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Technology Stocks : Apple Inc.
AAPL 280.65-1.2%3:59 PM EST

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To: Eric Yang who wrote (9881)3/23/1998 9:45:00 AM
From: Hugues  Read Replies (1) of 213173
 
The cost of a chip is very dependant on the engraving technology. With a twice smaller engraving techno, you could do a four times smaller die size. And the cost of die is a function of the square of the square of the size (exponent:4). Because with a twice smaller size die, you can put four times as much dies in a wafer, and you have 4 times less defaults (the default yield is itself a function of the size of the wafer). So if you can reduce the engraving technology by 10 % (for example 0.20 micron to 0,18 micron), assuming you don't sophisticate the chip and keep everything else equal, you can reduce the cost by square of square of square of 10%. That is 0.9 exponent(8) = 0.43 ---> 57 % cost reduction. Note however that the cost of packaging and testing attenuates a little this reduction Nevertheless, if IBM could leverage a bit more the volume, they would have a great price advantage over Intel
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