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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (100755)	3/29/2000 2:35:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1571686

By the time the x-box is out...won't a Pentium III-600 be a feeble little processor? Seems like the game Jockeys will be running Pentium IVs or Mustangs at over 1500 Mhz... Jim

To: Paul Engel who wrote (100755)	3/29/2000 3:29:00 PM
From: Dan3	Read Replies (2) \| Respond to of 1571686

Re: by the time the X-BOX is in full production - year 2002 - Intel will have transistioned to a 0.13 micron wafer fab process... My bet is that Intel could make a meager profit if the SOLD the X-BOX CPU for $20. Are you saying that X-Box will be produced on full depreciated .25 equipment in fully depreciated .25 FABs? (the reported speeds do seem to suggest that). What are the variable costs on a die that large? Or are you expecting X-Box die to come from new production facilities? Have you considered the depreciation that must be allocated to parts produced in a new FAB? I'm not talking paper costs, those can be manipulated to shift costs to other parts if need be, but the real cost of devoting a half Billion dollars of upgrades to producing a low margin chip? You'll almost certainly have to allocate $200 to $300 million in depreciation costs to whatever is produced in such an upgraded FAB in the first year, and $150 to $250 million the second. If 50 million parts are sold per year (not likely, meaning fixed costs have to be spread over fewer parts) you'll need to cover $3 to $6 per part for FAB depreciation alone, you also have to depreciate design and marketing costs, add in variable costs such as wafer stock, chemicals, labor, packaging, etc. Aren't variable costs on a .18 Intel CPU at least $20 to $25? Now, consider that to get Microsoft to shaft AMD in the middle of Intel's big "let's all switch to Linux" campaign, Intel must have offered a very low price - my guess is considerably under $20 - so the estimate that Intel will be shipping a $20 bill with each X-Box CPU sounds about right, and is probably a worthwhile investment for Intel. Alibi Dan