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

To: Elmer Phud who wrote (138148)	10/29/2004 5:09:09 PM
From: pgerassi	Read Replies (1) \| Respond to of 275872

Ephud: Number from MicroProcessor Review. Yours requires more substantiation as raw material costs are higher than that per good working die. That is the rub. Another die may cost Intel $10 to make, but many are non functional and thus need to be tested. Of those that do work somewhat, many of those can't run within the parameters of any bin. Of those that can be binned, many can't be in a bin that can be sold in today's market. Now what's left is much less than what were started. And then you must add in packaging costs, shipping costs and distribution costs on those saleable dies. Lastly you incur other costs like pamphletes, HSFs, etc. needed to make another sale. Now we get to the true marginal cost of another CPU in sales. It doesn't include the price reduction costs of the increased supply and all of those other real world costs that can make it actually worse to produce anther CPU. You can take Oil as an example of an inelastic good that once you satisfy demand large ASP reductions are required to sell just one more barrel a day. Else OPEC wouldn't be able to use production cuts to boost their profits. Intel already stated this in their press releases. Now where is your justification for believing Intel can make an average CPU for $10? Now look at all those costs you forgot. Pete