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

To: Ali Chen who wrote (79003)	5/1/2002 7:56:48 PM
From: wanna_bmw	Read Replies (1) \| Respond to of 275872

Ali, Re: "How can this possibly qualify as an excuse, excuse me? We are talking about overall efficiency, don't we? Under-ramped fabs cost money too, don't they?" ... "Even if you try that Intel is making other stuff in their FABs, I would argue that all other stuff is considered as enabling means to provide sales of their CPUs, therefore that cost must be considered as inseparable, and Dan's argument still stands." The statement in question is this one. "Intel just spends 8 to 10 times as much on their FABs for 4 times the capacity" Message 17397076 You are being unreasonable on two counts. First, if you are going to talk about Intel's return on their manufacturing investments, you have to consider how these facilities will operate at all points during their lifetime. Right now, there are some fabs on Dan's list that have not ramped to capacity. Still others on Dan's list haven't even started production. Dan3 even has a couple fabs on his list that haven't even finished construction! Sure, Intel is paying for these fabs now, but long after Intel has finished paying for them, these fabs will be generating a ton of revenue for the company, yet Dan3 neglects to count any of this in his argument. The reason why this is important is because Dan's whole argument is based on how many chips that Intel sells vs AMD, which is a data point for the present. A year or two down the road, though, Intel will have far more manufacturing capacity, all based on the spending that they are doing now. Capital spending affects the future, not the present, and that's a major fundamental flaw to Dan3's whole argument. Second, if you are going to talk about money spent vs returns on manufacturing, you have to consider how many finished goods are going to be produced. You can't restrict the data set to CPUs, or CPUs + flash, or any other arbitrary category. You have to consider everything manufacturable from all of Intel's fabs. This includes, but is not limited to CPUs, Flash, chipsets, Embedded products, Networking chips, I/O chips, optical chips, legacy chips, and MEMs. Intel manufactures all these things, gains revenue from all these things, and will likely continue ramping higher in volume on all these things. That's their return on investment, yet Dan's argument assumes that all but the first two are trivial in volumes. This is not necessarily so, making Dan's current data set is highly suspect. I suggest that you rethink your support for Dan's argument. It's been clear to many people so far that it doesn't hold water, and you seem to be one of the few people fooled into believing it. wbmw