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

To: Elmer Phud who wrote (138206)	10/29/2004 10:31:22 PM
From: pgerassi	Read Replies (2) \| Respond to of 275872

Ephud: Your so called response was also lacking. I checked your figures and they were quite light. 612 GDPW is too high given Intel's production. They must have to throw out quite a few to need 1 300mm fab, much less four. So either they are producing far less than 120K WPW or the mean speed bin of the "good die" is far below saleable speed, a number of sigma below. I unlike you assume the former which does kick up the die cost substantially. Use your own die cost model, if you want. I used the one from sematech.org . Its simple economics really. AMD got to 75% fixed 25% variable, but Intel went way far the other way (like they did with pipeline lengths), perhaps 90-95% fixed and 5-10% variable. $5-10 marginal cost builds to $50-200 true die cost. Intel needs those triple digit ASPs to pay for that fab building binge. 120K WPW worth of fabs run at a dozen or two K WPW, are very expensive. And to put even more salt into the wound, Intel paid a premium to get them ahead of the waiting lists for equipment. So a wafer cost for say TSMC, Micron or TI is probably far less than what Intel has to pay. But, they have this cash cow that makes everything alright with the shareholders. Trouble is that that cow isn't producing as good a milk as it used to. Bad feed and poor management is to blame for that. The Netburst hormone made it sick and the Itanium feed left it even weaker. Some of the milk was so bad, that it had to be dumped. Now they hope to cut back on the production to give it some rest and hope for the best. But it will still play havoc with the farm finances. So either Intel is suffering horrible bin splits or they just built too many fabs. Most here disagree with you. They think, as do I, that the latter is far more likely. And that means high all in die costs (either way you look at it). And it will get even worse until they have a better design. Adding cache may make for a slightly faster slug, but 105% of slugs are still slugs. They won't be mistaken for the rabbits of the competitor. Pete