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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 206.14-4.1%Nov 25 3:59 PM EST
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To: Sarmad Y. Hermiz who wrote (200827)6/7/2006 10:21:48 AM
From: eracerRead Replies (1) of 275872
 
Re: There was an Intel paper a year or two ago comparing production cost in 200mm fabs and 300 mm fabs. It claimed that when a product was moved from a 90nm process in a 200mm fab to 65 nm process in a 300mm fab, the expected cost savings would be 40%. I think that is the exact amount of the price reduction that Intel made in April.

So if before the price cut P4's (in their hey day -- y05 q4!) were getting 60% gross margin, then woody and siblings will also fetch 60% once the fabs are at full util.

You still don't get it. It's not the size of your fabs that counts, it's what you do with them. You constantly talk about large production capacity and small, cheap cores being Intel's salvation. The specs (performance, power consumption, etc.) of the cores produced is far more important. Intel can NEVER return to its glory days without offering much better products than they do now.

So what if Intel cuts production costs by 40%? If a die was $15 and now costs $9 and Intel sells 45 million CPUs in a quarter then Intel "only" saves $270 million. But in the 90-nm days almost every CPU had a single core. With chips like the Pentium D Intel needs two $9 cores ($18 total) versus one $15 core.

The only reason to hold Intel stock now is on the belief that the competitive advantage NGA products will eventually stop the market share bleeding and lift ASPs. It may take a year or more before those advantages actually turn into a substantial economic improvement for Intel and a rebound in share price.
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