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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: The Duke of URL© who wrote (121091)	12/7/2000 1:33:34 PM
From: Dan3	Read Replies (1) \| Respond to of 186894

Re: I belive That Intel's unit cost of production is Lower than AMD's I believe this is true in terms of materials and labor, but Intel has a fixed overhead cost that dwarfs AMD's and Intel's non X86 business loses money while AMD's makes money. Bottom line is that Intel's breakeven point is at an ASP of around $140 while AMD's breakeven point is at an ASP of around $70. Dan

To: The Duke of URL© who wrote (121091)	12/7/2000 1:40:24 PM
From: jeff_boyd___	Respond to of 186894

"Cost of Production" You are certainly right that Intel's cost to produce is less than AMD's. In a very competitive market with lots of competitors, I would think that a higher cost producer would be at risk of being driven out of the market. Here, however, if Intel's costs are $5 or $10 a unit higher, they would have to give up their margins in order to "drive AMD into the ground." That only works if AMD is only doing business in certain segments. The key question in my mind is whether AMD can move into the corporate space so they can avoid this. On that issue, it looks like AMD needs to make quite a bit of progress. On the Dresden accounting issue, you do raise a good point, but it isn't a huge issue. They continued to capitalize interest on the facility while "construction" dragged on, but in the overall scheme of things it wouldn't have been more than $50 or $60 million per year. This will be depreciated with the building. Regards, Jeff