I've been hearing a lot of hype about Transmeta recently (of course, this is from those hideous magazines that would hyp the sun rising as a paradigm-shattering event...). Any thoughts?
Jim Baird
> Rakesh Bhandari wrote:
>
> > In a much appreciated post, Enrique shared his understanding of things
> >
> > A $500 PC just doesn't have any room for the
> > >profit margins Intel has grown fat on. Add in the enormous increase in
fab cost
> > >for each succesive generation (a .18 micron fab already costs several
billion
> > >to build) and the future of the CPU industry, in my opinion, is
increased
> > >commoditization, ugly price wars, and desperate fights for vanishing
profit
> > >margins. Intel is yesterday's news, and that's why it has shown no
significant
> > >profit growth for the last three years - though it may have a brighter
future
> > >as a speculative hedge fund; after missing tis earnings expectations
two
> > >quarters in a row, it decided to count the money it made betting on the
> > >Internet stock lottery as if it were earnings from business, guessing
> > >(correctly) that neither its stockholders nor the SEC would give a
hoot.
> >
> > Yet if US microprocessor firms can maintain some monopoly power as unit
> > sales of pc's expand as prices plunge, they may do quite well. They'll
go
> > from high margin/low volume to lower high margin/more volume. And AMD
and
> > Cyrix may gain on Intel as a result.
>
> No doubt they will. So where is the monopoly power? Particularly as the
fattest
> market (Western business users) has already been serviced, and it is
likely that
> Third World users will be even more price conscious.
>
>
> > Still better than ever lower
> > margin/ever more overproduction memory chip business.
>
> No doubt. Intel will become GM; Micron Technology has a date with Chapter
11.
>
>
> > So the relative
> > profit expectations from US firms are indeed quite a bit stronger than
> > elsewhere, partially explaining the tech specific US stock market rise.
>
> A matter of opinion. Methinks that the tech stock rise is a classic
demonstration
> of fund managers occupational dynamics: if you want to keep your job, you
can 1) be
> always right and 2) do what everybody else does (in this case, buy tech).
>
>
> > As
> > long as the divergence is increasing
>
> What divergence?
>
>
> > --even if US profit margins are
> > themselves dropping--US tech stocks (and the dollar) will remain quite
> > strong.
> >
> > If things get really rough, then expect further cartelisation.
>
> A definite possibility, though the dynamics of chip production (marginal
costs
> after fab yields rise are very low) make cartelization difficult.
>
> >
> >
> > Of course further cartelisation may not be necessary; more government
> > programs like Sematech (along with VERs) which announced to the world
> > seriousness about maintaining the US technological position may already
> > suffice as a threat to stay out.
>
> I don't think anybody is planning to compete with Intel and AMD. I just
don't think
> the MPU industry will be worth competing for.
>
> >
> >
> > Perhaps the US govt is being so cautious about breaking up Microsoft so
as
> > not to create room for a new foreign monopoly commanding a bigger
network
> > abroad merely to supplant it as well? Probably why the US government
has
> > allowed massive mergers and monopoly power in aerospace.
> >
> > Strategic trade theory was centered on these kinds of questions. The US
> > government seems quite committed to the power of its technological
> > monopolies.
> >
> > But you have encouraged me to give a call to some old hands in Silicon
> > Valley. I'll report back.
> >
> > Needless to say, you may well be right about Intel's future. Moreover,
if
> > the next downturn is disturbingly deep with no govt stabilisation
program
> > at hand, future profit expectations may be so dim to crash capital goods
> > orders (in which pentiums and cutting edge software would be embodied)
> > even those that would give an immediate fillip to profitability in
> > desperate times. Yet these monopoly prices seem to be themselves
> > weakening the structure through wage cutting, deflationary strategies
they
> > are forcing upon technology using firms.
>
> I am not sure I follow. My whole argument is that, in the MPU industry,
monopoly
> prices are a thing of the past. Cartelization may bring them back, in a
reduced
> fashion, but I don't see the industry as being very cartelizable.
>
> >
> > >However, the problem I see with the technology industry in
> > >general is that it is absolutely drowning in capital, thanks to the
Greenspan
> > >Bubble: in just about any promising area you can think of, there are
several
> > >competitors armed to the teeth with no-strings-attached,
> > >lose-as-much-money-as-you-want-for-as-long-as-you-want investor's
money. And
> > >not just on the internet. That's no way to extract monopoly rents.
> >
> > That's why they call it vulture capital.
>
> I am not sure what you mean here.
>
>
> > But people like Kenney and Florida
> > thought it would ruin solid American companies to the advantage of the
> > keiretsu. They were wrong.
> >
> > yrs, rakesh
>
> Cheers,
>
> --
> Enrique Diaz-Alvarez Office # (607) 255 5034
> Electrical Engineering Home # (607) 272 4808
> 112 Phillips Hall Fax # (607) 255 4565
> Cornell University mailto:enrique at ee.cornell.edu
> Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique
>
>
>
__________________________________________________ Do You Yahoo!? Talk to your friends online with Yahoo! Messenger. http://im.yahoo.com