According to the information coming from key partners, the initial allocation of Radeon HD5850 and HD5870 is below expectations. This information implies that AMD could be having yield issues with TSMC’s troubled 40nm process node as well. In order to dispel any FUD and to get to the bottom of the story, we called various partners and distributing channels to see what is actually going on.

We were quoted numbers of allocated cards for EU and North American market [yes, I can imagine AMD’s sales reps with steam going above their heads with the numbers we have] and they were quite disappointing when compared to ATI Radeon 4800 launch or nVidia’s GeForce GTX280/260 launch, respectively. The initial batch of cards for the European launch seams on GeForce GTX 295 levels, but there is a key difference. If you check large e-tailers, you’ll see that majority of them are completely sold out, with "auto-notifications" being in place. The sad truth is that ATI did not deliver the expected number of cards and the people we talked to are understandably, pissed off.

After we found out the numbers, we called up certain people inside AMD to learn the truth. With Radeon HD 5000 series, AMD tweaked their delivery process in order to ensure that all partners get allocation for launch, so that there aren’t unhappy customers, like the situations that occasionally happened in the past. The very start of this strategy, with 5870 and 5850 being unavailable is quite the contrast to the promises we were given. ATI Radeon HD 5850 won’t be available until next week, while HD 5870 is massively available – as a "pre-order".

The Radeon HD 5870 and HD 5850 delivery will be in multiple phases, and board partners will receive a new batch of cards every week [unlike conventional burst mode that was "huge delivery now – wait 2-3 weeks – huge delivery – wait another 2-3 weeks]. This "burst mode" was known to all ATI and nVidia partners, and was present since both AMD and nVidia became whole board makers [manufacturing is contracted out to PC Partner, Flextronics etc.], reducing AIBs to nothing more than simply sticker stampers – at least for the first batch of cards.

Thus, if you hear rumors that ATI has yield issues or something like that, you’re free to discard them as FUD coming from the competition – unless our sources are grossly mislead. AMD (or ATI) simply "improved" the way they’re delivering cards and now the whole channel should have no issue with availability of these much-wanted cards. In a way, GPU distribution now looks more like a CPU business, and we’re not exactly sure that might be a winning move. After all, the GPU business is a money-making one, while the CPU side of business doesn’t exactly look particularly healthy.

Now, the good news is that this new mode enabled really aggressive pricing strategy – the HD 5870 is available for $379 in USA, with HD 5850 following up with $269, with no mail-in-rebate schemes. This is also followed by good news for Europeans, who are not paying a 1:1 conversion with the US Dollar, but rather paying more-or-less equal amount of money, even though vast majority of Europe [unless you live in Monaco, Andorra etc.] has taxes from hell, if we compared them to USA ones.

This system should excel with mass-volume products such as Radeon 5700. Looking at behind the scenes, and talking to AMD’s partners and insiders we can freely conclude that AMD didn’t just work on the GPU architecture but also shaped up its MO [Modus Operandi] with their partners.

Update September 23, 2009 19:54 GMT – In our original article, we used a picture from Legit Reviews article. This is now replaced by an official AMD image. We apologize to Nathan for using a picture without approval.