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Technology Stocks : Intel Corporation (INTC)

INTC 35.10

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Nov 19 3:59 PM EST

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To: cfimx who wrote (44181)	1/6/1998 7:08:00 PM
From: Paul Engel	Read Replies (2) of 186894

Twister - Re: " any guess regarding mpu ASPs for 1998 (pmmx and pII)? " My guess is that the overall ASP will decline from now to July, and then begin to slowly rise. Current ASPs are around $215 to $240 (depending on whose data you believe). I would guess these will drop to $195 - $220 over the next 6 or 7 months. From then on, they should rise to about $230 by the end of 1998 - my guess. Re: "what % of business is non mpu product for intc?" CPUs - 70 to 75% Chip Sets - 6 or 7% Motherboards - 4 to 6 % Networking Hardware/Software - 4 to 5 % Flash - 5 to 7% Embedded CPUs - 3 to 5% Re: "how fast can intc reduce costs on mpus during a year?" This depends on their transitioning to smaller geometry processes, volume growth, depreciation schedules - and to some extent yield improvement. Yields are already quite high and some marginal improvements are possible. By growing their volume by 15 to 20%, Intel can reduce their die costs proportionately - by spreading their fixed overhead and depreciation over the larger number of die. Intel seems to think they can sell 100 million CPUs in 1998 (if no Meltdown occurs) and that is a 20% unit increase over 1997. Reducing Pentium II die size (to Deschutes) can add another 30% in cost reduction IF 100% of the die are converted. Tillamook is also smaller than Pentium MMX (0.35 micron) by the same amount. I haven't estimated Intel's depreciation schedules for fab/equipment but some fabs are getting near 5 years old (Fab 10) and may leave some margin - however, Intel is bringing on new fabs - Fab 14 and Fab 18 in 1998 - so this may be a wash (or worse!). Expect a 25 to 50% die cost reduction throughout 1998 - if business remains (???) healthy. Re: "is there a published source for intc units sold and asps? " Intel steadfastly refuses to publish these numbers - check with IDC and Dataquest - or Ali Chen - he knows everything. Paul

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