Wanna_bmw, Tcmay, Elmer, Monica.
You are all refusing to face up to the fact that AMD is a lot more efficient than Intel. How many steppers are in which square feet of what plant being run by how many workers is something we aren't told by either company. But here's what we do know:
AMD supplies 20% of the CPU market and about 15% of the flash market with costs of $900 million per year.
Intel supplies 80% of the CPU market and about 25% of the flash market with costs of $5,400 million per year.
Chipsets? Last year, when VIA and Intel each held about 40% of the chipset market, VIA's quarterly revenue averaged about 200 million, and 80% of their sales are chipsets.
So Intel's costs for chipsets (for which it doesn't have to pay a "foundry profit") according to Elmer, must be less than $160 million out of $5,400 million.
How about flash? In 2001, AMD made $18 million selling $1,133 million worth of flash. They, by definition and by the design of the FASL agreement buy flash at cost. Much of that cost is for capex, but last year AMD and Fujitsu each paid in an additional $122 million. So, quarterly costs for supplying 15% of the flash market, including capex costs, were $309 million. Even if you double that figure for Intel, it shouldn't account for more than $618 million of their $5,400 million in quarterly costs including capex.
So, after figuring in flash and chipsets, AMD's remaining costs were about $600 million, and Intel's remaining costs were about $4,620 million. By the way, AMD's "other" category was $50 million this past quarter, IIRC, so their network and chipset business may be picking up - but I'll ignore that for now.
What is Intel's motherboard business worth? Asus has sales of about $500 million per quarter, Asus produces 300K Notebook PCs, 4.5 million Motherboards, and optical devices like DVD readers and CDRW each quarter. I'll guess they make one DVD or CD units for each motherboard (the CD and DVD units that go into all those Intel motherboard systems have to come from somewhere). If the notebook PCs cost Asus $600 each to make, then a motherboard costs about $40 to make. If Intel sold half of the boards for Intel PCs, that's about 15 million boards in a quarter, or $600 million.
So, take out chipsets, flash, and motherboards, and Intel's costs are $4,120.
Networking? 3com had quarterly costs of $307 last quarter. Intel's networking operation is probably about the same size, but let's call it $350 million in costs.
So Intel's CPU costs were about $3,770.
We took out Intel's networking and chipset costs, so we should remove AMD's "other" costs of about $50 million (which are mostly for their much smaller network and chipset businesses) so AMD's costs for CPUs is about $540 million.
It costs Intel $3,770 million to supply 80% of the market.
It costs AMD $540 million to supply 20% of the market.
It costs Intel nearly twice as much to design, build, and market a CPU as it does AMD.
As long as Intel's marketing can continue to sell what is basically the same part for close to twice the price, Intel can make a little money, but that game seems to be wearing a bit thin, lately. |
