The average price of AMD's (
) notebook processor has gradually declined over the past years due
to increased competition from market leader Intel (
) as well as emerging competition from tablets like Apple's (
While we expect pricing declines to persist, reaching $50 by
2016, the Trefis community expects better price levels of around
$60, translating to an upside of 8% to our price estimate for AMD
We currently have a
Trefis price estimate of $7.74 for AMD's stock
, about 6% below market value.
Pricing Crucial for AMD's Competitive Positioning Against
Intel is globally recognized for its line of notebook processors
and consumers are willing to pay a premium for the "Intel Inside"
brand (particularly for notebooks, when tend to be more costly than
AMD's popular processors, including Turion and Sempron, are
widely used in low-priced notebooks. As the increasing demand for
low-priced notebooks from emerging countries drives down processor
pricing, AMD will have to keep its prices lower than Intel's in
order to maintain its competitive position.
Threat to AMD Processors From Tablets
Apple's iPad sales have risen significantly over the past few
quarters and the product is now widely considered to be a direct
competitor to notebooks, particularly low-end models. With more
tablets expected to flood the market in 2011, it could put pressure
on notebook makers like Dell (
) and HP (
) to reduce prices. Any such reduction to notebook pricing would
likely flow through to AMD's processor pricing.
Trefis Community Forecast
The Trefis community predicts that AMD notebook processor
pricing will remain within a range of $61 to $64 in the years
ahead, compared to the baseline Trefis estimate of a gradual
decrease from $58 to $50 by 2016. The member community imply an
upside of 8% to the Trefis price estimate for AMD's stock, which
would bring our estimate in line with market value.
Drag the trend-line in the chart above to assess the impact
of various notebook processor pricing scenarios on AMD's stock
complete analysis for AMD's stock is here