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To: Petz who wrote (37821)	4/30/2001 1:47:38 PM
From: kash johal	Read Replies (2) \| Respond to of 275872

Petz, re:"you oversimplified the financials in saying P4 makes more profit than P3. When making P4's, Intel's depreciation and MG&A expense have to be spread across far fewer chips than would be possible with the P3. Just considering raw materials and direct labor to make the P4 vs. the P3, you are right about the cost. And there is no way a 1.3 and 1.4 GHz P4 will have an ASP higher than $160. I read someplace that the Rambus rebates are NOT ending until Q3. Finally, there is another factor in that the P4 has more layers and requires more processing steps. Therefore, a fab that can normally process 5,000 wafers per week on the P3 process may not be able to process 5,000 wafers per week when making P4's, just because the "assembly line" for the P4 is longer and all the equipment for 5,000 WPW of processing steps might not fit in the fab." Well there's any number of ways of looking at it. 1. Intel has essentially a fixed overhead cost - regardless of wether they ship PIII's or PIV's. They clearly make more money selling PIV's than PIII's. 2. The only way for me to be REMOTELY wrong on this is where Intel is capacity limited. Which they clearly are NOT right now. Now if you are asking me wether Intel is LOSING money on all the PIV's it sold last quarter and most likely this quarter. Then i would agree with you if you amortize developemnt, marekting costs etc into it. However this is ALWAYS the case with every new chip for EVERY semiconductor company - until it ramps up. When considering this you also have to look at the opportunity cost of Intel of NOT having the PIV in high volume by Q4 2001. regards, Kash Johal