A bit of defense for SOI

I have received intelligent criticism about my enthusiasm for AMD doing the extra expenses it takes to include SOI in their silicon manufacturing, to which I gave a reply, but a new article allowed me to go deeper into the subject:

In an interview, "Turn Down the Heat ... Please" which I obtained thanks to an article in "The Register", "IBM: Cell-like CPU yields 10-20 per cent", Ed Sperling asked Tom Reeves, VP of semiconductor and technology services at IBM, what would be the next big thing in chip technology, and Mr. Reeves answered:

Through the ’70s and early ’80s, bipolars went up to 100 watts. We had water-cooling systems, but you needed something new. Then we started with CMOS, [...] Now, 20 years later, we’ve got 100 to 120 watt chips again. Power is everything. The efforts we’re taking to get leakage power down for cell phones or a base station or a Cisco switch are enormous. If you look at a chip in a base station or a switch, they’re 40 watts, and there are a lot of them. The total wattage gets up to 5,000 or 10,000 [!!]. So the major focus now is not on Moore’s Law [!!] and how you get the next density step. We’ll get that. How you get the next performance step is harder work than it’s been, too. But the most important issue is how you manage power. Leakage power at the most advanced lithography is very challenging. And with active power, can you cool the gain? College kids were hanging some gaming systems out their dorm windows to cool them down.

Silicon on Insulator may not help at all to overclock a µ-processor, which is a nice feature that the gaming market appreciates (the materials used for SOI are good heat insulators as well, thus they obstruct the efforts to extract the extra heat that the overclocker forces the processor to generate over volting and over clocking it), but still, it helps with the very important leakage.

The simplistic explanation is this: The transistor behaves a bit as a capacitor, to switch, it needs to get rid of the charge it accumulated. The lower the charge, the lower the energy leakage associated with switching, and the lower the capacitance the lower the charge. SOI helps precisely about lowering the capacitance. According to the wikipedia, SOI helps 30% with the transistor leakage, and 15% with switching speed (of course, it takes less time to get rid of a lower charge at the same current level (because the voltage is the same and the resistance too)).

We shouldn't take Mr. Reeves opinion as that of an interested party, what he points out is perfectly clear and true. Power, it is Power the issue of these times. The usage of the more expensive SOI technology, and harder to market slow clock speeds, is a sign of a pervasive attitude at AMD: They focus on solving the real technology issues. Just like I said in "65nm Is Just Intel Marketing", Intel doesn't bother, at Intel, the basic question is this: "Can we market technology defficient products?", if the answer is positive, Intel won't do power efficient processors, nor good architectural features. Rather, what Intel attempts is to sell products with marketing-amiable catchphrases such as "Gigahertz" (remember that Pentium 4s only cared about the clock speed, although they couldn't do as much real processing as an Athlon at half the speed, while consuming a lot of power!), "Hyperthreading", which was so poorly implemented that rather than providing a huge speed boost, as it should, provides a decline. 65nm products that so far are not even at par with current AMD products. "Dual Cores" that are really multi chip packages, and it now spins the weaknesses of not having neither the integrated memory controller nor a processor interconnect as a great advantage that "allows" to put gigantic caches and a stupid memory architecture flexibility, because it's something you can't do much with.

It is the same approach everywhere. For server processors: "Can we market processors for servers although they can't scale past the four cores because they don't have any processor interconnect?", "Can we fool our customers with Netbursts while they want to buy Woodcrests?", yeah, let's name the Dempseys Xeon 5000 series and the Woodcrests Xeon 5100. A great question is how long can Intel succeed with lies. It has taken decades to merely crack Intel's monopoly, which was constructed with lies and deception. How long would the monopoly remain given that Intel insists in blatant lies?

There is no wonder that at Intel they don't expend the extra doing SOI, they prefer to expend expend extra in marketing to convince people that SOI is an unnecessary expense.

On the playing field of companies:

Imagine that this is the WWF (or the extinct WCW, or the WWE, or whichever you fancy). And we are about to see a match. Two guys get into the ring. One is The Undertaker, and the other is Some blonde from the De-Generation X. The match begins, and there are thousands of things affecting the match and affected by the match.

Of course, there are some things affecting the match that are completely internal to the two wrestlers (size of heart, size of the lungs, dosage of steroids taken, amount of previous training and workout), some of them are internal to them, but bear interaction with the outside world (mouth to shout, arms and legs to use). Then are the real external ones, like fighting style, number of moves known, et cetera. Some are in the environment, like metal chairs, or the poles of the ring (and how masterfull is each fighter using them). And ¡hey! ¡if you thought there were just two contenders, you are wrong! there is Yokozuna, who "happened" to be in the arena, and this guy Hulk Hogan who refuses to let go and passes the chair to one of the guys. Then there are other stakeholders, like girlfriends and friends of the wrestlers... But it does not stop there, there is the regulator (the referee, McMahon), then there is the paying (per view) customers, and the guys who pay tickets and buy magazines and action figures. And the bookies. And then there are the horoscopes of the guys...... You get the idea....

So ¿What are the things that affect a firm, any firm?

Well, first there are some internal thing like the Core Beliefs, Mission, Vision, Strategy and what not. Then there is Recruiting, Compensation plans, Evaluation Policies, Financial Position, Production methods and capacity and what not, that are internal, but bear some relation with the external world

Then we have the Product's Technical Merits (real and perceived), Product Quality (conformance and customer defined), Marketing, Public Relations, Brand Image, Industry relationships...

But wait, it does not end there, some players may be interested in the outcome, producers of complementary products, for example (chipsets im the µProcesor industry, hotdogs in wrestling).

The market as well is interested. You, as a father, do not want to buy for your children the action figure of the guy that looses all matches (unless the child specifically asks for it); and you do not want to buy a Betamax either.

But wait, it gets better: ¿Are you polluting? ¿Creating jobs? ¿Saving the Wales? ¿Paying your taxes? ¿Abusing your Dominant position? ¿Using Predatory Pricing? ¿Are your products made by 12 Year old children in sweatshops in Asia? ¿Are you showing nipples in prime-time in the USA (in Europe is not such a big deal)? These are called non market issues.

But it gets even better, if you are in the Electricity or Telecommunications Business, you may have Solar System Issues (solar flares, solar storms and solar spots come to mind), if you are in Satellites, add to that asteroids....

But it gets even better than ever before: You can have Galactic / Universal issues: If you are a chip maker, ¡Cosmic rays can wreak havoc with you! ¿You do not believe me? Well, check the link

(This is the first link I post because this is so obscure that googling for this is hard. I assume that the audience can use google for some of the things / people / theories / facts I mention , if not, this is not the right blog for you)

In the coming weeks, we will analyze one by one all those factors, in our attempt to understand what is happening in the Intel vs. AMD struggle.

¡Salud!

Howling2929

AMD64 practical: XP 64 + VMWare Server

There are many inconsistencies and issues with 64 bits in the Windows world, drivers in particular, that prevent people from enjoying the whole capacity of their computers. But there is a practical solution.

First, why would anyone bother to install an AMD64 Operating System?: Because unfortunately the only way to have AMD64 functionality requires the Operating System to work in "Long" mode, that is, native 64 bits.

Now, most people would say that it is irrelevant to have AMD64 functionality if you don't have more than 4 GB in your computer, and I would keep repeating myself saying that such an opinion is totally wrong, because AMD64 is inherently faster:

• The same applications should run faster with just a recompilation to 64 bits because AMD64 offers twice the number of General Purpose Registers, 16, instead of 8. That means that the processor can work simultaneously with twice the number of temporary values. Furthermore, in x86, among the 8 GPRs are the stack pointer and the frame pointer ("Base Pointer" in x86 Intel's nomenclature), therefore the applications only really have 6 GPRs. But in AMD64 they have 14, more than twice the effective number (learn more about registers at this footnote).
  This feature has many positive consequences:
  
  
  • It eases the memory traffic (which is good because there are latencies associated with accessing even the L1 cache) because the values are already there, in registers that the compiler or programer can administer at compile time with more intelligence than the silicon dispatcher or the scratchpad register manager on the fly.
  
  
  • It allows more silicon optimizations. Since the values are in registers, they are readily available to all the speculative, reordering, branch prediction, etc., optimizations. If those values were in memory, even in L1 cache, these optimizations couldn't even keep track of them, much less actually factor them out of the critical execution path.
  
  
  • It is easier for both the compiler and the programmer to write optimal software. Consider the case of a calculator that can only hold one value: Most of your time will be expent in writing aside the temporary values that you need to remember, we already explained this in the first item, but also, if you could just leave the temporary values in the calculator and recall them when needed, not only your life would be easier, but less error prone too. Exactly the same happens with compilers and programers and a large register file.


• If you have a fairly powerful computer, like in the range of 2 GB or more of RAM, chances are that you are already hitting the 4 GB wall, because of the virtual memory. The problem is that Windows reserves 2Gb for itself (1Gb if you tweak the system) and therefore the applications fight for the remaining top of 2 GB (3 GB). When windows "feels" that it is running out of memory, what happens is that it gets rid of disk caching space and swaped out memory blocks, that is, it increases its number of direct reads (and writes) to the filesystem instead of the much faster secondary memory accesses (hard disk accesses) to the page file.


• What if you need data sets larger than 2 GB (3 GB), or simply want to give Windows the luxury of 2 GB of memory disk cache? then, either the Operating System or your applications, or both, will have to deal with the non-trivial complexities of "Page Address Extensions". If you were old enough in the early nineties, you would remember about the horrible nightmares of configuring DOS's low, high, extended and expanded memories; the 4 GB barrier is the dreaded 640 KB redux. As it is today, there aren't too many incentives to put more than 4 gigs in a compy, even though the addition of memory could really speed things up.


• Finally, if you do integer calculations larger than 32 bits, either the usage of the floating point unit to do them, or the ripple-chaining of twin 32 bit operations are from two to eight times slower.

A 32 bit processor is a 32 bit processor, the patches to support 64 bit features are patches: buggy, error prone, difficult to understand things that are the last recourse. Computer technology is something that should be approached looking at the future, not towing the past to the present.

If you are smart you must be wondering, but aren't there some tradeoffs?, a "price to be paid" to have these benefits? Some people have asked me that perhaps the programs are larger (less memory efficient) if you use 64 bits. The answer is that practically no. AMD64 applications may choose among using 32 bit integers, or 32 bit pointers by default or not. If they default to 32 bits, there is no space overhead other than the truly negligible overhead of passing some 64 bit parameters in the stack and return addresses of system calls.

The AMD64 encoding is almost the same as the 32 bit x86, which is tight. And the "trick" of extending the architecturally visible register file gets accomplished by devoting the single-byte encodings of register INCs and DECs to byte prefixes, that is, the opcodes from 0x40 to 0x4F become the famous REX prefixes that work as mode (64bits/default) and the register class (old/new) selectors for the up to three registers that can participate in an instruction (Register, Base, and Index), with an overhead of one byte, in only some occasions. It is worth noting that it is still possible to do "INCs" and "DECs" of registers using the MOD R/M version (that is, instead of the single byte 0x40 or "INC EAX", the two bytes enconding, 0xFFC0, remains available).

Thus there is practically zero impact in the coding efficiency for AMD64 applications.

The problem with AMD64 is that Intel never wanted it to succeed, for obvious reasons, thus never really tried to make it work seamlessly in their processors, and Microsoft felt too complacent with XP and 32 bits, so, the brunt of making this technology mainstream fell upon puny AMD and unintimidating Free Software projects, with unforgivable marketing incompetence on the part of AMD who failed to market the advantages I mentioned in this article and instead allowed the general public perception to be the misleading "64-bits is only relevant for monsters with more than 4Gb, not my gaming machine".

But the Free Software world wasn't incompetent. Linux and other Free Software projects leveraged their intrinsic advantage of being easy to recompile to recompile themselves in AMD64 obtaining all the benefits expected. That made Microsoft move its ass to get on board before the ship departed, and with Microsoft providing support, Intel didn't have any other choice but to also get on board and took Yamhill (EM64T) out of the closet.

The problem is that neither Intel nor Microsoft really took the x86-64 thing seriously, the former got delayed with XP-64, even XP for AMD64 being relatively trivial to do, and has been failing miserably at guaranteeing acceptance by not porting to 64 bits all the device drivers that helped Windows XP to be so popular.

About Intel, it is commonly accepted that programs run slower in EM64T than at 32 bits; contradicting what I pointed out earlier in the article; but the reason may be very simple: Intel may have implemented EM64T in microcode, thus 64 bit instructions may be sort of "emulated", and naturally much slower. Thanks to the 64 bit advantages, a bit of compensation is obtained and the downstep in performance is not so pronounced.

Without Microsof and Intel seriously supporting the 64 bits technologies, the rest of the market has followed suit, and the adoption has been lacklustre.

Thus, the AMD processor owner is on its own about how to reap the advantages of the 64 bits in a practical way.

The solution to this problem is simple, practical, free of charge, and with a number of positive side effects: Microsoft is giving a 120 days free trial of XP 64 bit, thus you have the practical way to test the waters before making commitments; then leverage yourself with Free and Open Source software. In Windows, important applications such as Java, 7-zip, POV-Ray, Daemon Tools, and even a free (of charge) antivirus, such as Avast! Home edition as can be confirmed here come with versions for 64-bits. The rule of thumb is to leverage Free and Open Source Software as much as possible, because the FOSS has the advantages mentioned above to easily port the applications to AMD64.

To fill the gap that still remains, you can put a 32 bit computer inside your empowered 64 bit computer installing the free (of charge) VMWare Server and preparing a 32 bit Windows XP Virtual computer. It will only take some shared hard disk space and whenever you need the 32 bit computer, its operation will draw only 320MB of RAM memory (or whatever you choose).

I have a 3800 X2 1 GB DDR2 800 in Dual Channel, on top of which the virtual computers run, and my virtual XP-32 machine runs faster than my Turion. Furthermore, I haven't experienced lack of responsiveness in my host XP-64 (the real computer) when my virtual machine is doing heavy stuff such as installing windows updates, and this was before I changed the configuration, the virtual was configured to have a virtual hard disk mapped to a 6 GB file in my SATA2 (300 MB/s) hard disk formatted in NTFS.

So, if I don't want to deal with the hassle of finding a 64 bit driver, I just fire up my 32-bit XP virtual computer and deal with whatever needs it at 32 bits in the virtual computer.

In case you don't know, the virtual computer runs as an application in your host, not even being aware that it is a virtual computer. The guest (virtual) computer has a virtual network adapter that in reality bridges to the host's (to the real computer's network connection), but from the rest of the network, it looks as any other computer. The guest may also use the hardware installed in the host, such as Hard Disks, optical disks, even USBs. Since both the host and guest computers are the same hardware, you don't need to dedicate too much hard disk space to the guest, just provide it with enough space for the operating system and essential applications, the rest, for instance, space to do DVD transcoding, may come from the host through the virtual network, sharing the hard disk space of the host.

Using a virtual computer has another advantages. For instance, I wouldn't install the "Gordian Knot Codec Pack" to transcode DVDs to XViD and DivX in any "serious" computer, because it really messes up with the operating system configuration due to all the codecs and tape-'n-bubble-gum applications glued toghether, but if it is a virtual computer specifically prepared for that, then there is no problem, if it corrupts the whole operating system, well, tough luck, I will expend 5 minutes restoring the last snapshot ;-) Another use is to install testing software, or even software trials. In case you are wondering, the video transcoding operations ran so fast in the virtual computer that I never bothered to benchmark how they would have run in the host. One of these days I will set up an XP-64 bit guest to check whether the applications that I use to transcode run flawlessly in XP-64 and perhaps install them one by one in the host.

All these experiments were so successful, that I opened my wallet to buy another monitor so that I could maximize the virtual computer window in the secondary monitor, and dedicated a (P)ATA-133 hard drive to the guests, to have "portable virtual machines" and to increase my total hard disk drive bandwidth. Now I get the feeling of having powerful computers side by side: One at 64 bits, the important, and the other(s) at 32 bits for quick and dirty stuff.

Currently, I fire up a guest with Knoppix every time I need Linux, and I am preparing a Linux-from-scratch to make it exactly the way I would like it, but this project will take a while at an average of 5 minutes of work per day ;-)

Since I am already tuned into the virtualization wave, I am enthusiastic about the virtualization features that AM2 brings and the further developments of Pacifica/Presidio, which are already vastly superior to Intel's Vanderpool because of the Integrated Memory Controller which allows to virtualize memory and I/O (my article on the subject). Once Woodcrest shows up for real and induces a slide in the price in AMD processors, I will buy a dual socket dual core Opteron compy specifically to run virtualization on them and to centralize all of my hardware.

x86 and AMD64 registers: According to their names and binary code ordering, they are: Accumulator (AX), Counter (CX), Data (DX), Base (BX), Stack Pointer (SP), Base Pointer (BP), Source Index (SI) and Destination Index (DI). Initally these names were significant because every one of these registers had unique roles, but with the cleaning of the Instruction Set in the transition to 32 bits they became almost uniform in properties, although the ESP and EBP (the distinction to refer to the 16 bit part and 32 bit part is to put the "E" prefi x for 32 bits) naturally continue to have very defined and not flexible roles.

Shorts & Bears, isn't AMD warning you?

Take a look at http://www.amd.com/us-en/Corporate/VirtualPressRoom/0,,51_104_543~110430,00.html: We know that revenues are down 9% sequentially. You are happy so far, right? Your dream come true: AMD warning again after one year of beating and pounding the Wall Street estimations. But keep reading:

Record AMD Opteron™ processor sales were driven by continued strong demand for single-, dual- and multi-socket configurations for servers and workstations. Sales of entry-level and mainstream mobile and desktop processors were down.

That is the company speaking in official capacity. Let's go item per item:

• Record Opteron sales: The highest profit product line from AMD is having record sales...
• Sales of medium or high end mobile or desktop processsors?: NO MENTION

So AMD is informing us that the whole earnings cake is smaller, but made with a new recipe that has a much better filling than what we are used to.

Now ask yourselves, how many Semprons sales are needed to make the same profit as an Opteron 186? Could it be that the total revenues are down 9% but the total profits up? Did AMD crossed the absurly high (for its standards, anyway) level of 60% Gross Profit Margin? And think about it again: Only 9% decline in revenues with Intel doing a nasty all-out dumping campaign including 50% in Pentium Ds, their fairly high end products? The time is ticking, not to face Conroe, but to face AMD at 65nm... Did you receive your Woodcrest already? When do you expect it? Hello? it is the Server space we are talking about...

On Bounded Rationality and the Nature of Reality:

     In Chicagrafo's Blog, there is a statement of purpose: «My bit of help with the irrationality».

     ¿Can Chicagrafo really help?

     Well, ¡the answer is no! ... And neither can I.

     You see, this gentleman called Herbert Simon put forward a model of human behavior called "Bounded Rationality". In very crude terms it means that humans are rational only in a limited subset of their interactions with their environments, usually the one which is closely aligned with their experience, training, and formation, and as they depart from that comfort zone, they behave more emotionally / irrationally.

     Of course, some of you may say that, since no two humans share exactly the same background, if we assemble a collection of humans whose backgrounds cover most of the relevant field, we may get a rational explanation of the whole field. But this method has two flaws:

     * ¿Are you sure that these humans will be able to communicate in a rational fashion, when they have such different backgrounds? Maybe, since their backgrounds are different (as per the assumptions) there will be miscommunication and frustration thwarting the effort (try to put a psychologist to talk with an engineer, throw in two marketing majors and a lawyer to boot, and see what happens). This is one of the banes of Inter-Disciplinary teams.

     * The second problem is with reality itself. You see, I think that reality is a REALLY BIG picture, but not a painting, which is continuous in nature, nor a gigzaw puzzle, which is not continuous, but at least the parts fit each other perfectly, but a huge mosaic, like the ones you find in some churches. Some people are very close to it (we call those specialists) and can only see some individual bits and pieces; some are very far away from it (we call these generalists) and can see the big picture but have no clue on how the pieces interact, but at least the can shout to the specialists what to do (the question about if that is effective or not, is a different story); some people are very far away from it, but with a telescope that they can not rotate (McKinsey & Company call them "T-Man"), therefore, thay can see the big picture, but are experts in one (or a few) area(s); and finaly some of them are blessed by being far away, having a telescope, and being able to rotate it 360° (those may be called geniuses). Therefore, we are trying to interpret a thing were the pieces do not fit together nicely, and sometimes, our point of view does not help...

     ¿Is Chicagrafo a genius? No. He is a very intelligent man (whom I respect, but sometimes do not agree with), but no genius. I will let himself to choose his category.

     ¿Am I a genius? No, I am not ... I am a guy far away from the mosaic, with a telescope that almost does not move, and I am refocusing and pushing the sucker (for instance reading a lot, doing marketing courses while working as a SysAdmin in a telecomms company, doing an MBA) to amplify the telescope's range of movement, maybe 1° today, maybe 3° tomorrow, and I will keep refocusing and pushing the sucker until I die or get Alzheimer's......

     The point is that, at the end of the day, we will not be able to help with the irrationality ... But, if you keep an open mind and "Listen Without Prejudice" you may get some of your bases covered, and some interesting info out of the reading.

¡Salud!

Howling2929 

Introduction: On the nature of this Blog:

     I have to confess I have no idea what this blog is about, and Reading Chicagrafo's profile does not help much.

     ¿Is it about Technology at large?
     Then ¿why all I hear about here is About Intel and AMD?

     ¿Is it About financial Markets?
     Then ¿Why chicagrafo refuses to read the works of Aswath Damodaran?

     ¿About the financial Markets of High tech companies?
     This may be the case, but when I try to talk to Chicagrafo about the financials, he says he is concentrated on the technology, and when I tray to talk to him about the technology, he says to me that he is busy with the financials.

     ¿Is it about the X86 Microprocessor Market?
     Then: ¿Why I do not hear about the C7 Chips from VIA? (You know, those that have encryption instructions built in the instruction set).

[Ok, we had our laughs and internal jokes, but see the grain of truth in this]

     ¿Is it an AMD Vs. Intel Blog?
     ¡I think this is it!

     And what is worse, oh dear reader: I have no Idea who you are....

     Maybe you are a bunch of PostDocs (that is what comes after a real Ph.D., not a Ph.D. like Sharikou's) reading it just for the laughs, or maybe, you are a bunch of high school kids with too much time on their hands (I shall know, I used to be one, but I only had books, no Internet, no cable).

     Therefore, as we are forced to do most of the time in the MBA, ¡I will assume!

     I will assume that this forum is abut AMD Vs. Intel, both in Finances and in Technology, and that all other things are circumstantial to this main end. And I will assume that the readership is mixed.

     If I operate under that assumption, the best I can do is to build my theoretical construct step by step, laying the foundations, until the construct is completed. I will leave to Chicagrafo the grunt work of keeping you on top off current events, and dedicate myself to the theoretical underpinnings of my construct...

     ¡Bear with me, as it may prove to be an interesting journey!

¡Salud!

Howling2929 

Hello world

Hello audience.

This blog has a new collaborator.

I have a friend who has been contrarian to most of the opinions posted in this blog. He felt enthusiastic about the possibility of posting the criticism himself, so I agreed to grant him the permissions.

Welcome, Howling.

Fourth Factory

It's simple:

1. Multicores that need bigger dice, and drastically reduce yields.
2. Proximity to the silicon processing partner, IBM
3. The Albany Technology Park
4. Highest qualified people available a plenty
5. Greatest Communications/transportation Hub of the entire world
6. Increasing Market Share
7. Technology Leadership
8. And a bit of help from the State of New York.

Since the stock price movement of AMD is totally absurd, this will induce a slide in the price share and I didn't cover my written calls, but I am very well aware that my shares are worth much more!

Responses to Criticism

I have received intelligent criticism, which I feel honored and proud to have received. It would be easier to reply and follow threads if whoever posts comments "signs" them with a nickname, such as "Last Mohican" or whatever.

My responses:

Received from "Third Factory..."

Errr... 3rd factory? (I though it was replacing an existing factory - that would make 2)

Your analysis on capacity is way off, several obvious issues:

1) you assume F36 will be double the output of F30 - that would be true IF they both had same wafer starts/month (which they don't) AND 300mm has same yield as 200mm - I haven't seen any data that 300mm yield = 200mm yield for AMD.

Who has seen the data you are demanding?. There is no reason to think that yields have to be lower at 300mm, they could, but I would like to know possible reasons. Same thing about the number of wafer starts. Under the reasonable assumption of other things equal, the fact is that 300mm wafers have 225% the surface of 200mm wafers, thus, Fab36 should be, eventually, in conditions to supply, all on its own, 40% of the market, because Fab30 supplies 22%.

2) I believe <10% of AMD's current production is dual core, as they migrate more to dual core they will get fewer die/wafer (unless of course they continue to plan to only make 10% dual core...) And any quad core production will cut into capacity even further. That cuts the legs out of your 300mm will provide 2X the dies of 200mm argument (it will be ~same if you account for migration from single to dual core) 3) The conversion of F30-F38 will actually limit their production during that conversion to <2 fabs

AMD prides about lots of accomplishments such as running test wafers next to production ones in the same lines. I am willing to be optimistic and assume that the disrruption of the retrofitting Fab30 will be light.

[...]Another thing to keep in mind is 300mm automation and material handling systems are completely different so it is not just a matter of swapping 200mm tools for 300mm tools. FYI - 200mm-300mm conversion is not "radical upgrading"; numerous IC manufacturers have done this.

So, you are saying that the equipment is totally different and the transition is not radical (!?)
Another anonymous post:

Just a (few) problems with your knowledge of process technology:

"The transition to 65nm was neutered by AMD's 90nm sSOI; pushing them further down the path toward 42nm."

It's 45nm, I thought it may have been a typo until you repeated it again.

Yes, I made that mistake. Do you find it particularly relevant?

Your other link says: "The wires are thinner, the resistance is higher, the lost power greater."

The "other link" should refer to "Intel's 65nm is just marketing"

Ummm... the major power deltas between 90nm and 65 nm is off state leakage casued by leakage between the gate and channel and from source to drain (neither of these have anything to do with "tiny wires". Also SOI doesn't impact either of these - the main

I don't say they do. I was just illustrating an idea, that the transition to ever smaller transistors incurrs in trade-offs in which things that used to be negligible are not anymore.

benfit of SOI is latch up protection which can be minimized much more cheaply with better implant processed. (SOI adds at least 10-15% to production cost of a wafer)

That is your opinion, and most definitively not authoritative. Googling SOI I found studies that prove SOI to be more than cost effective.

"APM, a robotic tech. for chips production"

Do you actually think APM has or uses robots? It is just a SW control system - all other

Sure, I think it is Rosie, of the "Jetsons", the female maid robot (Robotina de los Supersónicos para los panas hispanohablantes) who made AMD to win the best factory award by Sematech for years and years (as mentioned by Daryl Ostrander here, slide #17 of 28). But of course, you are entitled to think that AMD is like Intel in which the manufacturing process is controlled not by robotic technology but "Copy Exactly!"ing the factories. Are you going to say that is as flexible as AMD's? Anyway, I am not scared to acknowledge that I misused "robotic" to refer to Automated Production Manufacturing, but it is implied that the machines intervening, since they are computer controlled, qualify as robots.

the major manufacturers use their own systems (TSMC, Intel, Samsung, etc) - it is impossibel to compare the systems as none of the companies disclose the specifics of how and what they do.

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

As you get roughly double the transistors your yield rate would have to go by a little less than a factor of 2 for it to be cost neutral (the reason it is less than 2 is that there are additional manufacturing steps and 1 metal layer which adds cost to the 65nm process. Your analysis is not congruent with your statment as you are comparing an older technology on single core (or 1/2 cache) to the newer technology with dual core or (double the cache). Your statement above says same number of TRANSISTORS (the

Perhaps I am wrong, but in my ignorance, I have seen a lot of people referring only to the benefit of the smaller size, that is, half the "variable cost" of production, ignoring the outstanding capital investments of retooling for more detailed silicon processing, or the "fixed costs". And by the way, the yields *do* take a hit

65nm example you give has many more transistors, thus you are comparing apples to oranges)

I'm not sure what you're background is in, but it is clearly not semiconductor process tecnhnology or manufacturing.

You are right about that last one; although sincerely you make me wonder whether you are even more ignorant ;-)

From "Bears run to cover":

Please explain to me how SOI minimizes the amount of leakage between the gate in a transistor and the channel (which are spearated by a 12A gate oxide)? Hint - it doesn't.

Please explain to me how SOI prevents lekaage between the source and drain (which is separated by the Si channel)?. Hint - It doesn't

SOI does not have significant impact on leakage - the reason between Intel P4 and AMD K8 power is chip design and clock frequency! Hence, Conroe which has much lower clock frequency than the P4's has a much lower TDP on the same manufacturing technology.

The only leakage path SOI addresses is junction leakage which is a distant third to gate leakage and source-drain leakages.

You may call me superficial, but wikipedia disagrees with you:

Silicon on insulator (SOI) is a layered structure consisting of a thin layer of silicon, from 50 nm to 100 µm, which is created on an insulating substrate, which is usually sapphire or silicon with an insulating layer of silicon dioxide(SiO₂) 80 nm to 3 µm thick on its surface. This process reduces the amount of electrical charge that the transistor has to move during a switching operation, increasing speed (up to 15%) and reducing switching energy (up to 30%) over CMOS-based chips. SOI chips cost more to produce and are generally used for high-end applications. [my emphasis]

Switching power loses are the most significant at these speeds and feature sizes.

Another anonymous, from the same article:

Fanless: Can use just a passive disipator: No noise, no mechanical parts that wear down and deteriorate

Some questions:
1) what is the major source of noise in a computer?
2) what is the failure rate for a CPUY fan; based on your comment above this is an important factor?

Let's see, in *my* computer, it is not the harddrives (I buy the quiet ones), it is not the Floppy (which I don't even have ;-) it is not the DVD drive (which I seldomly use), it is definitively not the network connection. It is the power supply fan!. Now, if I had a "Rackable" computer, one of those which has the power transformer outside the computer, or if my computer were powered by the twisted pair cable as some routers are, guess what: It would be **me** the noisiest component of the computer! wouldn't that be cool!?

Please, leave some sort of a nickname, and sincerely, thank you for your criticism, it has been constructive for me to reply.

Is effective the price war?

[Updated Jun 13]

An effective price war would be one in which lower prices make the competition to lose market share, or to lower its prices.

It is possible to assess whether a price war is being successful or not from the perspective of a normal citizen, we can just look at any store how the products are moving to have an idea. This method is not scientific, but other things equal, I don't see major reasons to think that the city where I live, Chicago, is not representative of at least the rest of the United States.

I have been a client of TigerDirect because I am very price-conscious, and I guess that TigerDirect is not famous for handsome quality but for cheap prices; thus, among the clients of TigerDirect Intel's discounts should be more effective than among BestBuy's or other suppliers. But this link tells us a different story: AMD processors have certainly taken a popularity hit because they have been pushed from the top sellers list #1 to #N position to the fourth, but the prices are about the same prices they had before while at the same time retaining a lot of popularity. What is very interesting about this list is that you can see for the first time in history that AMD prices are not half of an equivalent of Intel, but double, for an advancement of the brand recognition of 4x.

Of course that it is arguable that a Pentium 4 E. E. (Extreme Embarrassment edition) 3.2 GHz/800 MHz at 1050 would be the only counter example of a product not even up to an AMD FX-55 and yet much more expensive, but you can check the rest of the list: The Pentium Processors are finally being given their deserved price, that of crap.

Given that the prices of AMD products remain at the same levels, it only remains to be seen if the market share is holding its ground.

A member of the audience game us an interesting link to a "Dailytech" article in which it is detailed leaked information about steep price cuts plans for AMD processors for July 24, around the launching of Conroe. This is yet another sign that finally AMD is "feeling the pressure", bad omen for this quarter's results.

So far, my take on the July earnings report is as follows: AMD beats the expectations by ample margin (yet again), around $0.34 EPS, but Guidance will be un-optimistic, and perhaps we will have to bear the acknowledgement of one or two market share percentage points lost during the quarter, effectively ending all the momentum growth in the consumer segments and taking the share price to the $25 levels. Nevertheless, it remains to be seen the resilience of the server market, remember that AMD has technology to keep growing in those segments. Thus, $25 would be an absolute bottom for me because the server part of the business has to increase what I think is the share price accounting only for consumer segments ($25).

Regain The Lead?

"[At AMD, t]hey've been very quiet recently on what they are going to do to regain the lead in the server space in the back half of the year" [my emphasis].

That was Doug Freedman quoted in reuters.

Mr. (?) Freedman, you are an imbecile because AMD currently has the lead ALL ACROSS THE BOARD, having the undisputed best processors from the top multiprocessor x86 server segment to dual core 64 bit processors for the mobile market, including the value desktop, and the gaming high end market. If Intel is able to regain the lead at some of those segments, that is something THAT HASN'T HAPPENED, thus AMD doesn't have to regain anything, quite the contrary, at most you may wonder what are they doing to KEEP THE LEAD.

AMD Digital Media Xpress

This is a technology that I don't know of, but it caught my attention the following, from laptoplogic:

<<
The 128-bit Digital Media Xpress instructions are able to compute up to four floating-point operations in a single instruction. These instructions can simultaneously operate in parallel on multiple data sources.

The number of XMM registers are doubled from 8 to 16. This inceases performance by reducing substantial memory access overhead.
>>

As I said many times before, the main advantage of AMD64 is not the huge addressing space, but going from the puny 8 General Purpose Registers (AX, CX, DX, BX, SI, DI, BP and SP) of which only six are truly GPRs, to 16 GPRs.

It has been confirmed by independents that it is included in Turions X2, although AMD has been quiet about it. Perhaps AMD is still deciding whether to make it official as it is right now, or to finish the specification with minor modifications.

Core2 Beginning to Crumble

The Inquirer gives us an interesting article that discredits that the upcoming products are as good as claimed. If they were that good, and easy to manufacture, Intel would be allowing reviewers to freely play with them, but it is happening the opposite.

Intel gathered reviewers, gave them Conroes and Benchmark Software to do the reviews which Intel expects to be published by June 4th. Also, the reviewers were promised to be sent units "at a later date", but haven't received them.

Intel is a marketing-governed company. If Intel had truly good products, in mass production as would be expected for something that will be launched in less than two months, it would leave the reviewers to play with those supposedly excellent products any way they wanted, to create a wave of word-of-mouth enthusiasm.

Nevertheless, the Conroe sightings (and Woodcrests, Meroms too for that matter) have been suspiciously scarse.

Let us review Intel's attitude towards Core2 processors:

• Many months ahead of launching, Intel disclosed that they have managed to develop killer new products,
• That those products were coming imminently to the market
• And Intel didn't care about totally eroding the credibility of all Pentium 4s embarrassing them by the comparison to the next products.

Thus, they followed an attitude of "tabula rasa" and "all or nothing" with Core2. How are we going to believe that they want to be secretive now? We must conclude that Intel is having serious problems with the new processors.

We already have pointed out predictions:

• That they are very complex, thus it is entirely reasonable to expect all sorts of development delays, production delays, and overall low quality like in Blue Screens of Death.
• Being so big (larger than the 90nm they come to replace), they must be very hard to manufacture

Naturally, the recent developments are in agreement with these predictions. That's why I will go beyond to speculate about exactly what's the matter:

I don't think the most important problem to be yields (the statistical distribution of operative processors versus clock frequency), because although they are gigantic in area, since Intel managed to ramp Yonah (Core Duo) quickly enough, it demonstrated it has enough control of the 65nm process, therefore Core2 would be at most harder to manufacture, but definitively mass produceable.

Then it should be processor malfunction. I think that Intel has not been able to iron out all the bugs in Core2. I guess that the frequent operational situations are well covered, but not the rare cases. To avoid Blue Screens of Death (BSODs), they must make sure that the software will not trip the bugs, and the only way to accomplish that in tests and benchmarks is to make sure they have been patched by Intel. It is becoming more probable almost by the day that Core2 will require Microsoft and other Software vendors to come up with patches to "support" Core2... Don't expect anybody to say that the Core2 need the patches because they are buggy, but expect any Marketing bullshit such as "since Core2 are so advanced they require updates to the Operating Systems and Applications to make use of all of its features".

In Bob Colwell's Stanford lecture, he complained that in the very old Pentium Pro the problem of race conditions already showed up with all of its nastyness. That is, with the re-ordering in Pentium Pro, sometimes the processor followed a re-ordering strategy that far from incrementing the efficiency made the processor to stall. I have worked as Software Architect in low level of abstraction software, therefore I have firsthand knowledge about how difficult the race conditions are to predict, detect, and correct. Being Core2 so much more aggressive in Reordering and other optimization strategies, it is truly a certainty that they are susceptible to lots of bugs and race conditions, that must be one among the many problems Intel is desperately trying to solve right now.

The insistence of management about this unrealistic schedule may be an indication of Intel's internal disconnection; although these design and development problems are crucial, they are also not at all easy to understand for those who don't have a solid engineering background. The Marketroids at Intel that compose top management must be just demanding from engineering something as impossible as demanding from nine women to deliver a baby in one month; the reality of the bees nest they got into will explode in their faces very soon.

Imagine then some problems in manufacturing (yields of less than 40% operating processors and most of those can't run at the promised frequencies) with a buggy operation, and all you can do to sustain the illusion of superiority is to cherry pick wafers, processors, tests, benchmarks, reviewers and do special manufacturing runs for demos.

Isn't it in Sun Tzu's "The Art Of War" that if you are weak you must pretend strength, and if you are strong you can pretend weakness?

If you care to read more about this subject, in "Steam..." I said, doing an analogy between Steam Engines/Diesel-Electric and Intel/AMD processors:

The design ideas and techniques of Steam Engines were exhausted, played out, but Diesel's had the whole world ahead.

Intel's new lineup of products are steam engines. There aren't any new ideas to further the basic Pentium Pro architecture; I, for one, am skeptical from the professional point of view (summary here), about some of the design compromises Intel chose; and in particular, there are some assertions that my considerable understanding of this subject are not capable of explaining, such as the claims of higher power efficiency, or how is Intel going to successfully deal with the problem of trading off combinatorial complexities for marginal benefits so pervasive in all engineering disciplines; especially with Intel's track record.

AMD's balance sheet

To help those pondering the third factory news (or conversion of Fab30 to Fab38), I have prepared the following table with the help of the data available in Google finance about AMD:

In Millions of USD (except for per share items)	As of 2006-03-26	As of 2005-12-25	As of 2005-09-25	As of 2005-06-26	As of 2005-03-27
Total Equity	4709.92	3351.84	2974.24	2846.61	2934.7
Total Common Shares Outstanding	483.39	435.53	401.96	396.33	394.7
Equity per share	9.74	7.7	7.4	7.18	7.44
Approximate stock price at quarter ending	36	31	23	17	16
Approx. Share Price/Book Value ratio	3.69	4.03	3.11	2.37	2.15

As we may see, when AMD was at $36 it wasn't even trading at 4x book value. Today, at $31+, we are, relating to the latest report, at 3.2x book value. This severely discredits the accusations of stock dillution formulated against AMD. In any case, it is important to see how much the book value of the company has risen, being so big, it is very notorious and phenomenal.

Assuming that the 2.5 G$ investment is raised half and half between stock issuance and debt, the stock holders equity will grow by 1.2 G$. At a price of $30 per share, we are speaking about 40 M shares, or 8.3% of the float. Assuming 3x share price to book value, that means that the infusion of 1.2 G$ translates to (100% + 3*8.3%)/(100% + 8.3%) * $31 = 115% * $31 = $35.75. Take into account that the 15% share price will be absorbed along the following 18 months.

Of course that there are more details involved such as the expenses of decomissioning Fab30 to make it Fab38, but I think the general approach works, do your own calculations if you want and let us know of your results.

[ Update May 30 ]
Look also at the dramatic decline of Inventories in the last two quarters. This speaks of a company that is selling off all of its production (Q1 06, Q4 05, Q3 05, Q2 05, Q1 05)

Total Inventory

337.22

388.63

931.76

911.16

846.15

As a comparison, look at the financials for Dell, and you will see the opposite: 20+% reduction in Equity, a Book Value of about $1.5, meaning a multiplier of more than 10x!!

Third Factory, 300mm

"As global demand continues to rise for AMD products, we are scaling our manufacturing capacity intelligently to meet our customers' growing needs"
...
"We expect that AMD's momentum and demand for our products will continue to increase, fueled by our technology leadership, our commitment to customer-centric innovation and the continuing global antitrust scrutiny that will ensure truly competitive markets."
...
"Through the combination of leading-edge equipment, Automated Precision Manufacturing (APM) and the great people of Dresden, the plant will [reach] full capacity by the end of 2008"

Dr. Héctor de Jesús Ruiz, Chairman of the Board and Chief Executive Officer.

Is it justified a third factory for AMD?
How would the stock market appreciate this 2.6 G$ investment?
Are there other implications about this move?
These questions are what is going to be treated in this article.

1) AMD currently has a 200mm factory running at over 100% designed capacity (it is "borrowing" area from Fab36 among other tricks to accomplish this, according to Charlie Demerjian), by the time Fab36 will be reaching full capacity, substantial investments would be needed in Fab30, including upgrading to 300mm rather than 200mm equipment. It has been demonstrated that there is sinergy between AMD Fabs, look at what Charlie says about Fab 30 doing 150% what it was designed for thanks to spare space in Fab36; that helps to justify to put all the eggs in one basket. Besides, the German government loves this kind of economical activity, and everything seems to indicate that it will continue to underwrite, and even finance, the construction of facilities.

When Dr. Ruiz says "the Great People of Dresden", it is not just a courteous remark, it is true. The great AMD technologies benefit greatly from having top-notch technicians controlling its greatest manufacturing process APM. To be inserted in the heart of Europe is another advantage.

2) This leads me to Wall Street's appreciation: The Street loves when a company puts money directly into the "Capital" section of the Assets ledger, these investments increase the book value of AMD. Better than that, the financial help the German government would provide it going to be seen as a free-bonus. This is no idle or spare production capacity neither, the Street acknowledges that AMD has very good semiconductor manufacturing technology, thus, it may not believe AMD to be able to sell a 100% processor full production, but it doesn't require much imagination to understand that the capacity will be used anyway.

3) The announcement itself is a confirmation that AMD is jacking up its expectations. Fab30 all alone could supply 22% of the market, but let's say that it was using tricks. We can be sure that Fab30 was supplying 18% of the market. Fab36, with 300mm wafers can produce more than double 200mm Fab30, thus, Fab30 + Fab36 are enough for 54% of the market, consequently, the radical upgrading of Fab30 (Fab 38) means that AMD is aiming for more than half of the market (!), significantly above the 30% that it has officially declared to aspire to.

Does AMD has enough steam to aspire to more than half of the market?

A quick overview of Intel's general situation provides a grim outlook for that company:

1. The transition to 65nm was neutered by AMD's 90nm sSOI; pushing them further down the path toward 42nm. But without SOI, or really deciding whether it is time for immersion technologies or not, the efforts put into 42nm so prematurely may prove rushed and wasted
2. A significant portion of the benefits to go to smaller scales is lost because of architectural defficiencies. In particular, this thing of the gigantic caches that Intel processors have to try to compensate for not having DCA/ccHTT/HTT can not continue, because the physics of the shrinks determine decreasing power/performance benefits. In particular, Core2 65nm processors are actually larger than the 90nm products they come to replace, thus no economies in production. And just like it was explained before, smaller scales have greater power leakage overall.
3. Core2 are dauntingly complex µ-procs. This means that there is no architectural improvement coming; Intel decided to rely solely in shrinks to improve speeds and performance. This is not only my opinion, but also that of Ars Technica's eminence Jon Hannibal Stokes: "Core's performance will scale primarily with increases in the number of cores per die (i.e. feature size shrinks) and with the addition of more cache, and secondarily with modest, periodic clockspeed increases". Athough he doesn't says it explicitly, after reading his article one reaches the conclusion that Intel lwon't be able to really do any significant modification to this µ-arch., it would be easier to start over with Banias again.
4. Also take into account that the complexity may induce nasty problems.
5. Intel also has a dilemma about Itanium. Should it kill it? Should it keep funding that losses generator?
6. What about Intel factories? Some say that Intel has worthless factories that it hasn't written off trying to defer the decomissioning expense for better times. In any case, "CopyExactly!" seems so primitive when compared to APM...
   
7. Still has to develop the equivalents of SOI, DCA, HTT, ccHTT, APM, etc. to really catch up to AMD instead of "fleeing ahead" to smaller scales.

Having demonstrated that Intel will cede more market share, we can also remember that more and more consumer electronics is being transformed into some sort of personal computer technology. For instance, I watch VHS, DVDs, cable and public TV on my laptop, using my custom VLC Server/Client streaming setup over my wireless network. I also believe that the video game consoles stimulate rather than discourage the market for computers. Because who is going to chat with fellow players through the console rather than a computer?, besides, the entry-level barriers are lower for Computer games than consoles, thus the highest creativity will be expressed in computer games.

AMD's "Ecosystem" approach also has a lot of potential: Coprocessors, and partners with vested interests in pushing AMD forward. Remember that AMD leaves a lot more of opportunities to add value to partners than Intel

Confirming that AMD is closer to the bleeding edge of technology than Intel, there is the potential of things such as Z-Ram (Zero Capacitor RAM with 5 times higher densities than regular six-transistor flip-flops). I don't know about the introduction rates for semiconductor technology, but it seems that very soon, like in the scale of one or two years, AMD will be able to include Z-Ram either as L2 or L3 cache memory. All that separates AMD from glory (and Intel from demise) is 8 Mb of cache internal to the µ-proc. Z-Ram may be precisely that. Remember that the gigantic L2 caches is the snorkel that prevents the already shit-submerged Intel from drawning, Z-Ram may nullify that...

AMD does have the package to get to over 50% market share:

1. Good, proven management
2. Good, proven, exciting technology
3. The brand name has appreciated significantly, creating a loyal customer base
4. Technological leadership assures media exposure, free good publicity, public awareness, toghether with the enthusiasm of partners in the ecosystem
5. The ecosystem itself
6. Production Capacity!

The stock market is very myopic, that's why it thinks that a duopoly is not as profitable as Intel's monopoly; but it is not true. Once the technology market gets used to the competitive struggle among AMD and Intel, I predict that an era of technology flourishment will began. It happens every time a key technology gets developed by leaps and bounds because of competitive struggles. That's where the profits will come from to compensate the smaller margins.

My theory is that AMD is very cheap at a market capitalization of less than 23% the combined market caps of Intel and AMD, because that is the true value of AMD given its market share; which today is 121 G$ * 23% ~ 27.8 G$, which today means $57.50 per share.

In the future, I will cease to invest in AMD when it reaches an inflation adjusted value of todays 61 G$, or $120 per share. This is a four-bagger.

I still hate Lucy

It is not clear from my latest post that I still despise Lucy.

Lucy is still headed for bankruptcy, that is a company that doesn't care about the customer. That doesn't fly once the customers find out that they are unappreciated.

And I am not more optimistic about AMD because Lucy, the bottom of the barrel, decided to smudge AMD's shinning reputation by finally giving in to the pressure and associating with it.

As a matter of fact, I consider far more important than the Dell news, today's opinion of the Illustrious Rahul Sood from Voodoo PC who said "In the meantime I can't talk too much about Conroe other than to say I am very impressed with the performance - it's $%*#ing fast man, seriously" because it made me change my opinion on Core2: First, since I still don't understand how Intel could reduce so dramatically power consumption on Woodcrest (see my previous posts where I detail why the features didn't seem to me sufficient to really explain Core2 claimed power efficiency, summary below), "The Inquirer" news about the subject were received with skepticism by me; but now R. Sood adding to the Core2 chorus really weakened my convictions.

I fear that tomorrow we will lose much of that 15% we gained today, just as what happened when AMD reported fantastic earnings: Everybody was waiting for a good earnings report as an exit point for this roller coaster, perhaps now a lot of people will use these news as an exit point too. I am not sure, though, these news are very disrruptive, the boost of market confidence is very significant. I think that the Turion X2 and the power efficient processors are compensation for my improved understanding of the real threat that Core2 is, thus Dell may be seen as a net positive.

It is important that you know that I didn't think this deal possible, because I think that Dell and Intel have a obscure secret about their relationship that prevents the former to be free and deal with AMD as anyone else; thus I was very wrong, and I sort of lost the bet, so I deserve a "bunnysuit" for this post.

Again, I ask you, members of my honorable audience to not forget to leave a name or callsign in the comments, a simple "I am "whoever", blablabla" would do perfectly.


Summary of why Core2 power inefficient: They are larger, even at 65nm, than Pentium Ms, they have more than twice the transistors, which switch faster, and to top all that off, they have much more execution units that can only be used marginally, with less power efficiency. Intel claims that they did micromanagement of power in the new arquitecture, but after looking at the material readily available, I came to the conclusion that those features can not be enough; so I am really curious to know why or how Core2s could be as power efficient as touted.

Congratulations dear Dellusionals

Okay, Dell is going AMD in 4-way servers.

The world is really upside down. Do you remember I was speaking of going crazy?

Well, this is what I remember from my infancy:

That is, Lucy never allowed Charlie Brown to kick the football, and Charlie Brown never learns.

The same thing happened with Dell and the AMD investors: Always saying that AMD was a "distinct possibility" and never actually doing it.

But we will have to rewrite the comic books, this time, Charlie Brown hit the football and scored a 15% field goal. I insist, I am becoming crazy. Unbelievable things are happening too often, I must be seeing some sort of DeLLusions.

I warn you again, I am becoming crazy, you should take what follows seriously, but:

• Doesn't it arise suspicions that Woodcrest is coming in June and yet Lucy finally allows Charlie Brown to kick the football? Woodcrest can't possibly be so cool...
• This is not an empty announcement, Dell must have felt excruciating pains to finally gave in to the pressure, that is, the market is there for quad-dual core Opterons and quad-true quad core servers.
• It is the high end of the market! Dell invited AMD to do business in the elite market, the one with the highest profits, which requires the highest credibility, in which businesses last the longer.
• It has been demonstrated, just as I been explaining, that the real differentiator among HP and Dell is AMD.

With the field goal scored, the AMD dellusional investor has a lot of credibility points above the rest of the market, this 15% jump overnight will kill a lot of AMD shorts after the squeeze, and won't allow the "why should I hold my shares if it is going down and I will be able to purchase them back anytime?" because another mega jump may happen: Another announcement of a blockbuster product.

Good that I covered my written calls, this is all gains!

Dear Shorts and Bears

I sincerely hope you are also having a nice hard laught at my latest public ridicule. I advised you to run to cover, because there were coming three major good news for AMD: The Core2-killer power efficient processors, the launching of Dual Core Turions and Hewlett & Packard results above expectations. Nevertheless, the stock you took bearish positions in is down. Congratulations on the money gained.

Well, I must be a fool, because I haven't understood what is going on, I still want to put more money on bullish positions in AMD. My (surely) damaged brain tells me that:

• AMD has a number of partners to develop platforms, that means competition which will, compared to Intel's centrino duo, trio, quartet,...:
  • Push down costs and prices
    
  • Improve quality, performance and appeal. Remember that we are talking about the combined competitive creativity of nVidia, ATI, Broadcom, Hewlett & Packard, Sun Microsystems, IBM, even Gateway, Acer and the whole channel too
  • Offer variety to suit every customer need
  • All those companies acquiring products from AMD even if they are inferior to Intel's just because they can add much more value to them
    
  These all are benefits of having a real ecosystem: AMD allows partners a lot more aggregated value potential.
  
• Silicon On Insulator will give them always the edge on power efficiency, and possibilities such as Z-Ram memory gigantic caches
• The integrated memory controller (Direct Connect Architecture) coupled with I/O connectivity through Hypertransport, and the glueless, single-space memory model that Cache Coherent Hypertransport offers for n-way systems and coprocessors guarantees not only
  • Superior 2, 4, N-way performance
  • Coprocessors
  • but also pervasive advantages in new crucial features such as Virtualization (as I explained here)
  • It takes ages to design, debug, develop, mass produce, thus it is as long term an advantage as it gets
    
• Simple, straightforward and sound designs such as K8 are always better than over complicated and pompuous designs such as Core2 for obvious and non-obvious reasons.
• Repeated abuses by Intel are reason enough to opt for AMD.
  

Please, laugh, I am telling you that I am dumbfounded by my losses in the stock market, I just put my money in my foolish opinion that it should account for something that AMD has right now better products than Intel, and even if Intel's promised pies in the sky are actually better than AMD's, anyway AMD:

• Has superior products in mass production, mass marketed
• APM allows AMD to react swiftly to changing market preferences or strategies, such as concentrating today everything on dual core mobiles, and two months down the road in n-way servers
• All financial indicators in AMD have been steadily improving

You know, I am becoming crazy, because I see news like Intel crashing because they can't sell their products with AMD overcompeting them all across the board and instead of that being a reason for confidence about AMD in the stock market, it has been a reason for fears!, it also makes me crazy that the single most important differentiator among Hewlett & Packard and Dell is that the former is a slave of Intel processors, and yet Dell going down the toilet takes AMD with it... I wonder, "how come"? Dell is *not* a customer of AMD!! It is weird, but my faulty logic tells me that since Dell has less credibility in general, the fact that it is refusing AMD must have less importance than when it was a successful company...

Keep laughing, because to tell you the truth, Dr. Ruiz, the wetback CEO, and the Engineer President, Mr. Meyer, really inspire a lot of confidence in me, but Mr. Otellini and fellows really make me laugh, truly!

It has been so repetitive that I see financial institutions downgrading AMD such as the Deutsche Bank, Merryll Lynch, Bank of America, and at the same time increasing their long positions; and similarly, pumpy&dumpy with Intel that I don't know what's the meaning of a downgrade anymore. It is so utterly confusing to see the greatest news I have seen about AMD in a while, you know, the justification of the whole power efficiency campaing which made me do the effort to inform you, dear shorts and bears, with all of my sincerely, writing this article that you should cover; and then realize that while I was writing the article Bank of America was downgrading AMD as if instead of good news there were bad news. It makes me wonder, what are good news for AMD? If it sells a lot with the greatests margins, it takes a 6% hit. If it does great products, it goes down because it is in a collision course with Intel, if they increase production, that's bad because they have larger depreciation expenses, etc.

The weirdest thing of all is that I am consistently making predictions about the technology market and they fulfill, but my interpretation should be wrong because the stock market seems to understand them exactly the opposite.

The laughs don't end there. I am being contrarian to my instincts. In the first manifestation of schizophrenia in my life, being totally optimistic about AMD, I took moderately bearish positions such as writing in-the-money (covered) calls, and WON MONEY!

I expect the quality of my posts to get down, like I said, I am becoming crazy, not because I am losing money, but because I see the stock market world upside down. Since I am heading for a margin call, probably I won't be able to pay a Psyquiatrist who could help me be clear minded enough as to keep the quality up. Perhaps my friends and family should move to declare me legally incompetent.

My public ridicules are so pathetic that even I am having a blast!

Shorts and Bears: Run to cover!

The bearish position game on AMD is over.

AMD has unveiled a new line of power efficient processors, the official news here. For instance, a Desktop Athlon 64 X2 can be made with a power envelope of mere 14 Watts!! that's about 25% of the power consumption of the promised Intel Merom mobile chip.

Why is this important?:

• Fanless: Can use just a passive disipator: No noise, no mechanical parts that wear down and deteriorate
• No overheating: Longer lasting circuits, better overclocking possibilities
• Tighter packaging (same space, more processors), or alternatively: A smaller media center pc
  
• Better accessibility: It is easier to work in a computer that doesn't have a turbine of a fan cooler
• Longer lasting battery
• At 14 watts, a pedal or a hand crank power device makes sense (although it is true I am kidding ;-)
  
• Smaller electricity bill: Remember that heat in a computer requires air conditioning that is also expensive; it has been calculated (sorry about not having the link) that the electricity bill in supporting air conditioning is twice what the computer itself consumes.
• Once the upcoming revolution of solid state storage (using Flash memories instead of harddrives) takes place, the brand with the best power envelope would be the natural choice for the designers of an entirely new generation of computing devices whoose batteries will last a lot more, like what happened when the world switched to digital mobile telephones compared to analog.

Why is AMD able to pull this trick off?: Silicon On Insulator. AMD does strained germanium doping silicon on insulator chips. Intel only does Strained Silicon. Today, the transistors are so small that they can't prevent current leakage --a problem that gets exponentially worse with shrinking dimensions-- thus, although the shrinkage to 65nm still gives power benefits due to smaller transistors, there is trade-off that explains why Intel's products at 65nm have been so rather dissapointing. In any case, SOI means that the transistors are floating in an insulator that helps a lot with the leakage. Intel insists in claiming that SOI is just a fanciful and expensive way to do chips without concrete benefits. Remember that in my previous articles, I have serious doubts at the possibility of Intel promised power envelopes to be true...

Another thing: A lot of people and investors were worried about AMD doing this worldwide advertising campaign with Intel announcing a giant progress in power consumption in their chips, for a while some people became worried at Intel promised products being actually superior in power consumption to AMD's; but no way, this was the trick AMD had up its sleeves.

Thus, from the point of view of an investor, Silicon On Insulator is becoming a huge strategical (long term) AMD advantage that is being reaped in Power Consumption and perhaps soon enough in Z-Ram gigantic caches and the techniques that IBM claims give huge switching speed increase. Intel announced that they are already moving towards 45nm, without Silicon On Insulator, thus all these benefits of SOI may evidentiate Intel's move to 45nm as rushed and worthless, another huge effort lost, if they have to go back to square zero to rethink their production lines to include SOI. (Perhaps something like that would occur with immersion anyway)

And remember that to be fair, the Front Side Bus should be counted in a comparison to AMD processors, or at least the power consumption of the integrated memory controller should be discounted, so, AMD numbers are actually even better!!

--* FRIENDS, PLEASE, POST A COMMENT WITH A NAME, CALLSIGN OR ANYTHING BUT ANNONYMOUS *--

Head-on collision

The summary of my latest post is this:

The market for Microprocessors was going to be excellent for this year.

But some events happened.

AMD did such a terrific job, that naturally and unavoidably put itself in a collision course to Intel. Dell, thanks to the bit of extra pressure it meant having dead-non-competitive processors broke and initiated its collapse, and Microsoft failed miserably at giving a reason to speak of future.

Now that AMD is in a head-on collision course, can it survive?

Sure! The N-Way server market guarantees it thanks to DCA/HTT/ccHTT alone, plus all the traditional competitive advantages.

What would happen if AMD survives a head-on collision against Intel? That it will prove the viability of the Duopoly and will reach who knows what stock price.

In October 2005 something similar happened, good results, and a plunge (although much more moderate), but the priciple is the same: The objective bad news are already here, AMD is priced for its mediocrity and Conroe's (Core2) excellence. If neither is true, well, you know.

Keep writing the covered calls, but only out of the money.

Over Reaction

I thought at late november that the market for x86 microprocessors this year was going to be stellar. There are some phenomenons taking place that pretty much guaranteed it:

• The convergence between entertainment and computers
• The launching of Microsoft Vista
  
• The increasing market for home editing of digital video with its huge demands of raw performance
  
• The impressive strentgh of the digital audio market
• Growth of the digital photography market
  
• The development of all the normal computing needs
• The growth of China and India markets for technology
• The growth of mobile computing.
  

Some of these principles would operate on the consumer side, some others on the server side. For instance, the heating of the competition struggle between Google, Yahoo, and MSN search engines guarantees growth in the market for servers. Leading edge games keep requiring 1+ K$ microprocessors, etc.

Since AMD was in a much better position to benefit for that clearly defined bullish market for its products thanks to the abysmal all-around advantages they have over the competition, the easiest investment was AMD, which climbed like a rocket up to a multiyear record of $42. But then something happened, and came back crashing to levels it had *before* its two greatest quarters: 2005 Q4 and 2006 Q1.

I feel the need to explain what happened.

Right now, by coincidence, it is happening the collapse of not one, or two market Bellwethers with a lot of influence on the microprocessor market, but three! And what kind of Bellwethers: Intel, Dell, and Microsoft!

They are so important that I won't abuse my audience's intelligence summarizing them.

So, the market for microprocessors became shit for the year.

AMD is healthy, strong, growing; but right in the middle of the trio.

Intel is trying desperately to preserve the monopoly, betting all what is left of its credibility at the success of at best mediocre bloated products that try to accomplish by brute force what AMD's products do through sound design. Finally Windows collapsed under its own weight and Microsoft hasn't been able to build anything else on top of it after five years of trying (!). And Dell...

Let me tell you about Dell. Unexplicably some years ago they decided not to care about the customers, yanked the technical support to make an extra dime, which in reality made them slide a bit. To compensate, Dell decided to cheapen the products diminishing quality. Then the slide became worse, and then they decided that they were going to "compensate" by fooling the consumers with rebates and warranties impossible to execute, manipulating the accounting books at earnings, and not giving the customers what they want - AMD. Perhaps the uncompetitiveness of Intel processors was the last straw that broke the Dell's back, they are now in a terminal collapse. Please, members of the honorable audience, I need to understand why this all began, post a comment.

Going back to Microsoft, it finally hit the wall of complexity. I would say that Windows finally collapsed under its own weight, Windows is a staggering collection of patches. See the bottom of this post for a better description of Windows problems.

Anyway, these three former Wall Street darlings really lost status seriously. All three of them insist in the very ways that got them in the hole, with increasing degrees of desperation. Thus they are doing truly stupid things, and the net consequence is that the market for computers became shit.

Microsoft doesn't provide a needed 64bit operating system for the masses, thus what would be one of the greatest current advantages of AMD became irrelevant. Dell is dumping its products, thus damaging the market for all other players. And Intel is doing everything in its power to prevent AMD to become stronger.

I concurr with the opinion that Wall Street's Market Makers have a lot of clout in the financial media. This is important because due to tradition, history, and amounts, Intel, Microsoft and Dell are companies for which the Market Makers will go the extra mile to protect.

That's bad for AMD: The MM can't even allow the public to have the perception that there is a creditable supplier of 64 bits µ-procs, because that would mean that Microsoft has just been incompetent at Vista and at providing drivers for XP-64. So, on top of a bad market, this company will have to endure a lot of media flak.

Finally, the money at AMD is very weak. This is a company with an awful record as an investment, basically it has given zero returns. It doesn't have a really solid trajectory of earnings, in the past it has conquered the technological leadership only to crash harder than Intel with the 2000 bubble; all things that provide lots of fears and worries to the investors every time a credible threat shows up.

When there is just a bit of nervous selling, these fears scale into a multiple percentage points sell off. Since temporarily the stock becomes severely undervalued, the reality of the fundamentals make it rebound, to produce a roller coaster ride.

That's why the market overreacts in both directions.

I have the special benefit of really understanding the technology behind these products, thus I am in the position of independently coming up with an assessment of the chances for this company. And my verdict is bullish, very bullish, in fact.

I realized that I became an "early adopter", which means that I am in football terms in "off-side", ahead of where the market is. In any case, I feel comfortable buying deep on margin the shares. To benefit from my understanding of the turbulence that surrounds this company, I am writing monthly slightly out of the money covered calls. This is my second month employing the strategy with success.

In case you don't know much about options, a covered call write is when the holder of shares backs up with them the written call contracts. If the price goes down, then the fee obtained by selling the call contracts mitigates the losses on the shares, if the price goes up, but below the contracts' strike price, it is all gains for the writer. Thus, this strategy doesn't give money in short-term spikes up, gives money in slight growth or decline, and is wide open to crashes in the stock price. But I am not afraid of AMD being a bad long term investment, so I happily incurr in that risk.


WINDOWS: This is the explanation about Windows. Windows was based in good ideas that became corrupt thanks to the emphasis Microsoft wanted to give to certain features in certain circumstances.

For instance, NT3.51, a "serious" operating system, had the hardware properly separated from the operating system. But by the time Microsoft wanted to launch NT4, it was clear that Microsoft didn't have a good contender to Unix, just a well received User Interface (the one of Windows 95), thus it had to make sure that NT4 had the W95 U.I.; but the hardware separation, vital to have a robust Operating System, made that much harder to have the fast and fancy Windows95-like user interface for NT4, thus Microsoft broke the separation and included deep into the kernel some graphical issues. Thus NT4 became vulnerable to problems in the graphics hardware.

In Windows there are three processes that must collaborate for every application to run, including the one that controls the user interface. That is an idea that is not bad per se, but in Windows it was taken to a degree, and distorted in a way that made the operating system almost inoperant because all applications are catastrophically vulnerable to all those complex processes interoperating. For instance, have you noticed how when your computer gets in trashing because it doesn't have enough RAM memory for a demanding application, you basically can't fire up the Task Manager to kill the application because although the system is in trashing, yet the Task Manager is requesting more memory to load the graphical widgets it needs? Thus there is no way to actually execute an important operating system service such as killing a process when you need it the most.

There is also the issue of security. Since all software produced by Microsoft disregards good software practices (because of marketing reasons that have proven correct), it became a tower of patches that no one would ever be able to audit, with more security holes than a colander. The only approach that would work to solve this issue would be the tabula rasa, but Microsoft doesn't dare.

Vista is a nearly perfect complement in Software to Intel's V//V. A brand, or name, that really doesn't tell you nothing about what is it. Nobody really knows what is it either, it is just a marketing buzzword. What are the problems, defficiencies, or innovations that Microsoft is going to put in play with Vista?

I had one idea: It was natural for Microsoft to make use of the opportunity to really clean the Application Programming Interface (the set of services the O.S. gives to the applications, the very definition of the O.S. itself) to make it up to current standards in reliability, security, stability; and of course, implementing new and exciting User Interface ideas. But no, it seems that Microsoft chose to do XP service pack 3 and call it "Vista" (by the way, XP itself may be thought off as a Windows 2000 service pack).

I wrote a premonitory article in January about Vista and Microsoft, it is still vigent

Steam Engines versus Diesel and wishful thinking

There is too much confidence about Intel capabilities. It seems that a lot of analysts, investors, and technology enthusiasts think that Intel can pay its way out of any problem, thus, if AMD is Intel's problem, Intel will use its resources to kill the problem, and AMD will be destroyed. I disagree with that point of view, my reasons follow.

Intel is a greedy monopoly. The business model depends on both characteristics to be able to exploit customers and to have happy employees stuffed with stock options. That is one reason to think that Intel won't incurr in any price wars (1). Management, who relies on stock options as their main source of income (2), wouldn't want to do that; not even for long term good prospects, their exploitative and greedy attitude demand instant satisfaction. "In the long run, we are all dead" (Keynes) would seem one of their mottoes.

But they can try a similar approach: If the crux of their problems is that they have been outcompeted, and the market finally became aware of that, then the company has to offer better products. But since they are so hopelessly behind in the technology (While AMD is already doing Silicon On Insulator, Integrated Memory Controller, the upcoming single die quad cores, the coprocessor architecture that HTT 3.0 allows, APM; Intel "counters" with things such as "CopyExact!), they can't come to the market with truly better products.

The next option is to try to outcompete AMD following the brute force approach of putting more of everything known to work and selling the package for about the same price the competition sells. That is a sort of price-war: Not to manufacture products of equivalent costs to that of the competition's while selling them at steep discounts, but to manufacture extremely costly products to sell them at about the same prices as the competition. That is to sell a 4Mb L2 cache at the same price as 2Mb, 65nm at 90nm price.

That approach has been tried many times before in many markets and technologies. The latest steam train engines were by far the most complex ever designed and built, they had the largest boilers, etc.; because only through sheer sizes they were able to be up to the capabilities of the uprising Diesel/Electric engines. And the efforts to keep up were futile in the end:

The design ideas and techniques of Steam Engines were exhausted, played out, but Diesel's had the whole world ahead.

Intel's new lineup of products are steam engines. There aren't any new ideas to further the basic Pentium Pro architecture; I, for one, am skeptical from the professional point of view (summary here), about some of the design compromises Intel chose; and in particular, there are some assertions that my considerable understanding of this subject are not capable of explaining, such as the claims of higher power efficiency, or how is Intel going to successfully deal with the problem of trading off combinatorial complexities for marginal benefits so pervasive in all engineering disciplines; especially with Intel's track record.

I recently heard Henri Richard from AMD repeating the common saying that not even with 9 women it is possible to have a baby in one month; that is, it doesn't matter how much money Intel may have, the design gap is not possible to be closed in less than two years.

The problem is that AMD is in high gear, not in a reckless drive, but *cruising*, ramping two times more production capacity, with the highest market share it has ever had, highest revenue share, highest mind share, highest credibility.

Thus at Intel they have to follow for years the route of profitless existence that AMD followed until its recent emancipation. I wonder what makes the market think that AMD, which has the same management and engineers who reversed the roles with Intel at the brink of bankruptcy, all of a sudden are going to screw it all and at the same time, Intel's management, who allowed this reversal of roles, is suddenly aware of all of their mistakes and going to pull off a momentous come back after those two years.

That is wishful thinking. The market overvalued Intel and undervalued AMD. AMD demonstrated its worth, flew to the point of reaching $42 per share, too high so as to not force the comparison with Intel, thus forced the market to decide whether Intel was overvalued or not. But still the market's money was on Intel, every positive news about Intel was received with joy, every positive news about AMD with concern; that leads to a very easy to understand psychological phenomenon: Wishful thinking.

There are those who say that Intel has managed in the past to quash AMD's rebellions, that's true, but AMD never managed to get this strength before, Intel hadn't screwed it up so badly; in the past Intel could dump products in the only segment in which AMD was competitive, and succeeded because AMD never was able to get out of the "value desktop player" typecasting; today, it is Intel who is outcompeted all across the board but in mobiles in which they only have a bit of "residual" competitiveness.

The wishful thinking that supplies the credibility for more promises and more dissapointments will make the slide toward insignificance of Intel and Dell just slow and uneventful, but equally inexorable.

(1) There is a distiction between "channel clearing", what Intel is doing and proper price war.
(2) Unconfirmed