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Politics : Formerly About Advanced Micro Devices
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To: Kevin K. Spurway who wrote (64848)7/12/1999 6:27:00 PM
From: Fred Fahmy  Read Replies (1) of 1580035
 
Kevin,

<Does your company own a billion dollar fab? If it doesn't, maybe you can try to understand why AMD needed to initially discount at 25%. AMD needed to RAPIDLY build market share so that its very expensive, rapidly depreciating fab wasn't just sitting there idling. AMD
couldn't afford the nice slow, gradual ramp that your company has accomplished over 6 years. There was at least some financial imperative for their decisions.>

No we don't own a billion dollar fab, but we do have several production facilities throughout the world.

Why 25%?? Why not 35% or 50%...wouldn't that have been even better using your logic? Wouldn't volume have even been greater?? It's always nice to have as much volume as possible to spread over all your fixed costs (not just fabs), but it doesn't really do you any good if the net affect are huge losses.

Re: AMD's fab

Perhaps they should have decided to be fabless until later in the game?

<Of course, this is moot because the 25% discount policy no longer exists.>

For, AMD's sake I hope they try and price more reasonably. It may be moot now, but the results of this strategy are being felt today. Their balance sheet has deteriorated significantly and their cost of credit has gone up because of these past strategies.

<I think the verdict is out and will remain so for about another year.>

I seem to hear this every year....have you ever heard this before?

FF

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