Chip supply will exceed demand by 11% in 2005 and by 33% in 2006

Article posted on Forbes web site.
http://www.forbes.com/markets/2004/1...ahoo&referrer=

"Intel (NASDAQ: INTC - news - people ) will provide a mid-quarter update for
the fourth quarter next Thursday. Earlier this week, Credit Suisse First
Boston downgraded the chip titan to "underperform" from "outperform" and
said the company may see increased competition from rival Advanced Micro
Devices (NYSE: AMD - news - people ) as well as an overcapacity for
processors. "While Intel will likely see near-term strength given
low-expectations, healthy seasonal build-demand, and improving inventories,
we would be sellers into the strength," CSFB said. "We believe Intel will
more likely continue to lose share to AMD (in both servers and desktops) due
to AMD's increasingly equivalent offerings and substantial
average-selling-price (ASP) discount. ASP and market-share erosion combined
with overcapacity risk could weigh heavily on Intel's profitability." The
research firm lowered its price target to $22 from $25 and said it "would
use the potential near-term strength to swap out of Intel and into Texas
Instruments (NYSE: TXN)." In terms of chip demand, CSFB said based on
Intel's and AMD's current manufacturing plans, chip supply will exceed
demand by 11% in 2005 and 33% in 2006. "We would need to see one or both
companies pull back their plans to get more positive," it said. Shares rose
14 cents, or 0.66%, to $21.43."

"The Week Ahead by Peter Kang"

Looks like cpu pricing my be coming down in the near future if Market
forecast are right assuming that the overage will be in cpu chips.