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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (36146)	4/17/2001 6:57:52 PM
From: Road Walker	Read Replies (2) \| Respond to of 275872

Joe, re: "Suppose Intel has capacity to build 150M processors. Now they will invest in .13u, lower the unit manufacturing costs by 1/3 and double capacity to 300M processors. So now Intel has capacity to build 300M processors, and costs like the old costs to build 200M processors. But suppose they only sell 150M processors. The costs will actually go up by 1/3, not down." Well, the COGS goes down a lot (also with the 300 mm wafers), but you are right, without growth, the fixed cost as a percentage go up and if unit growth is not there then net profit would probably be down. Intel is betting on a growing marketplace. If it doesn't happen, Intel (and it's shareholders) are screwed. AMD (and it's shareholders) are screwed also, probably more, becuase the ASP's will drop substantially. And at that point the assumption is that Intel is the low cost producer. Bottom line, the Intel CC was better news for AMD than Intel. Intel has the communications problem, still declining, they say PC's have bottomed, maybe not servers or mobile. I suppose AMD has more of a flash problem as a percent of sales. We will find out tomorrow night. John

To: Joe NYC who wrote (36146)	4/17/2001 7:45:27 PM
From: niceguy767	Read Replies (1) \| Respond to of 275872

Jozef: "But suppose they only sell 150M processors. The costs will actually go up by 1/3, not down." INTC has not proven that P4 can sell at any price from what I've seen...Heck they were supposed to sell 2 million in Q1 and only sold 1 million...nevertheless the iNTC AH investor is elated...INTC at $29 in the AH market gives a whole new meaning to contrarian investment strategy...

To: Joe NYC who wrote (36146)	4/17/2001 10:15:37 PM
From: kash johal	Read Replies (1) \| Respond to of 275872

Jozef, re:"Suppose Intel has capacity to build 150M processors. Now they will invest in .13u, lower the unit manufacturing costs by 1/3 and double capacity to 300M processors. So now Intel has capacity to build 300M processors, and costs like the old costs to build 200M processors. But suppose they only sell 150M processors. The costs will actually go up by 1/3, not down." But you are missing the big picture here. Die cost is irrelevant wether it goes from $20 to $30. The key is majority of profits come from the top 10-20 of parts shipped - the highest Mhz - highest performance ones. Intel is attempting to put a massive high Mhz production capability to crush AMD. AMD in turn is gonna bet all the marbles on SOI. The risks for both comapnies have just gotten pretty extreme IMHO. regards, Kash