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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stefan who wrote (47779)	8/24/1999 8:09:00 AM
From: Graham C.	Read Replies (1) \| Respond to of 53903

Here's a rough ( simplistic ) idea of how chip prices may vary over time ... The maximum size of a chip doesn't vary much over time, so how much you can fit on a chip varies with the feature size. If the feature size shrinks by 30%, you get twice as much function per chip. ( 0.5 microns to 0.35 microns, say ) There is a cost associated with moving to a smaller feature size - this may be relatively small, or it may be large, depending on how much of the old equipment needs to be replaced with upgraded equipment. This cost makes the new chips more expensive initially but the effect wears off with depreciation and maturity of that production line. This may or may not be associated with a move to larger wafers. Same wafer size means roughly same number of chips per wafer; increased wafer size means 50% - 100% increase in chips per wafer. The cost per wafer would increase a little for same size wafer, or maybe quite a bit for a larger wafer. The bottom line is you get twice as much 'function' for only a little more cost, or maybe 4 times as much function for a moderate increase in costs, apart from the initial capital investment needed to switch over. Smaller features => more integration => more function per chip => more revenue per wafer => more profit ( or maybe that should be : more chance of survival ) 128 Meg will be more cost effective than 64 Meg once the initial capital investment is depreciated.