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Thursday, March 29, 2007

Calls of Note Part 4

- Bank of America notes that at an Analyst event, Intel (NASDAQ:INTC) released details regarding its upcoming Penryn family of products, slated for introduction in 2H07. It also simultaneously disclosed key elements of its new microarchitecture, Nehalem, slated for introduction in 2008.

Penryn - driving higher performance at potentially lower costs. The improvement in performance (20-45% vs. existing processors, in certain applications) will likely blunt the improvement that AMD will witness from its upcoming platform (Barcelona) launch. Intel's cost leadership vs. AMD will, in firm's view, be further extended given Penryn's smaller footprint (die size) of 107mm2 vs. existing Core 2 products (143mm2). The cost and performance advantage, they think, has positive implications for Intel's ability to maintain margins while simultaneously building on share gains vs. AMD.

Nehalem - a game changer for Intel. With Nehalem in 2008, Intel essentially addresses bottlenecks associated with its prior architecture (particularly in high end servers), by utilizing an Integrated Memory Controller approach in conjunction with Configurable System Interconnect Architecture - similar to AMD's approach with Opteron. Nehalem also integrates a graphics core onto the processor silicon - an event that is occurring sooner than expected and should allow Intel to see modest expansion of its share of bill of materials in a PC. Nehalem nullifies AMD's remaining advantage in the multi-processor (high-end) server market.

Maintains Buy and $28 tgt on INTC.

Notablecalls: Not actionable but good to know category.

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