Bruzzone correcting clarification; 3rd paragraph before last two hanging sentences;

“Core discount appears 30 to 35%, that is higher than normal, where Intel marginal cost also appears to be rising, still under, but closer to AMD foundry price.”

Whoops late night edit dyslexia . . . Core discount 30 to 35% is slimmer than normal.

1991 through 1998 and thereafter ME, 2001 Dr. Tom who I met once through Michelle won’t remember me, in 1995 Mike C who else? Our time of address is rapidly approaching. Bend over Intel mafia and give it to them up the as.

mb

AMD will become progressively more shielded from it’s consumer CPU/GPU market fluxuations once there can be more Epyc/Naples and Epyc/Rome(late in the year into 2020) sales/revenues figures/project design wins announced! Ditto for any Radeon Pro WX/Radeon Instinct Pro GPU revenue figures that will also be along for the ride with some Epyc/Naples and Epyc/Rome(Later in the year into 2020) server CPU sales.

One bright side for AMD is that the costs of its Epyc/Naples 32 core SKUs come in well under even some of Intel’s lower core count Xeon offerings so maybe with the world’s economy cooling off AMD will look the better for hosting more VMs per socket and its MB/Platform providing 128 lanes of PCIe connectivity standard with no product segementation by PCIe lanes compared to the manifold ways of product segemeting Intel enforces across its Xeon/MB platform offerings.

Let’s look at the TCO figures if the Interest Rates go up any further and the cloud services market has to really begin to watch their budgets if the economy cools off any more. AMD has some advantages of being in the beginnings of a steady growth phase and not as heavily extended into any x86 Server/Consumer, or GPU(Pro and Consumer) markets, even now.

AMD’s value proposition(Lower TCO, more cores/PCIe lanes per socket, 8 memory channels per socket) and other such features that come standard in AMD’s relitively non segemented Server/HPC CPU offerigs is what may just earn AMD more attention from the cloud services providors looking for the best deals in an unsure economic environment.

And before anyone can cast doubts on AMD not supporting more than 2 socket MB offerings well just look at the percentages of 1P, 2P, and Greater, Socket based systems out there worldwide before thinking that having more than 2 sockets per MB offerings adds up to any sizable advantage. Just an Aside remember that Epyc/Rome will double the cores/threads per socket to 64/128 as well as having more Cache/L3 Cache and those Epyc/Rome MB/Platforms will still support 128 PCIe lanes but those PCIe lanes will now be PCIe 4.0 lanes with twice the bandwidth per lane as the previous generation for even more storage/GPU/other PCIe attatched options. Zen-2 is espected to bring up the single core IPC metrics and AMD’s Epyc/Naples and Epyc/Rome are leading in the multi-core/multi-thread metrics.

Sure the Pie is not growing as fast and that growth rate is falling back a little but any economic downturn also means that the cloud services providors will be looking for the better deal and a smaller longer term TCO if the lending rates are not as attractive as before. If a reduction in demand for Server/HPC CPU SKUs solves Intel’s current shortage woes what will Intel’s gross margins have to do in order to compete with AMD’s Price/Performance metrics in a server/HPU/Cloud services market that’s not snapping up every Server Die that comes off the diffusion lines.

There is no leading incumbent that did not build component inventories and overage across the relatively worry free 28/22/14/12 nm lithography regimes to stay incumbent through volume financial control over development resource, production system, channel procurement for end market product sales.

Merely a matter of producing along the road map that next desirable component in mass volume to fill channel’s first financially keeping others out. And, yes, times have changed at this inflection point to whatever comes next. As commercial art morphs back toward applied science where the art of manufacture is being relearned from the fresh starts of adaptation and adoption, the freedom to compete in an open commerce system?

For Intel and to some degree Nvidia as the development train crashed into ITRS physical walls, back in time secondary product availability on price performance took control over primary design production and this certainly effects Nvidia in the near term and Intel into the long term.

Intel inventory in channel by product generations;

Cascade Lake = 0.2685%
Coffee Lake = 3.7215%
Kaby Lake = 3.3908%
Sky Lake = 8.6425%
Broadwell = 21.7875%
Haswell = 39.3123%

Solely Xeon;

Cascade Lake; 0.33%, where there should be more on historic time to yield in 14 weeks.

Skylake Scalable; 6.64%
Broadwell v4; 25.15%
Haswell v3; 41.86%
Ivy Bridge v2; 26.02%

Noteworthy, Intel did this too themselves where division revenue splits don’t do justice the reality of back in time Xeon secondary market dominance. Where in the enthusiast market, back in time Xeon, not Core Extreme, today rules primary sales; 2600 v2 10C appears to be among the top sellers. Fast 1600s snapped up. v3 Hexa/Octa made great Christmas gifts.

In GPU space how many are aware the overwhelming majority of RTX 6000 available in sales channel are introduced integrated into fast refurbished v3 2P. Makes a lot of system procurement on applications sense.

Intel 5 year long run product availability in channel today on volume;

Desktop; 10.66%
Mobile 13.15%
Xeon; 76.19%

By value on volume discount, where 25 year long run discount is 50% HERE Core less 50%, Xeon less 70%;

Desktop; 4.59%
Mobile; 4.96%
Xeon; 90.43%

Think about all that Xeon down bin that gets sacrificed into sales bundle. When communications revenue is up you know there’s down bin sitting in Intel inventory.

There’s plenty of good product in channels. Where in first-in first-out sales system something has to sell to procure new. Unlocking secondary and overage the quicker those frozen values are unlocked the faster the primary market will recover. But you can’t break the channel financially doing so. Where Intel has not only held up but raised the price umbrella there’s certainly run way to unlock frozen values. Until Intel starts the squeeze again. And where this inflection point, process saturates and the train stacks from behind differs from other process and package transitions.

Normalizing channel inventory value with Intel division revenue split, Xeon highest volume discount again seems to be 85%, indicator cloud has leverage. Intel is selling into cloud and for high volume procurement at commercial price between 4 and 5x cost.

Core discount appears 30 to 35%, that is higher than normal, where Intel marginal cost also appears to be rising, still under, but closer to AMD foundry price.

Finally who needs Ice Lake or Rome unless your network infrastructure needs Rome, Ice Lake, Cascade Lake or L3 starved Skylake when Broadwell v4 for majority of enterprise management tasks is known offering acceptable price performance to wait and see the result of what comes next.

Let other’s pioneer 100 GbE down from 400 GbE spine and rewrite the OS, system management and applications for in-memory compute. Oh you want it, some before others, but how to pay for it and what adoption hurdles are justified on the risk reward of commercial consideration. With more options then ever before no need to entirely own that responsibility?

Industrious play wait and see?

Full Intel Q4 inventory and AMD Q4 inventory reports and slide sets here;

https://seekingalpha.com/user/5030701/instablogs

Mike Bruzzone, Camp Marketing