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Politics : Formerly About Advanced Micro Devices
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To: kash johal who wrote (58867)5/20/1999 8:46:00 AM
From: A. A. LaFountain III  Read Replies (2) of 1583406
 
Kash: re "The big bucks are spent already on fabs, equipment and personnel"

Well, yes and no. The big bucks are prespent (if that's not too inelegant a term) for the fabs and equipment, so the costs associated with them are a non-cash charge. The headcount is a sticky cost, not fixed in the strictest sense, but not variable either. Although I'm no process guy (or Boy, for that matter), I have a sneaking suspicion that the operators are fairly essential to the tools and that they're not kept around for show.

But there's another fixed cost that often escapes such discussion - interest. Intel doesn't have any, and AMD gotta have it. By definition, you can't go bankrupt if you don't owe anyone, so don't think for a minute that Intel wouldn't be the last one standing.

But I believe that the odds of the situation sinking to this level are fairly small. It's been my contention for the last several months that AMD's progress (which on a technical basis has been documented by many on this thread and which on a financial basis has been pointed out by many on this thread) is, on balance, sufficient to put Intel's excessive margins at risk and is likely to enhance AMD's pitiful profit record. There is room in this market for two viable vendors, and it's unlikely to be the scorpion dance that many seem to think is preordained. - Tad LaFountain
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