SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Politics : Formerly About Advanced Micro Devices
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Aaron Cooperband who wrote (29461)3/4/1998 5:44:00 PM
From: Petz  Read Replies (1) of 1574005
 
Aaron, re:<AMD is selling a low margin product and must pay for double depreciation and SG&A...>

I simply took the cost of finished wafers that Paul Engel estimated and calculated the revenues from them. Is there something wrong with my arithmetic PROFIT=REVENUE-COST? The only depreciation applicable to this formula is for equipment AMD uses to package the die and that is factored into the $10 per chip packaging cost. (That number, BTW, came a long time ago from an estimate by "Patient Engineer."

Finished wafers are purchased from IBM for a fixed $ amount. IBM sets their price based on depreciating their own equipment, AMD doesn't pay for IBM's equipment. If you quibble with the estimate of $2500 per wafer, take it up with the Intelopers on this thread.

As far as cash flow analysis goes, there is no such thing as depreciation. Machines are purchased with cash, and if you don't have the cash, you can't buy them. IBM has a fully equipped fab that is most likely winding down on production of PowerPC chips. This is a profit making deal for both sides, otherwise, why do it? Too bad, production won't start until 3rd quarter, which means no significant profits for either company until 4th quarter.

Petz
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News