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Politics : Formerly About Advanced Micro Devices

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To: Charles R who wrote (99946)	3/26/2000 2:12:00 PM
From: tejek	Read Replies (3) of 1572369

Also, the data so far indicates that AMD is delaying bringing Dresden to production status as much as possible because of depreciation issues. With the MHz lead AMD has there is no reason to bring Dresden up until Fab25 production peaks (~7Mu is my guess). Charles, I don't think that is correct....I am not an accountant but depreciation is not an expense but rather its a tool or formula that participates in determining how much taxes are to be paid by a company each year and for calculating taxes on capital gains. Depreciation results in less tax and not more and therefore is beneficial. In fact the major reason for delaying production at Dresden is that the agreement (and its been a while since I read it) with the German state of Saxony requires that AMD start repaying Saxony the monies Saxony provided for construction when Dresden gets to a certain level of production....a provision by the way that is not unusual when the government assists in a development. These loan payments have got to be huge(probably many millions per month) because Dresden was a big project. Therefore it makes no sense to start production at Dresden until Fab 25 in Austin is completely maxed out. Like I have said before and contrary to the comments from the dedicated and concerned AMD investor, Elmer, Sanders is being very smart to wait to the very last minute to start production. And don't think the Saxony officials are not complaining...not only are they waiting for the repayment of their loans but the whole point of Dresden was to provide good jobs for Saxony residents which is a part of the old GDR and like the rest of the old GDR suffers from very high unemployment. Those jobs will not happen until full production. Dresden has become for these officials like the proverbial carrot....just out of their reach. ted

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