So the Corpse Duo is good!

Tic - I wouldn't say so. It seems that Apple is receiving a lot of help to make the transition from Intel, and it seems that Apple is better at extracting kickbacks from Intel than Dell itself

Chi - Any chance about Apple doing AMD?

Tic - No news about it, but it has been remembered that Apple and Steve Jobs have established a reputation of shooting themselves in the foot

Chi - What? Explain yourself

Tic - Yes, a reputation of doing a great innovative package with inferior components, such as the original iPod with the faulty batteries, or doing awful packages with superior components such as the PowerBook 150. They also do the opposite of what they should, such as allowing MacOsX to run in PCs and being active at allowing Windows to run in Macs...

Chi - ...and choosing Intel instead of AMD... They've got to have a lot of feet to spare!

Chi - But anyway that contradicts your "magic" theory

Tic - Oh, no, it doesn't. AMD's magic is "white", positive, it helps customers and partners, it doesn't gives bad karma to the skeptics.

Chi - That's interesting... perhaps it is not a matter of magic, but cold business reasons: AMD leaves a lot of profits to be made because it is not exploitative and believes in cooperation, the ecosystem; and Apple is doing well because it is exploting Intel, who now is not available to be exploited by Dell, to the detriment of the later.

Chi - What about my article about the subject, Ticker?

Tic - Only has a few reads, but one (contrarian) comment. Sharikou dismissed it, though.

Chi - No, I am asking about your opinion

Tic - I will confide that my fellow newstickers and friends in the Media have been spinning too much positive news about Intel and negative about AMD. My Masters have asked me to do the same, but you're too clever to be fooled, so I will keep being fair to you

Chi - I appreciate that. Thus you agree that once this stock reaches $45+ it will have to slide all the way to the next quarterly report, Dual Core Turions notwithstanding, and stuff like that, right?

Tic - Yes. And instead of selling shares or buying puts your strategy of writing monthly calls seems better

Chi - You are not saying that just to please me, right?

Tic - Oh, no, I see that AMD doesn't have much chance of crashing down, so it doesn't plays all that well to puts, but the core issue is that once momentuous news such as an earnings report is priced into the stock, it has been demonstrated that there are no good news that kick the price up; not even Dellienware was able to sustain a meager 4%, thus little chances of a permanent intra quarter upswing play very well to the short term call writer.

Chi - That's what I thought.

Chi - How are we doing?

Tic - Green. Another bull trap, perhaps

Chi - About your "magic" theory, why is it that AMD is down?

Tic - I think that it is because the positive magic is spent in partners and customers, so there is nothing left for its own stock price.

Chi - I see. It is that Wall Street doesn't see a company governed by greed, that is not appealing to them. Let me explain it to you: Other things equal, every $1 that goes out of Intel's market cap should mean one dollar getting into AMD's market cap, but because of their relative sizes, 1% Intel's market cap means like 7% AMD's. If Intel is down 10%, AMD should be up 70%, but that isn't happening; thus the money that goes out of Intel's market cap doesn't end up in AMD's, something similar happens with Intel's profits. That's why WS may agree about the whole market down; perhaps it is not that at all, but that AMD is behaving like a Robin Hood, taking the extortionately high Intel's profits and leaving them in the ecosystem, and Wall Street doesn't really understand where the money is going.

Tic - Thus AMD isn't winning all that money, being so small, doesn't it make it vulnerable?, perhaps it is not such a good long term investment

Chi - Nah, AMD increasingly will get protection from the ecosystem, that will be the moat for the competitive advantages castle that Wall Street gurus like so much. Think about things such as nVidia's NBP (nVidia Business Platform) that is defined with an AMD processor at the core.

Tic - Hmmm... only if it manages to survive until consolidating the ecosystem...

Chi - Of course!, what?, do you honestly think that the perfectionist Germans are going to screw up in production? Do you seriously concern yourself about the Grand Masters not keeping up with outstanding architectures? Do you think that these guys battle hardened who most of them had a close encounter with Bankruptcy and in such circumstances pulled off DCA, ccHTT, AMD64, Dual Cores, SOI, sSOI, Fab36, APM are scared or worried about these times when they have pocketed the whole server market, 80% of Desktop retailing in the U.S., an explosion of production capacity, positive reviews, benchmarks, credibility, etc.?

Tic - You have good answers. It is very instructive to work for you. I will try to recommend these opinions to my other customers

Chi - Thank you, please let them know that History is being made, that whenever that happens, the nature of the changes is not readily understood, but that also principles have the tendency to prevail...

Tic - I sure will...

Riding the roller coaster

The little I know of the dynamics of AMD's share price is this:

1) There may be the most impressive stream of good news that I have seen about a competitive situation for a company, and yet AMD's stock price may slide and slide and slide.

2) If I am right about the current situation, we will touch $50 after the CC, but just to avoid disputes, I spoke of $45+

3) But there is no way to sustain that price level without the help of Wall Street. But since the last quarter, AMD became Wall Street's #1 enemy, and I am being serious:
a) This is a disrruptive company, that WS doesn't like because it is not able to understand is cooperative model.
b) This company is destroying a former largest capitalization company not to replace it with itself, but with an ecosystem (!!)
c) Being neither exploitative nor monopolistic, AMD simply doesn't appeal to Wall Street, although the tertiary industries (such as chipsets) that it may create could be good for the whole world

4) Wall Street has to defend the $80 billion it has on Intel somehow.

5) Having WS as your enemy means that the formidable leverage on the media will be exploited to the maximum against you. Every positive spin on Intel (bad) news will be highlighted, every negative spin on AMD will be highlighted too. We have lost the game of perception before hand.
a) Look at Conroe: That is a dead end, over complicated tweaked processor, and it is duped just like the Vergelstungswaffen that will bury AMD.
b) Look at the price war that is not happening but that AMD already lost.

6) Most investors are not able to resist a concerted brainwashing effort from the whole of Wall Street. I am an engineer with solid background in µ-proc architectures; yet, I must confess that I have doubted my knowledge trying to give it a chance to Conroe, all because I intuitively feel that I can't be right and the whole world wrong. Well, this is me accepting a bit of brainwash. Anyway, must investors don't have my experience, so, they are vulnerable, and they will lose faith, they will sell, the money will get out of AMD, and the price will fall

7) Once the price starts to fall, the "technical analysts" will see bearish tendencies on it, and will intensify them, so we will have once again the whole brunt of the day traders selling and the stock price sliding

8) Until new conference calls or news of such caliber take the price back to where it belongs, only to reiterate the cycle.

You see?
We will have plenty of opportunities to buy cheap.

I myself will be aware of when the bashers and the technical analysts start to come back to AMD and speak of bearish signs, not to short AMD, but to write (covered) short term calls to be closed/let allowed to expire worthless, and buy back when the absurdly cheap levels are even understood by the bashers. In this cycle it was $34, next cycle I think it will be $38

Investment

I have just read a very nice article:
http://www.geek.com/news/geeknews/2006Mar/bch20060331035576.htm

Although the author makes the mistake of not understanding how investments are accounted, his point holds.

He compares all the hardships AMD has experienced along these years to the family that struggled to put through college all the children, and got to the graduation year in very good shape. The oldest of the family is already having a top-flight job, and this is just the beginning of the new situation of prosperity.

The miracle is that this family believed so much on the kids. Not everyone was born to go to college. But AMD's competitive advantages deserved full support. Since the days of the Athlon, in 1998, it has been a constant investment in a set of principles that didn't pay off perhaps until last year.

One of those principles is to respect the market.

I very well remember my days at the University when I was full of admiration for Intel. In those Pentium days, Intel was perhaps at its zenith, it was a company that innovated with vigor, it was an open company, it had an inviting attitude toward its products, and you could perceive a technical excellence not present in previous generations (which lasted only until the Pentium Pro, as was later proved). But of course, Intel has always been greedy. In any case, we reached the years of the incoming Pentium III with Intel being the undisputed leader of the computing necessities of the world, when my great dissapointment happened: Intel started to promote the Pentium III as "optimized for a fast internet experience". That is, it was not enough to supply everything that the market asked for, greed pushed them to *lie* [there is no connection between any of the features present in a Pentium III and a fast internet experience, if anything, it would be the MMX (the integer SIMD extension) already present in the Pentium II, SSE (floating point SIMD extensions) was something different aimed towards computing that didn't have to do with "Fast Internet Experience"].

Then, AMD put in the market the Athlon, and because it had superior architectural features, it took the performance lead from the Pentium III. Intel, who apparently succeeded in fooling the market, decided that they were not going to do actually superior processors to those AMD was doing, but that they were going to do inferior processors that they could sell as if they were superior by lying and deceiving the market. So, what I call the "gigahertz obsession", was born.

The gigahertz obsession was simply to do processors with ever increasing switching speeds, regardless of how much useful computation (real performance) the processor could deliver, and later on, regardless of how much power it would consume.

By this antics, deceiving the market, Intel substantially helped AMD to have a close encounter with bankruptcy.

Then it came the transition to 64 bits, when, because of greed, Intel wanted the whole world to go their propietary architecture route (Itanium) and didn't do an extension to x86.

But AMD got in their way again, it did the extension, with striking simplicity and elegance, so AMD64 was born.

What has done AMD about AMD64? has it fooled the market telling it that it is imprescindible? no, of course not.

What is Intel doing with V//V nowadays? V//V == snake oil

Live! is an entirely different approach.

That's how Intel's credibility decays exponentially under AMD's respectability pressure.

Engineering:

Intel got to where it is because it actually had very good products. But in an indeterminate moment, marketing took charge at Intel. Perhaps with the Pentium III they were convinced of the fallacy that you can fool the market, so, marketing at Intel began to think that the products sold not because they provided value to the customers, but because they, the salesmen, could find all these clever lies to misled the public to buy their products.

So, they lost the technical focus and were unable to do something even remotely worthy ever since.

The promotion of merit: Current CEO, and current President are people with undoubted merits to have arrived to their positions, and this culture is very evident at the different levels of management.

But Intel is a different story. The fact that a young Israeli team, operating so far from the corporate power center, was the one who received the challenge and responsibility to design and develop the flagship products for the next two years means that top management is not focused nor concerned about providing the absolute best products. It is evident that top management concerns itself with politics and financial manipulations.

AMD was nearly bankrupt, but stood on the principles. And demonstrated, beyond any doubt, that that is the way to succeed.

Right now, we are in the harvesting season, all of what AMD sawn has grown and is ready to be turned into profits. The neighbor doesn't have anything but weeds. There is still a lot of people who has faith in the gigantic neighbor, he says that in the remote corner it has the greatest grain ever grown in these fields, but that just seems to be him once again bragging about what he doesn't have. If his harvest were good, he would be very busy, as we are.

Intel is not even aware of when or why it went wrong. They are just awakening to the fact that they went wrong.

Wall Street is even more pathetic. Wall Street is just complaining that it doesn't have anymore the cash cow it used to milk

15% Haircut, why?

Why is AMD down 15% in four trading days without any bad news whatsoever?

The answer is simple: To put the money in AMD is speculative, that makes it vulnerable to influences. In this situation, one has to remember that AMD is a member of many indexes where Intel is a major component, and Intel went down heavily. That means that even though the reason why Intel is down has been the competitive pressure AMD is putting on (meaning that AMD should be doing things extraordinarily well), the fact remains that beause of Intel the indexes where AMD and Intel are members are down. So, there is that bit of negative sentiment, that gets amplified and a sell-off happened. The following words are the explanation of this phenomenon.

1) AMD investment is speculative: I am convinced that AMD is going to take the absolute leadership of the processor market from Intel in about a year and a half. But the fact remains that AMD is NOT the leader today, that it hasn't been at the top for decades as Intel has. So it takes a leap of faith to believe that the semiconductor market is going to be changed so radically. Actually, there are solid rational reasons and for those in the know such as yours, truly, for it to be a simple prediction, but for the vast majority of investors and for those who handle most of the money in The Street, it is not a simple fact. While they don't understand the significance of advantages such as Direct Connect Architecture with Hyper Transport over the classical Front Side Bus, they at least can barely hint that AMD seems to be on a roll and put some money on it. But that conviction is not as solid as having seen Intel double and double over and over for decades, giving dividend yields in a reliable fashion. Other things equal, the money put into AMD is the money to "spare". That's why as soon as the Dow Jones or any index is down half of a percent or that a stock market recession looms in the horizon, due to bad economy, a political crisis, or the Federal Reserve raising the interest rate half of a percent, it always happen that the money put into AMD is seen as not safe and the urge to "secure the profits" arises.

2) Intel is being killed by AMD, the competitive situation of Intel is truly pathetic, and all negative options for its future are on top of the table, including bankruptcy. Thus Intel pulls down with some strength all the indexes it is a member of, carrying AMD down.

3) But is AMD's success what is taking down Intel!!: Yes, but Mr. Lemming Nilvestor and Joe Sixstock doesn't believe this despite all the evidence, because they are utterly unable to understand the evidence. And not even in a million years if Intel says that the market for computers or processors is weak. That fits very well into the formerly successful hard coded rule that if Intel is doing Ok., then the market for semiconductors is Ok., and viceversa.

4) But if AMD is still doing great and is Intel's main competitor, then the money that gets out of Intel has a natural place at AMD: No, not really. Intel and AMD may be the two players in their market, but they are companies as different as it gets: Intel appeals to the greedy investors looking for a predatory company that juices every possible penny from their customers, that ruthlessly squashes competition and has no morals. Technological Leadership? as long as it becomes earnings per share and dividends, otherwise, they couldn't care less. AMD is the opposite: A thrifty company that doesn't even aspire to milk the customers but to create an ecosystem where all can share the profits (look at Hector's speech). Note: Not being greedy is not an innefficient strategy, nor it is the aspiration of creating an ecosystem where all share the benefits, it is just a different strategy aiming at sustained growth through cooperation rather than in a zero-sum game (Intel's approach). More to the point, an investor looking for dividend yields may go to Intel but not AMD. Thus the money leaking out of Intel is *NOT* moving to AMD

5) There is also this issue of the historical transition from Intel to AMD. Whenever there is an underdog that manages to score the win against an intimidating opponent that looks as invincible as Intel, a lot of disrruptive processes have to happen. Disrruptive processes are difficult to predict, that's why those of us who are betting on AMD have the merit to gain 5X our investments, because through our Due Dilligence we understood some of those processes while others couldn't.

Look at http://drge.blogspot.com. That's the blog of a guy with multiple acclaimed university degrees. But he just can't accept that AMD could have a lead of perhaps 5 years above Intel... Aristotle: "It is the sign of an educated mind to entertain an idea without necessesarily accepting it", well, Dr. Ge couldn't entertain the thoughts that AMD is crapping Intel with both AMD64 and DCA/Hyper Transport at 90nm. He can't understand that Intel has lost successively in all of its attempts to diversify beyond their core products of processors: They were beaten to humilliation at the 3D graphics accelerator game some years ago, that despite appereances AMD has had the lead in processors since the Athlon 550 MHz in 1999, that the Pentium 4 approach of meaningless gigahertz was actually a doomed marketing response to a concrete technological challenge, that a company that is not able to understand Itanium's failure and keeps pumping billions more into that catastrophe without ever entertaining the idea of killing it for good can't possibly be well managed. The Dr. Ges are not able to understand that it takes years upon years to develop all the concrete performance advantages AMD has developed or is using: Strained Silicon On Insulator processes, AMD64, DCA/ccHT, multicores, Pacifica, etc. Meanwhile, Intel distracted and keeps distracting entire mid-size national budgets into dead ends such as the gigahertz obsession, the Itanium, 32 bits, Front Side Bus, etc; and the Dr. Ges keep thinking that all Intel has to do is to wave a wand and AMD will be dead. Dr. Ges don't understand that at Intel they haven't come up with nothing good in a very long while, that they are going back to the Pentium III (because the high gigahertz obsession in Pentium 4 derailed them from their evolution path) and keep being confident that Intel is going to keep succeeding in the platform business now that AMD broke their dominance in the processor market and they don't have nothing to leverage things such as the Centrino platform, V//V, or any buzzword they can come up with... because they don't see much more dynamic companies such as Broadcom, ATI and nVidia getting into platforms for the duration with far better offerings than what Intel can come up with...

6) Nevertheless, they have become good at Intel at selling "Blue Crystals", "Snake Oil", "Vaporware" and related products. They are good at promising, because they promise so much and deliver so little that that some people still believes them is remarkable. So, they have their IDF, pump Conroe, Merom, Woodcrest as the nukes that are going to destroy AMD (magically, because there is no indication about how that may happen) and panic ensues in some AMD investors. And to top it off, a good PR stunt of some rigged benchmarks and the panic waves add to the other phenomenons and induced a 15% haircut on AMD without that company having bad news at all and having concrete good news...

Now, this are the good news for us, the AMD investors: Once that the weakling money is out from AMD, the proportion of those of us who understand what is going on among the investors will increase and that will give the stock price stability with higher growth just as happened until mid Jnauary when the vapor downgrades began thanks to Wall Street gazing their greedy eyes in our direction. Learn the game: After a sell-off, stable growth for a while, until AMD becomes noticeable again, and the roller coaster will begin again, until another sell-off.

Another positive thing to mention of this episode is that management demonstrated calmness but just ignoring Intel's shows. They keep speaking not with words, but with facts, with products in the market that everyone can test and benchmark.

The Live Intel Lies Thread, AMD Truths

1. Gigahertz is the only thing that counts
2. Deep pipelines is the proper way to do processor architectures
3. Nobody needs 64 bits computing
   
4. Itanium will conquer the world
5. 64 bit computing as done in AMD64 is no good, Itanium is the way
6. We are not copying AMD64, and will not ever support that instruction set, we will focus on Itanium
7. AMD's dual cores are as good as ours (Intel didn't even have proper single die dual core, but dual dice), ditto for quad cores (dual dice dual core)
   
8. Core Duo will be 64bits
9. V//V is 64 bits
10. Paxville will whip Opterons
11. Intel will regain the performance crown in 2005
12. We lost just 1% market share to AMD in last quarter
13. SOI (Silicon On Insulator) is unnecessary and expensive, plain Strained Silicon is better
14. Skype can't do 10-way conference calls without an Intel Core Duo (this may be a lie from Skype)
    

Please, extend the list with a comment, and I will update the post. You may also comment, document the source, whatever.

Also, don't forget to leave a name to address you in the post and to give you proper attribution.

According to Intel, AMD would be worth $189 in a price war

For those of you concerned about a posible price war among Intel and AMD, I have prepared an original analysis.

The fundamental assumption is that this would be a war for market share only. I subscribe to the opinion that AMD simply doesn't have to lower its prices in the case Intel chooses to do so, but assuming that AMD doesn't even want lose market share and just wants to keep the status quo, this is how I see the things unfolding:

1) Intel has about 75% market share. If they cut one dollar their average selling price in all segments, then for every $75 that Intel is not winning, AMD doesn't win $25, a 3 to 1 ratio.

2) But it is not quite like that. A gamer won't use a shitty Intel, a datacenter won't use shitty Xeons, no matter how cheap or free they are.

a) A gamer who pays $5000 for a computer won't use nothing but the best in the most important component. Look at what Dell is doing with the XPS line to have an understanding: they are so desperate to get rid of their Gaming computers that they have to give fabulous pricing/loan terms for customers to purchase them. This is so extreme that I wonder if it is not just a Dell book-cooking scheme to hide losses and weak sales. So, the multiplier may be another 2, that is, a 6:1 ratio in Gaming computers. But gamers are the makert tracers: The gamers are the people other people ask what to buy. So, if gamers keep buying AMD, recommendations will keep flowing to AMD.

b) Servers: It doesn't matter how cheap, Intel Xeons have actually **NEGATIVE** price (Intel is the one who has to pay to sell them, not the customer). Besides, Server Customers are buying today their upgrade path for 64 bits, multicores, virtualization, etc. Intel is not even claiming it is going to be competitive there anytime soon. I won't increase the multiplier here, but understand that I am being extremely conservative.

c) There remain Desktops and Laptops: Desktops: Tracers will keep biasing the market toward AMD, look at how deep AMD has penetrated the computer enthusiast spectre, since 2003, 2004, 2005, thus, the factor could be higher than just the base of 3. But that's not all, take Vista into account, and shitty EMT64s become inappropriate, Video editing. So, in desktops the ratio could be 1.5*3 = 4.5 : 1 or 9:2

Laptops: With a relationship of 80% to 20%, it has a base of 4:1, but what is Intel going to accomplish by dimishing AMD's market share? AMD itself is caring not all that much about this segment, that's perhaps why they don't have any dual core Turion, while they have dual cores in all other segments. But there is a problem: There is resilient demand for Turions. Some people such as me actually care about the 64bits, it doesn't matter what Intel does in this regard. So, the multiplier for Laptops is again 4.5:1, 9:2 just as desktops.

3) AMD's growth has a momentum, that is, current partners and key customers are increasing demand, so Intel's price war won't actually decrease it, just its growth; in other terms, demand is strong. Include another 1.3 multiplier.

4) Think again what will happen if Intel cuts a 25% their prices: It will automatically become in the minds of consumers, customers, partners and analysts a confessed inferior provider of chips, and will legitimize AMD as undisputed leader. Then, this effect will push forward AMD's marketing (to have the leviathan of the semiconductor business desperate slashing prices is excellent advertising), and will give AMD a "cool underdoggie" aura. So, the multiplier is higher, let's say another 1.2 to the numbers already mentioned (4.5*1.3*1.2 = 7).

5) Since AMD already has about the same profit margins as Intel, it would be Intel the one that goes into losses first than AMD, and being AMD so historically thrifty, with a not so distant encounter with the possibility of Bankruptcy, I would give it better chances to survive a price war than the spoiled kid of Intel.

A long etcetera, but this is the core of my argument:

Intel would be not earning (or virtually expending) 7 dollars to prevent AMD to earn 1 dollar, that demonstrates the confidence that Intel has in AMD as a threat; Said in another way, for Intel, AMD's earnings have an strategic value SEVEN TIMES GREATER than its face value. By the way, a price war would distinguish Intel as much more confident in AMD than most longs.

Expressed into the terminology of publicly traded companies, Intel's current share price to earnings per share ratio of 14.5:1 means that, for investors, every dollar Intel earns is worth $14.5 per share. Since every 7 dollars in Intel earnings are worth one dollar less in AMD, then according to Intel, the proper P/E ratio for AMD would be 101:1; so, using yahoo finance numbers for AMD, trailing P/E of 100.3 and forward P/E of 21.36, the valuation for AMD would be 101/100 (trailing) * $40 ~= $40; completely justifying current market valuation, or forward 101/21.36 * 40 = $189 (!!)

65nm is just Intel Marketing

There has been a lot of nonsense talk about the supposed advantages of intel processors at 65nm. I am fed up of watching my friends at AMD repeat the mistake. Read if you want to get out of the darkness, bear with me about the technicalities:

First fallacy: It is cheaper to manufacture the same number of transistors at 65nm than 90nm:

It is clear that a wafer of 65nm has the potential to have 92% more transistors than a wafer of the same size with 90nm features. But wafers at 65nm are much-much-much harder to do. In particular, to obtain the same yields (percentage of perfect circuits), you have to expend much more. A quick an easy way to do 65nm, or 45, or whatever, is just do them, and allow the yields to crash through the floor. If AMD wants to rush to 65nm, it can do so sacrificing the yields. Therefore, I am not impressed by Intel's 65nm tech. before knowing about the corresponding yields. I see something very interesting: Intel's dual cores have been dual dies before Yonah/Sossaman, that is, two different circuits glued toghether. That tells me that Intel's yields should be significantly worse than AMD's 90nm 95%. A bit of technicallity: The larger a circuit is, the greater the probability of having a defect in manufacturing. Specifically, for a single die dual core to be perfect, both cores should be perfect too, therefore, the probability of defects is squared. I don't know the exact numbers, but Intel's yields at 65nm shouldn't be more than 60%. That means that single die dual cores would have about 36% yield, roughly half of single dies. There it goes the 65nm size advantage. But the process is still much more expensive. And because Intel has this huge architectural deficiencies, such as the Front Side Bus, it has to abhor to use memory and is forced to compensate with large caches, that once again have the yields decreasing at its square.

[Full analysis: Let's say one cache has a yield of 3/4, and unitary cost. A cache double the size, costs twice at the same yield level, but since the yields becomes (3/4)^2 = 9/16 ~= 1/2, or a cost increase of (3/4)/(9/16) = 4/3 due to yields; then the total cost of a cache twice the size is 2.66. With 50% cache yields, (1/2)^2 = 1/4; (1/2)/(1/4) = 2; a total cost of 4, four times an unitary sized cache].

Things get really interesting when you consider QUAD cores: In the case of AMD, a 95% yield becomes a bearable 81%. Intel's... a 13%. The fact that Intel demonstrated a quad core which was in reality a double die of single die dual cores what proves is a) Intel wants to fool the industry with Public Relationships marketing shows, and b) very probably they don't have the capacity to do quad cores, therefore, the yields should be very small, and c) commercial products should be very far. Really, what did Intel do? they admitted defeat!

Thermal dissipation: It used to be that smaller transistors consumed less power. But not anymore. Before, the supporting infrastructure for integrated circuits consumed negligible power compared to what the transistors themselves consumed. But nowadays, because there are so many millions of gates in a microproc., and the internal buses are 64 bits wide at least, the consumption of the tiny wires has become significant. There is no way out of this: The wires are thinner, the resistance is higher, the lost power greater. Thus, the brute force approach, miniaturization, is becoming less and less attractive, because it has less to be gained. Comparatively speaking, and most importantly, Intel does Strained Silicon while AMD does Silicon on Insulator. SOI gives additional protection against another plague of the sub 100nm world: migrating currents. The gate, collector, and drain of transistors are so close that the transistor has trouble to really cut currents. This is an exponential problem, because the only way to compensate for the background electrical noise is to raise the voltage, raising migrating currents, a vicious cycle.

Switching speed: Oh!, yes, at 65nm is much faster. But the additional speed has a price. That's why all other processor manufacturers chose to improve the architecture rather than insist in the miniaturization, but Intel did kind of the opposite: Simplified the architecture to streamline it and make it more suitable for high speeds. The result? Eunuchs such as the Pentium4 that can't even do multiplication with a barrel shifter. Or the super deep pipelines that are just inefficient. For Intel, this was all a marketing game: To have the greater speed, the smaller feature size, because to evaluate performance is difficult, while the megahertz/nanometer number is catchy.

Intel has a manufacturing tech. of cloning factories to the cafeteria that simply is primitive, such as Sharikou detailed himself in one of his posts. AMD has APM, a robotic tech. for chips production, leaps and bounds ahead of Intel's. That's why when I hear Hector Ruiz saying that basically they will do 65nm as soon as AMD feels like it, I believe that it will be a success.

The bottom line is: Why would AMD want to disrrupt sold-out production of 90nm products to fiddle with inmature yields at 65nm? Let us the competition to rush and crash

Sun Microsystem's multiple personality complex

[Update April 21: I no longer subscribe to the point of view expressed here, for historic value I leave the rest as it was when published. I would say that Sun is managing to adequately walk the sharp edges of Sparc/Opteron and Java and has thus become a company with long term potential]

Sun Microsystems is a leader of technology, their products rock and fly, but it is not advisable at all to invest in it, because it is a company with a multiple personality complex.

Sunw tires to sustain its business of selling servers at a premium because of their unique architecture, Sparc; but at the same time they are the owners of Java, the technology that makes irrelevant the hardware to run applications. This conflict harms them a lot, especially their Sparc line of business, which is the bread-and-butter one. Now, they are doing the best AMD Opteron servers, that can be explained by the special AMD processors Andy Bechtolsheim says mentioned, so they in effect are becoming yet another x86 server company. What about Sparc? Isn’t it true that if they were capable of doing low cost (commodity or zero-premium) Sparcs they wouldn’t need to do Opterons for entry level servers? Or conversely, what does make them think that Opterons will not be able to scale to the heights of the best Sparcs?. The same duality/dilemma applies to Solaris/Linux/Windows

Java is a technology much more logical for IBM, that’s why they have embraced it so strongly as to become second leaders of it. They have computing hardware ranging from super main frames to less than pcs, therefore, Java, just as Linux does, actually helps them to focus. Sun’s reaction to IBM’s leadership challenge in Java is to extend Java with ever more absurd things, turning what once was small and beautiful into indigestible bloatware. That’s why Java has lost relevance.

I am not CEO of Sun, just a potential investor, so I can only see too many contradictions in that company but not solutions.

I agree with Sharikou: Journal of Pervasive 64bit Computing: SUN drives me crazy. In the mean time, the Ultra 20 makes me salivate.

Pacífica vs. Vanderpool

Virtualization is becoming a very important issue in the server market. One of the reasons is that to ensure availability of services, every computer has to be configured exactly as the service application recommends. If you have an Oracle database for critical information, you can't be fooling around installing every other nice feature on your server, everything in that server has to be conformant to Oracle's specification. Further than that, is actually desirable to have every computer running a critical service with a minimum of extra features, so that in the case of a problem, the process of locating/correcting it is greatly simplified. But at the same time, it is impractical to install three physical machines in a data center, each to do web serving, databases, and fileserving for a corporation. Virtualization is what enables the same physical infrastructure to be shared in a safe way among different services that each think have the whole computer for themselves. Try to understand this extending the concept of multitasking to computers: In multitasking, every task is not aware of the existence of other tasks, they just do their job, and the operating system is the one who switches tasks back and forth in the machine's processors for execution. With multitasking the computer seems to do many things at once. Equally, in vitualization, every operating system/service is unaware of the existence of others, they just do their job; but from the outside, the same machine behaves as if it were many different computers.

Virtualization can be done 100% in software, provided a little assistance from the operating systems that will run in that computer. An example of this is VMWare's line of virtualization software, and the excellent open source Xen. But of course, there are limitations, and help from hardware is so crucial that can determine whether a particular server machine can be partitioned into as many virtual servers as needed successfully or not.

Intel offers Virtual Technologies, VT, codenamed "Vanderpool", and AMD offers "Pacífica". Since this is an issue of relevance for the medium/long term x86 server markets, it is good to make a comparison among them.

There is an excellent set of articles published in "Theinquierer.net" about this subject, in three parts: 1, 2, and 3.

In part 1, we find the following:
"VT['s memory management] is a software solution [...]. As with most software virtualisation techniques, it is quite costly compared to doing the same thing in hardware. [...] VT manages memory in software."
Whereas Pacífica is a hardware solution that allows interesting advanced features without equivalent in Vanderpool such as the modes of "Shadow Page Tables and Nested Page Tables".

Second part explains that Pacifica's Shadow Page Tables (SPT) mean that all accesses to the microprocessor's page directory address (where the actual translation between addresses the tasks require and the physical adresses), or CR3, are shadowed by Pacifica, which activates the Virtual Machine Manager (VMM) to put the right value into the CR3 that each virtual machine sees.

In the third part, it is explained that Nested Page Tables (NPT) adds another level of indirection, but in hardware, to account for the Virtual Machine Management. Therefore, there are three levels: Application, that manage their own space, the Operating System, which manages many application's memory, and the VMM. Since this is done in hardware, the performance hit can be made negligible, for instance, through caching.

It also mentions the Device Exclusion Vector, a table that allows/forbids devices to put data through DMA into memory when the wrong virtual machine is running. This is another result of Hypertransport/Direct Connect Architecture.

The article summarizes:
"Looking back over the Pacifica spec, it is clear that it is indeed a bigger body of water than a Vanderpool. The basic architecture of the K8 gives AMD more toys to play with, the memory controller and directly connected devices. AMD can virtualise both of these items directly while Intel has to do so indirectly if it can do so at all."

Hasta la Vista, Windows

There is a lot of speculation about the coming of Microsoft's Vista. I want to contribute some speculations of my own to the pool:

Vista is not going to be a smash such as Windows 95 was, but something that markets will grow used to, such as happened with XP, because of similar reasons. It can't be any other way, because Vista is going to be a complicated, buggy and unstable Operating System at the beginning. As long as enough early adopters and Microsoft junkies are able to catch the bugs and Microsoft to employ legions of programmers to patch them, it will be improving until becoming mainstream usable, emulating what happened with Windows XP, Me, 2000, 98SE, and 98. Windows 95 was also very-very buggy at the beginning, until Windows 95 950B, but it was such a huge improvement over Windows 3.11 that it became an instant success.

The problem of Bugs and Microsoft has its roots in their oblivious disregard of good software engineering practices. If you look at DOS you would see a bad design of an extension for CP/M. Windows was an awfully preposterous bad copy of ideas that were circulating in the mid 80's, and substantially was a tower of patches over patches on top of DOS. Windows 95 and the Windows 32 Bit API was certainly an improvement, a serious attemp at simplification, but first, they inherited too much from the 16 Bit API; and the whole thing went the path of inconsistency because of the fundamental design problems of Windows 95 that didn't allow it to well-behave as an API for Windows NT would have demanded, so there was this fork between the Windows 32 API for Windows 95/98/Me and NT3.51/4/2000/Xp. As a matter of fact, that's what prevented Windows 2000 to be the real convergence between the branch of 95 and the branch of NT. Windows XP wasn't either, but by 2001 the stentch of Me was so bad that Microsoft allowed the branch to die.

Since the Operating System is so badly designed, so inadequate, some applications have to implement Operating System services themselves, and that lead to the problem of inconsistencies and mesmerizing bugs. For instance, where I work, six months ago we set up 100 recycled computers with a fresh install of Windows 2000 and Office Xp to serve as Internet/Word Processing/Presentation/Spreadsheet computers. For those computers we installed everything, Windows, updates, antivirus, anti spyware, etc. But soon enough the users began to report that the computers froze whenever they tried to save a file to diskette directly from one of the MS Office applications. We lost an inordinate amount of time trying to identify what seemed to be a virus, or spyware, until we realized in dismay that it was a bug the Windows Update Rollout 1 of Service Pack 4 for Windows 2000 introduced. It seems that Office doesn't use the operating system to deal with diskettes, but assumes directly the diskette management. That's preposterous, but very Windows-Style.

So, there are zillions of applications that misbehave in that fashion, thus, it will take months and years to make them work in an improved Operating System at 64 bits. It is not simply a matter of developing the Operating System and supporting all of the old API, but of getting the bugs reports to open new holes in the new OS so that the old applications can plug into those holes and run. Of course, some years down the road, the holes are still there, but it is malware what plugs into them, and the system is a nightmare of insecurity, until Microsoft decides that enough is enough and releases a Service Pack that cures some of those holes (while opening others, of course). That's what Microsoft has been doing ever since DOS 3.0.

What is the end result? -- Bloatware.

To use an analogy with cars, to carry all that bloatware, it would be needed an engine as powerful as a train, but in the envelope of a sports car. Only an AMD64 would be able to pull that trick off.

Good News for AMD investors

Intel is not getting it. The parents of Itanium, the mutant architecture, have decided to toss some 10 billion dollars to try to increase adoption. That is excellent news for AMD investors because there is no way under the sun to make that dead horse run, and if possible, even more field will be left open for AMD's products to colonize the server market. Tom Kilroy, general manager of Intel's Digital Enterprise Group, is quoted in that article saying that "This is a $140 billion opportunity on hardware. It's dwarfed by the opportunity in software and services on top of that". Well, if I am right, a quite significant part of those 10 billions will definitively go to waste (sorry for HP about that), but more importantly, AMD, which has the absolute best products for the $140+ billion market, will have the best opportunities.

[Update Saturday 28 #1] To exemplify how the Itanic performs in the market, take a look at the last paragraph in this link:

"According to IDC, unit sales of Itanium-based systems totaled less than 9,000 in the third quarter of 2005. Compared to the x86 server market, these numbers are worse than terrible. [Although competing in revenue and growing faster than Sun Sparc and IBM's Power,] this may all be a moot point if Opteron-class x86-64 hardware winds up dominating the server market. Will Intel continue to chase its proverbial white whale?" [End of Update #1]

I studied in depth the Itanium architecture while it was called IA-64 six years ago. While fascinating, with very good ideas, there are there too many mistakes at all levels, making it quirky, complex. I feel ashamed to have expent months studying it on my spare time without ever realizing that it was a dead end. I now feel thrilled that my understanding of the futility of those long hours expent in the Itanic are paying off, because I have the detailed knowledge to understand why it is futile to try to push that abortion of µ-proc arch. One of the problems with the Itanic is that it is unnecessarily disrruptive. As Linus Torvalds was quoted in 2003 by "The Inquirer", Intel, doing the Itanic, "threw out all the good parts of the x86 because people thought those parts were ugly. They aren't ugly, they're the 'charming oddity' that makes it do well". In comparison, it took me three days to grasp AMD64, clean, lean and mean arch. Of course, it has its limitations, but it has "the charm" that makes it work. I feel confident that if AMD keeps working with the same daring creativity as in AMD64, Direct Connect/Hypertransport, Multi Cores, then the extensions for virtualization (Pacifica) and the evolution of the architecture will take it to new heights that will be banned for good to Intel.

In any case, just like another quotation by "The Inquirer" of Linus, "The [Itanic] is a failure on so many levels. Let me count the ways" makes me think about something that I have understood ever since I became an engineer: Engineering companies must, by all means, be run by engineers. When that is not the case, then it happens that something fairly obvious a failure, such as the Itanic, instead of being terminated, endures a lingering existence that sucks resources from its company because no one at the top management has the technical criteria to say when enough is enough. [Update Saturday 28 #2] Even Hewlett Packard, one of the parents of the "creature" is allowing it to die, they even won't do any more Itanium workstations [End of Update #2]. It is so easy to understand how marketroids such as Otellini and his predecessors who couldn't realize that they have a carcass of an architecture, were capable to delay a real 64 bit improvement to x86, to open the door to AMD to come out with AMD64, to cripple their 32 bit product lines with stupidities such as PAE (Page Address Extension) done to give the Itanic another chance, only to succumb to Microsoft pressure to get in line with AMD64 once the omnipotent software house decided that it was the path to be followed.


My understanding of the Itanium arch. tells me that the very best and brightest of Intel designers are there, but in a futile effort to make the dead horse run. No wonder they only have advantage in the "brute force" of going to the 45 nanometers.

But the 45 nanometers is not the solution to Intel's problems. Despite what some ignorant "analysts" say, at the sub 100 nm scale, the power consumption problems are going to become worse, and may cancel any performance gains such as it is happening with the Core Duo (Yonah), the "Dual Dissapointers", and other 65 nm offerings that are squarely out performed by AMD's 90 nm products. This thing of the advantage in miniaturization is smelling more and more as a simple marketing ploy to instill confidence in partners and customers than a real technical advantage.

Thus Intel's engineering is in confusion and disarray. Maybe it will take more than two years to see something interesting coming out of Intel. Where would AMD be by that time?

On the other hand, the Silicon On Insulator tech, SOI, disdained by Intel, but featured by AMD, is becoming a very interesting potential advantage for AMD. If it is true that the zero-capacitor DRAM deal they signed with Innovative Silicon will give AMD the opportunity to cuadruple cache memories, I honestly can't imagine how "internet-quick" AMD is going to overtake the whole µ-proc market.

On the mean time, every company that is in partnership with AMD is doing excellent both in the market and stocks: Rambus, Soitec, Chartered, Innovative Silicon have all jumped ahead as a direct result of a deal with AMD, and perhaps even Broadcom (confirmation in the works) are doing great. Whereas Apple is next to dissapointing, and I guess that Dell would too.

Does anyone want to buy Dell $30 puts for February?