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Technology Stocks : Intel Corporation (INTC)

INTC 48.32

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3:59 PM EST

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To: Craig M. Newmark who wrote (153881)	1/5/2002 2:31:30 PM
From: Dan3	Read Replies (1) of 186894

Re: what is the economic lifetime of those capex expenditures? Might they be, oh I don't know, six years, say? At the current running costs (i.e., since AMD began pushing them 2.5 years ago), it costs them $45 Billion every 6 years to build their 6 year lifetime plant. Over 6 years they make between 600 and 900 million parts, resulting in the CAPEX costs I listed before (depending on what else is made in undepreciated plant, $37.50 to $75 per CPU. The thing everybody keeps missing, is that as long as they are having to fight off AMD, they have to spend $7.5 Billion each year to constantly upgrade their FABs. Each year. So those CAPEX costs have to be recovered each year. Each year. Or else they can't keep funding next year's CAPEX costs. And their earnings statements have been reflecting costs of $4 Billion per year not $7.5 Billion ($4 Billion is pretty much what their costs were before AMD became a serious competitor - they've had to increase spending, but that hasn't shown up on their earnins statements, yet).

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