Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 36.91

-1.1%

Dec 31 3:59 PM EST

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To: Paul Engel who wrote (156644)	1/24/2002 12:05:26 AM
From: Dan3	Read Replies (3) of 186894

Re: Intel got burned in 1999 and 2000 because they cut back expansion in 1997 and 1998. NEVER AGAIN !! Their timing was 180 degrees off then, they may be loading their costs now just as we're entering an extended period of modest demand. Between building new FABs, moving to smaller parts on .13, and moving to 300mm wafers, they've quadrupled their capacity and doubled their capital costs, to compensate for a shortfall of about 15% that occurred because of a once per thousand years event. On a per chip basis, capital costs aren't huge, but are larger than wafer and fabrication costs on a per chip basis (if it costs $2,000 or so to process a wafer). CPU margins have been gradually falling as CPU performance rises faster than software requires it. If there isn't a substantial increase in demand very soon, Intel will find that the result of loading itself up with those enormous increases in capital costs is thinner gross margins than it has had in the past.

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