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

To: Tushar Patel who wrote (137017)	6/8/2001 12:44:32 PM
From: Dan3	Read Replies (2) \| Respond to of 186894

Re: costs... are projected to go down after the move to 300 mm Exactly how much of a company's total costs should be allocated to each unit of production is what makes accounting a much more interesting subject than most people think it is. Most of us have no way of knowing how many staff-hours, dollars worth of wafers, and dollars worth of chemicals are used for each P4 die on a future 300mm wafer. What we do know, is that non-IAG (Intel Architecture Group e.g. CPUs and such) isn't going to be making much money for a long time, and that's what uses the ex-CPU capacity spun off by the IAG to be used by the rest of the company. So the IAG has to cover the capex costs. Capex is running $7.5 Billion per year, and Intel sells about 120 million CPUs per year, so I get capex costs of $62 per chip. Two years ago, they were selling about the same number of chips, at a $200 ASP, and capex costs were half what they are now. Now capex costs are way up and ASPs are below $150 and dropping fast. The market will keep growing, but a lot of that growth is at the very low end in Asia and will be satisfied by Via. I think Intel is hoping to collapse on the finish line next year, after building those 300mm plants, and then cut capex to the bone while they rebuild their cash reserves. But I wouldn't count on it, given that AMD is already putting in place what they believe is a more advanced process (SOI). Presumeably, Intel will save $5 or so on materials, labor, and utilities per CPU when the 300mm FABs are in production. But I think those savings are dwarfed by the capex costs. Just my assessment. Regards, Dan