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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 203.76-1.1%Nov 21 3:59 PM EST
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To: Sarmad Y. Hermiz who wrote (201421)6/9/2006 8:30:48 PM
From: colin1497Read Replies (2) of 275872
 
The issue here is simple. They have a HIGHLY capital intensive business. As long as the sale price covers the direct costs of manufacturing (labor and materials), then it's better to keep making them than it would be to not make anything, because the fixed capital costs don't go away if you stop making parts. Intel's only choice is to keep making parts regardless of how bad their market position is. This is the danger that people see in both INTC and AMD ramping fab capacity, both will have no choice but to fill up the fabs and then you drive prices and margins into the floor.
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