AMD considering selling its Phenom II 42 TWKR processors?

The market for high-end, overclocking CPUs existed from the dawn of overclocking. In the past six years, both AMD and Intel released overclocking-ready CPUs under the guise FX [AMD Athlon FX] or Xtreme/Extreme [Intel Pentium 4 EE, Pentium EE, Core 2 Duo, Quad, i7]. But with the original Phenom [K10 architecture], AMD was left out in the cold, with a non-overclockable processor.

Now AMD has an architecture that can relive the FX brand, the only question was - would the market accept it? In order to test the grounds, the company released TWKR Black Edition, a CPU with a default clock of just 2 GHz, enabling overclocks of 300% from the nominal clock. This was a brilliant trick from the side of AMD, since highest-clocked Intel's can reach 45-60% overclock at best. 

Phenom II is based on K10.5 architecture and this time around, AMD didn't fool around. This is the architecture that can withstand record-breaking low temperatures, enabling cooling even with the dangerous liquid helium, cooled down to -250 degrees Celsius.

The question that AMD's CMO, Mr. Nigel Dessau posted on Twitter was "If we had more #TWKR parts, how much do you think we could charge for them?"

Taking a look at e-tailers, we see that Intel sells its Extreme processors for anywhere between $999 and $1399, while Core i7 920 goes for $279 and Xeon E5502 goes for $199.99. This is the same die that goes inside the fastest Core i7 Extreme 975 processors.

If we take a look at estimated margins of 45% on average [and rare models with 80% margin], Intel earns at least $450-800 on every sold processor. When AMD was selling its Athlon 64 FX processors, the average margin was around 70%, since AMD always had lower prices on their processors. If AMD would sell FX-60 CPU for $999, bean counters would add around 700-800 USD into its piggy bank.

Thus, creating a special edition CPU costs a lot of money, in associated tools and manpower. However, when we look at ultra-profitable hardware companies such as EVGA and its numerous special editions of the same card, it is very clear that these efforts pay off.

If Intel would sell only 1000 of Core i7 Extreme CPUs, the revenue is still a million dollars, out of which at least half a mil is nothing else but clean profit. Given the numbers disclosed to us, especially for the Skulltrail platform and its 80,000 shipped systems [wildely estimated revenue would be $267M with $120-227M in profit], it is clear that a small business unit based around extreme components can yield a significant profit.

Taking a look at AMD's line-up, we see that the current top model, Phenom II 955 sells for only $245, $35 LESS than Intel's entry-level Core i7, the 920. Upcoming Phenom II 965 will probably start its life at $265 or $275, still $10-20 less than Intel's 920. If AMD would price Phenom II TWKR Edition processor in the range occupied by its last enthusiast-edition processor, the Athlon X2 FX-60 [$999], they would finally achieve parity. Given the high clocks reached by TWKR CPUs, TWKR would easily beat off Core i7 975 and achieve performance leadership again.

If for instance, AMD would need to spend $100,000 in tools and additional $500,000 in salaries, AMD would need to sell only 1000 or so TWKR processors at $999 to achieve profit. If AMD would cut down the price of this special edition CPU to let's say half [$499] - 2000 processors sold to turn a profit? If AMD is able to extract higher number of these selected dies and sells TWKR Black Edition as a top model [all of Intel Extreme processors are speed binned examples of Nehalem wafers, thus you get what you paid for], $999 doesn't seem crazy. These parts are not for everyone and if you take a look at Intel's balance sheet, it pays off to have Extreme line-up for both notebooks and desktops.

Hence our question: Quo Vadis, AMD?