kpf, if AMD was paying ten digits to develop a process node every two years, I would agree that it was a significant scale economy for Intel to amortize that amount over its larger output. While Intel probably spends that and more on process development in order to sustain their lead, I don't think AMD process development costs are anything like that. Remember, they split process development with IBM and others, and are content to be a trailing adopter behind several other players. Total R+D for AMD is what about $700 million per year? Surely most of that is product specific, which suggests that process development costs are closer to $250-300 million. Since their total costs are nearly $5 billion (for processor related activies) that puts process development on the order of 5% of average unit costs. Since Intel spends at least twice as much on process development, and amortizes it over 2-3 times the output, the difference in per processor average cost resulting from Intel's scale advantage is something less than 1%. That is not what is driving market share in this industry.
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ps I studied IO with Panzar, Brautigam, Rogerson, Porter, Williamson, and Bagwell at Northwestern. Its been awhile, but I'm pretty sure I'm not fouling any academic nests here. |
