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Technology Stocks : General Lithography
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To: Kirk © who wrote (1166)2/16/2000 6:06:00 PM
From: Andrew Vance  Read Replies (1) of 1305
 
That is absolutely true but the majority of IC houses in the industry are not as "Bleeding Edge" as INTC products. I would almost be willing to bet that INTC could go bankrupt maing DRAMs in the CPU fabs since they could not compete with the low cost producers.

We are discussing a fine line here between mainstream and niche. INTC is a very large niche company but it does not come near the rest of the industry that has to be a great deal more cost effective realtive to wafer manufacturing costs. That is why INTC is not getting involved with "commodity" type acquisitions and sticking to the high ASP type devices.

Think about this: For every 1 GHz CPU they ship, we could make an argument that they would have 8-24 DRAM (RDRAM) chips for the memory modules (8 chips per module and up to 3 modules per motherboard). It would make a great deal of sense if INTC produced their own RMBS RDRAMs since it is a 1 for 8 to 24 ratio. this is better than the ratio it has for CPUs to chipsets and the ratio of CPUs to its own motherboards. The great deal of sense would be if they could actually make the RDRAMs as cost effectively as the DRAM houses. And of course, with the margins of the CPU they make, it would not make sense to manufacture such a low margin part to begin with.

Intel's wafer costs are one of the highest in the industry but it is offset by the ASP they get for the chips they produce.

Andrew
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