How do you explain the fact that Intel's margins have been going up for several quarters while AMDs have been dropping fast? That would seem to cut against your theory that if Intel margins rise, so do AMD's, don't you think?
Also, Intel has a huge advantage. AMD is still peddling cocktail table sized low ASP 40nm chips in many segments, and its very best chips are still enormous, only just appearing on already old 28nm process. Intel has the majority of its production on 22nm and already has samples running on 14nm. A 14nm chips is 1/4 the size and 1/4 the cost of a 28nm chips. It's Intel's control over and dominance in process technology that has delivered margin gains more than anything else, though AMD's lack of competitive products has also helped.
AMD's margins are dropping and there's little mystery as to why. Its chips are not competitive in performance or efficiency. It can compete only on price. Its costs are higher. Due to lack of performance, its ASPs are meager. Its margins suffer. Consider the console business. AMD's peers are making 50-65% margins in their products. AMD has pursued business that will lead to a 14% margin. 14%. That's nothing. Restaurants have better margins than that. AMD could make more of a return on investment opening a chain of pizzerias.
What hurts AMD the most, though, are Intel's obvious server market segment gains. 12% growth and $3 billion in a single quarter is insane. Most of that growth had to have come from Opteron market share loss, since spending in data centers was flattish for the quarter.
If I were long AMD, I'd be a little concerned about Thursday. AMD's survival doesn't depend on consoles or future products. It depends on stopping the market share bleeding in higher margin segments. It doesn't look like they've managed that. Jaguar is looking like Llano II.
Um, INTC doesn't have to cut prices. There's no demand for AMD APUs at any price. AMD is trying to give them away with few takers. That's what happens when a company falls multiple generations behind as AMD has done.