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

To: Tony Viola who wrote (146451)	10/31/2001 3:22:49 PM
From: Dan3	Read Replies (3) \| Respond to of 186894

Re: Joseph did call in and ask if Intel was being conservative on that 25%. Andy B, said "maybe" or something like that. Intel's projection for the savings from moving to .13 next year will be 5%. I found that surprising (I think we all were expecting more). That 25% number you quoted was for moving to 300mm wafers in 2003. AMD will be able to supply 50 million processors next year with a single FAB that is small by Intel standards. Total processor demand this year looks like it's coming in around 140 million parts. If it goes up by 15% (an estimate that's looking more and more optimistic each day), Intel will need to supply 115 million processors (to support a total demand of 165 million). Intel will be running 6 FABs, some of them significantly larger than Dresden. If their chips were the same size as AMDs, and their yields were as good, they'd have the capacity for something like 400 million parts. The P4 is bigger than Athlon but the PIII is smaller, and most of Intel's production will be P4 next year. So maybe they only have capacity for 300 million parts. Intel has been putting in a lot of fixed costs for next year, and committing to a lot of variable costs, as well (payroll and building & equipment maintenance) that can't be avoided even if they shutdown half their capacity for most of the year. Maybe it's the knowledge that they've overestimated demand by 100%+ and will be incurring the costs of that mistake, that lead to the surprising lack of cost savings being projected for the move to .13. AMD expects costs next year to be lower than this year, but for output to rise from 25 million to 50 million parts - which sure looks like a cost reduction of 50% from the move to .13. Remember Jerry crowing about the cost advantage AMD would have next year? It seems that Barrett has confirmed what Sanders said.