AMD's Bobcat Fusion Chips In Tight Supply - Report

[nyker96]

It is reported that AMD is securing additional capacity from TSMC's new 300mm fab to satisfy demand. Bobcat based chips are in high demand and short supply as of now.

http://www.xbitlabs.com/news/cpu/di...MD_s_Fusion_Chips_In_Tight_Supply_Report.html

 

[Idontcare]

It's the same sad story every time AMD launches a killer product, seriously. Be it CPU or GPU they are always fighting against capacity constraints when demand is hot, and then supply glut when it is not.

Sounds like they missed the mark on pricing. If it were priced right then supply and demand would have been in balance and capacity would not have become a limiting factor in maximizing gross margins and the revenue stream. Typical AMD if you think about it, they seem to be on one extreme or the other when it comes to balancing supply and demand by way of pricing.

 

[podspi]

It's the same sad story every time AMD launches a killer product, seriously. Be it CPU or GPU they are always fighting against capacity constraints when demand is hot, and then supply glut when it is not.

Sounds like they missed the mark on pricing. If it were priced right then supply and demand would have been in balance and capacity would not have become a limiting factor in maximizing gross margins and the revenue stream. Typical AMD if you think about it, they seem to be on one extreme or the other when it comes to balancing supply and demand by way of pricing.

I don't think they were too far off base. Unlike Intel, AMD doesn't have much decent (mainstream) brand recognition... It's not always a bad thing to have consumers fighting over your product

I think people are going to compare their $450 Brazos netbooks to a $400 Atom netbook (read:ION based) and feel real good about their decision. Sure, pricing the Brazos netbook/ultraportable at $499 may have avoided a shortage, but its entirely possible that consumers then might end up looking at C2D-based laptops at that price and wondering why AMD doesn't offer good price/performance.

In the end I think this is going to be good for AMD and their Vision... brand, line, label, or whatever they're calling it these days...

Edit: That being said, if they screw up BD pricing I'll never forgive them D: (assuming BD turns out to be anything like BC for its intended market segment).

 

[Arkadrel]

It doesnt have to be AMD, could be TSMC screwing them over.

AMD hopes to "secure all new capacity from TSMC's 300mm fab, Fab 14's phase 4 facilities to solve the shortage issue".

Hopeing doesnt do much, if TSMC doesnt wanna play.

Selling over 1million of these APUs in under 1.5month doesnt sound like that many.... so I guess they just didnt antisipate demands, or had trouble getting enough production space from tsmc.

 

[IntelUser2000]

Lot of people like to believe in conspiracy theories, but it could be TSMC is just having supply problems of their own.

 

[jvroig]

I don't think they were too far off base. Unlike Intel, AMD doesn't have much decent (mainstream) brand recognition... It's not always a bad thing to have consumers fighting over your product

It is for the boardroom, unfortunately. Consumers may have different views on the matter, but in business it is always about "optimal" levels, and we have tons of statistical and quantitative analysis tools to assist us in determining (before the fact) and evaluating (after the fact) optimal levels.

So whenever something is supply constrained, people in the boardroom don't like it. That means it wasn't priced optimally, because if it were, they would still sell the exact same amount (everything they had), but this time their profit margins would be higher. The reverse is also true - whenever something has a supply glut, it also hasn't been priced accordingly (in business, pricing is primarily determined by "willingness to pay of the target market", and the actual BOM/COGS costs are secondary - it is assumed once a product is greenlighted that the willingness to pay (after all other shenanigans included like market segmentation) will overtake the COGS.)

Of course, this is taking into account that "everything went as planned". If it didn't (for example, TSMC promised 10,000 wafers a day but they only delivered 7,000/day), then that throws a wrench in everything, which can result in what we have now, so it might not be the fault of AMD's strategy team entirely. But either way, no one in charge of business is happy about supply constraints, no matter how you look at it. What people call "fighting over their products", business calls "lost revenue, c/o opportunity cost".

 

[Elixer]

Lot of people like to believe in conspiracy theories, but it could be TSMC is just having supply problems of their own.

Sure, nothing some $$$ won't fix. ()

 

[drizek]

Lot of people like to believe in conspiracy theories, but it could be TSMC is just having supply problems of their own.

I don't think that with GF starting to become a competitor that TSMC wants to advertise that it plays favorites or that it screws over their loyal customers in the middle of a successful product launch.

 

[IntelUser2000]

Sure, nothing some $$$ won't fix. ()

Pretty sure they are not in a condition to do that.

 

[BD231]

Since when does TSMC *NOT* have problems delivering for AMD/NVidia??? Until production ramps and yields increase this is pretty much always the case no??

 

[Idontcare]

Since when does TSMC *NOT* have problems delivering for AMD/NVidia??? Until production ramps and yields increase this is pretty much always the case no??

That's the point. There are certain things that are unavoidable in an engineering sense. Capacity ramp timelines are one of them.

So when a business fails to comprehend the fact that something is unavoidable (such as supply constraints if they price a product too low) the party to blame is fairly obvious.

We saw the same thing with the argument that TSMC cancelled 32nm and that screwed over AMD's GPU plans. TSMC cancelled 32nm only because the customers, including AMD, told TSMC they weren't going to pay for it. It was purely a business decision that all parties made together.

AMD can have more 40nm capacity but they might not want to pay the price needed for the capacity to be installed on a faster ramp schedule.

Hope is not involved in the equation, money is. Now it is true that AMD may have been hoping TSMC would recklessly spend money installing 40nm capacity to the point of creating a capacity glut such that AMD could then buy up 40nm capacity on the cheap...that's about the only opportunity to have hope in this situation.

Otherwise this is purely a case of avoidable miscalculation on AMD's part. They miscalculated demand based on the price they set and miscalculated the supply they needed to secure.

Blaming TSMC is just bad form. So much so that I truly doubt AMD is actually doing so, it is more likely the case that this is just the speculation of some sensationalistic freelance author.

 

[Chiropteran]

It's the same sad story every time AMD launches a killer product, seriously. Be it CPU or GPU they are always fighting against capacity constraints when demand is hot, and then supply glut when it is not.

Sounds like they missed the mark on pricing. If it were priced right then supply and demand would have been in balance and capacity would not have become a limiting factor in maximizing gross margins and the revenue stream. Typical AMD if you think about it,

Isn't it always the same "sad story" when Apple releases a hot new product too? iPhone and iPad shortages anyone? It doesn't seem like it is hurting Apple much at all when their potential customers fight to get a product. Isn't Apple one of the most successfully technology companies in recent years?

I don't think this is such a bad thing as you paint it to be.

 

[Edrick]

Could it be a marketing ploy?

- AMD releases "Product X".

- Not many people heard of Product X or even care to look it up.

- AMD states that Product X is in such huge demands that they cant maintain supply.

- People start looking into Product X because it is making news as a hot seller.

- Product X now starts selling even more units.

 

[Gigantopithecus]

Could it be a marketing ploy?

- AMD releases "Product X".

- Not many people heard of Product X or even care to look it up.

- AMD states that Product X is in such huge demands that they cant maintain supply.

- People start looking into Product X because it is making news as a hot seller.

- Product X now starts selling even more units.

There is a company you might have heard of called Apple...

 

[podspi]

It is for the boardroom, unfortunately. Consumers may have different views on the matter, but in business it is always about "optimal" levels, and we have tons of statistical and quantitative analysis tools to assist us in determining (before the fact) and evaluating (after the fact) optimal levels.

I understand all of that, but we're talking about consumer products here -- not commodities. Consumer preferences can be affected by comparisons to other products with similar prices, as well as word of mouth, which in turn can affect future demand levels.


If we were talking about $300 E-350 laptops I'd agree with you, but we aren't. We're talking about $450 E-350 laptops. Positive word of mouth (which is spurred by consumer surplus, not exhausting consumers' WTP) can be very valuable, especially to a brand like AMD.

 

[bryanW1995]

it is "poor execution" when AMD does it. When it happens to Apple it is "excess market demand".

 

[Idontcare]

Isn't it always the same "sad story" when Apple releases a hot new product too? iPhone and iPad shortages anyone? It doesn't seem like it is hurting Apple much at all when their potential customers fight to get a product. Isn't Apple one of the most successfully technology companies in recent years?

I don't think this is such a bad thing as you paint it to be.

The difference is that Apple leverages the opportunity in a way that delivers better gross margins and higher returns for their shareholders.

I think you've grossly misunderstood the purpose of my post, or I have grossly failed in stating it.

The cogent post by jvroig which proceeded my own and expounded on the topic in a rather obvious way so I am inclined to believe that my position was stated well enough in my post.

Apple does many things that AMD would do well to better mimic. Managing (if not outright engineering) shortages is but one example you could cite.

 

[Edrick]

There is a company you might have heard of called Apple...

No doubt about that!

For all the "shortages" I read about with various releases of the iphone, I never actually heard of anybody who actually was not able to get one when they wanted one.

And I just read today that Apple is already saying there will be shortages of the iPad 2 due to faulty screens. Yea, right. Just trying to drive up demand.

 

[BD231]

And here I was thinking that just *MAYBE* AMD might cater to a conservative model to ensure minimal overhead.

Perhaps that's a bit optimistic .... but at least it makes some business sense being that they keep going through very similar situations. Looking back to something as recent as the 5800 series showing a high demand with a low reserve is a good example. Vendors were setting price premiums on cards that AMD did not even collect on which makes no sense at all if availability was really perceived as an issue by AMD.

Instead they ramped up production accordingly, only raising price's slightly due to lack of DX11 competition. Within a month or two you didn't hear a peep on supply issues and they took over the DX11 market despite the initial lack of availability.

Granted they had no competition for almost a year, they still fixed that issue suspiciously fast IMO. Business as usual I suppose.

 

[Mopetar]

No doubt about that!

For all the "shortages" I read about with various releases of the iphone, I never actually heard of anybody who actually was not able to get one when they wanted one.

And I just read today that Apple is already saying there will be shortages of the iPad 2 due to faulty screens. Yea, right. Just trying to drive up demand.

From what I've read, it's usually difficult around launch and for about a month or so after that. After that they usually don't have more than a weeks worth of inventory in the channel so if they hit a production bump, their would be shortages within one week.

Introducing some new policy changes regarding purchases of the devices may have helped as well. There was a problem with some people buying ten or more devices in cash and then shipping them off to China to be sold at a mark-up. Not sure how prevalent this was or how much of an effect that had on shortages, but it may have contributed.

 

[IntelUser2000]

Just in case some people might have misunderstood my post. I'm saying they merely have too many orders and can't fill AMD's. Nothing else.

 

[Martimus]

According to this article: http://cens.com/cens/html/en/news/news_inner_35399.html; AMD has contracted TSMC to increase production of their Ontario and Zacate chips, and even are asking for all of the additional new capacities TSMC will add to its Fab 12 and Fab 14 factories this year.

 

[Idontcare]

According to this article: http://cens.com/cens/html/en/news/news_inner_35399.html; AMD has contracted TSMC to increase production of their Ontario and Zacate chips, and even are asking for all of the additional new capacities TSMC will add to its Fab 12 and Fab 14 factories this year.

Not sure what to make of the article given this rather glaringly wrong statement:

TSMC is recognized as the industry`s No.1 supplier of 28nm process foundry with its monthly shipment of 5,000 wafers of 28nm chips in the first quarter of 2011. Industry executives estimated Apple to join Nvidia, TI and Qualcomm this year in using TSMC`s 28nm foundry service.

TSMC is not shipping 5,000 28nm wafers per month this quarter.

So what else is completely wrong in the article?

 

[drizek]

maybe it was a typo for 40nm?

Either that or the iPad 2 is built on 28nm.

 

[IntelUser2000]

Output of 5,000 wafers/month is very low. They probably mean it for testing and such. And its not a typo: http://www.digitimes.com/news/a20110222PB200.html