Intel started marketing a new chip Monday, the Sandy Bridge E geared to high-end desktop computers. Expectations for gross margin are optimistic, despite prices that mirror the chips they replace.
Shares of Intel (INTC) were trading at $24.53, down 1.3% or 32 cents. Competitor Advanced Micro Devices (AMD) was down 2.4%, or 13.5 cents, to $5.81.
The Sandy Bridge E doesn’t have integrated graphics circuitry; the assumption seems to be that� sophisticated desktops will have separate graphics. chips� List prices of $999 and $583 are the same as the older chips they replace, according to David Wong at Wells Fargo Securities, who adds:
“Given the very high prices for these products, we believe that even with the large die size, they have higher gross margins than most if not all of Intel�s other Sandy Bridge desktop chips.”
With performance that represents a 10% to 20% improvement over older Extreme Edition Intel chips, and 30% better than lower-priced Sandy Bridge chips, according to Wong:
“none of AMD�s chips, including the 8-core FX Bulldozer chip, have performance that comes anywhere close to the new Sandy Bridge E product. Although the Extreme Edition chips address a market that offers a relatively low volume opportunity, we think that Intel�s continued dominance in this segment is significant because it shows Intel�s clear, ongoing leadership over AMD in terms of performance. It also suggests to us that Intel�s Romley server family will have significantly better performance than AMD�s Bulldozer-based Opteron server products.”
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