Re: How come Intel makes a profit and AMD keeps losing money?
If Intel had included to costs of building all those FABs on its income statement, Intel would have shown a loss in several recent quarters, too. Intel's "optimistic" accounting is why it has shown such consistent profits, not its actual business. They've taken depreciation costs as low as 1/3 their quarterly capex recently (Q4 2000) and if you were to include HR payroll costs of employee options they would have made a loss in 3 or all 4 quarters of last year.
But the main reason Intel has been doing better is that AMD didn't used to compete in all of Intel's markets. So Intel could sell chips below cost in the the Desktop market, particularly the desktop retail market, while making up for those losses (and then some!) with its monopoly profits in notebooks, workstations, and servers.
Going forward, AMD has been able to enter all significant (in terms of unit volume) CPU market segments, which means that Intel isn't going to able to cross-subsidize the segments that compete with AMD to the degree it has in the past.
The final pieces of the puzzle are here for SMP workstations and servers (64-bit, 66MHZ PCI expansion slots on the SMP boards) and will soon be here for notebooks (15watt Athlon4s, Athlon4s in small form factor packages, and SODIMM DDR).
That's what's been making money for Intel, and that's the advantage over AMD that Intel has lost. |
