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Politics : Formerly About Advanced Micro Devices
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To: Petz who wrote (45429)1/11/1999 2:29:00 PM
From: kash johal  Read Replies (3) of 1572208
 
Petz,

Re: Depreciation

Petz you are right and you are wrong.

YOU ARE WRONG: The wafer cost of $2000 DOES include the depreciation for the wafer fabs that are producing those wafers. Fabless guys like me can BUY 0.25 micron wafers for $2000 and that INCLUDES PROFIT margin for folks like TSMC.

YOU ARE RIGHT: The depreciation does not make sense when amortized over 200K wafers/quarter.

INTELS DIRTY LITTLE SECRET: They are still DEPRECIATING their old FABS/EQUIPMENT that ARE NOT PRODUCING any more.

This is a major problem because the old 0.5 and 0.35 micron Fabs still have 5 years to go to be fully depreciated. Their current market value is negligible. If these were valued at FMV Intel would be showing much lower profits.

Regards,

Kash

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