TABLE OF CONTENTS
Our Thoughts: Intel Primed For A Share Comeback In 2008 ............................................................................................................. 5
Microprocessor Market ....................................................................................................................................................................... 5
Intel And AMD................................................................................................................................................................................. 10
Manufacturing Trends And Product Roadmaps ................................................................................................................................ 14
Technology Transitions.............................................................................................................................................................. 14
Product Roadmaps ..................................................................................................................................................................... 16
Benchmarks................................................................................................................................................................................ 22
Die Sizes .................................................................................................................................................................................... 28
Thermal Characteristics ............................................................................................................................................................. 30
Desktop Market Detail ...................................................................................................................................................................... 34
Notebook Market Detail.................................................................................................................................................................... 40
Industry Standard Server Market Detail............................................................................................................................................ 45
Summary Of Recent And Upcoming Pricing Changes ...................................................................................................................... 51

Our Thoughts -- Stable Pricing, Reduction Of Supply Chain Inventory
We think it is notable that microprocessor pricing was stable in the December quarter despite a very weak
demand environment. Intel’s average selling prices (ASP) were up sequentially, excluding Atom, and flat
sequentially if Atom is included. AMD management said that its ASPs declined sequentially, due to mix, and
that, in general, pricing was stable. Mercury Research’s estimates have overall microprocessor ASPs up 4%
sequentially in the December quarter, with Intel's blended microprocessor ASP up 5.7% sequentially,
(excluding Atom) to $111, and AMD’s blended microprocessor ASP down 5.0% sequentially, to $60.
With AMD’s financial problems and Intel’s competitive strength, the overall pricing environment for
microprocessor has been benign in recent quarters. If AMD does successfully close its Foundry restructuring
deal shortly after its shareholder vote on February 10, 2009, we think that the new capital structure will
reduce incentive for AMD to drive down microprocessor pricing in the future, in order to fill fab capacity.
We hope that microprocessor pricing will remain stable.
According to Mercury Research, overall microprocessor unit shipments declined 22% sequentially (down
19% year over year) in the December 2008 quarter (excluding Atom). Including Atom, microprocessor unit
shipments declined by 18% sequentially (down 9% year over year). According to Gartner, PC unit shipments
declined just 3% sequentially in the December quarter, including the netbook market. Backing out our own
estimate of roughly 7 million netbook shipments in the December quarter and 5 million in the September
quarter, we calculate that worldwide PC shipments declined 6% sequentially. Based on the difference in
traditional microprocessor shipment growth (down 22% sequentially) and PC shipment growth (down 6%
sequentially, excluding netbooks) in the December quarter, we believe that the electronics supply chain
reduced its microprocessor inventory by a substantial amount in the December quarter. Both Intel’s and
AMD’s internal inventory rose sequentially in the December quarter, but both companies have cut back
production substantially. Intel expects to reduce internal inventory in the March quarter and AMD expects its
inventory to be flat to down. We think that the efforts on the part of Intel and AMD, and the various
participants in the PC supply chain to avoid creating excess inventory are laying the groundwork for a
potential inflection point in microprocessor demand at some time in the next few months.
Microprocessor Market
Following relatively stable year-over-year microprocessor sales growth in H1 2008, ongoing deterioration in
the global economy caused a significant decline in microprocessor sales during H2. Data from the
Semiconductor Industry Association (SIA) show that microprocessor sales grew 11% year over year in H1
2008, but declined by roughly the same amount from July to November. We are anticipating a further
deceleration in the month of December and into the March quarter of 2009, but we are hoping to see an
inflection point in microprocessor shipment growth at some point in the next several months.

According to Mercury Research, overall microprocessor unit shipments declined 22% sequentially (down
19% year over year) in the December quarter 2008 (excluding Atom). Including Atom, microprocessor unit
shipments declined by 18% sequentially (down 9% year over year). According to Gartner, PC unit shipments
declined just 3% sequentially in the December quarter, including the netbook market. Backing out our own
estimate of roughly 7 million netbook shipments in the December quarter and 5 million in the September
quarter, we calculate that worldwide PC shipments declined 6% sequentially. Based on the difference in
traditional microprocessor shipment growth (down 22% sequentially) and PC shipment growth (down 6%
sequentially, excluding netbooks), we believe that the electronics supply chain reduced its microprocessor
inventory by a substantial amount in the December quarter.
Mercury estimates that desktop microprocessor shipments declined 22% year over year in the December
quarter (flat in the September quarter), while notebook microprocessor shipments fell 13% year over year (up
26% in the September quarter) and server microprocessor shipments declined 33% year over year (up 6% in
the September quarter).