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

To: prtscrn who wrote (184037)	4/10/2006 8:13:03 PM
From: Sarmad Y. Hermiz	Read Replies (2) \| Respond to of 186894

>> Doesn't Intel have an advantage in 65 nanometer? You mean like five 300 mm fabs producing parts at 65 nm. While AMD has zero of same ? yes. But the people who expect Intel to go under, bolster their argument by saying Intel mismanages its assets. has poor utilization of its fabs. gets low yield in its manufacturing. has a bloated work force, and generally is an all-around corporate buffoon. The $15B of cash from operations in '05 does not seem to enter their calculation.

To: prtscrn who wrote (184037)	4/10/2006 8:19:54 PM
From: TimF	Read Replies (2) \| Respond to of 186894

Right now I think 65nm is to new to give Intel a huge cost benefit, but they are ahead of AMD, and presumably they will reach the cost benefit from 65nm before AMD. ---- Note I don't know the real price per chip for each company and I'm really not even trying to guess here, I'm just pulling some numbers out of thin air to try to demonstrate a point. The number can be off without invalidating the point as long as the relationships between them aren't too far off. ---- Lets say Intel fabs a chip for $10 (not including packaging and test but then 65nm won't help that) and sells it for $140. They don't make $130 on the chip because of packaging and test cost but they make a good profit. Lets assume AMD's chips cost more to make, and they get less for them. Lets say $15 for cost and $95 for the sales price. OK. Now lets say Intel's investment in 65nm chip production reduces the cost to Intel to fab the chip by a third. That a big cost reduction in percentage terms but it means they fab each chip for $6.66. The actual cost reduction per chip is only $3.34 on a chip that they sell for $140. Sure Intel's cost to fab a chip would now be less than half of AMD's but it would not be rational of Intel to try to "take advantage" of this cost savings to slash prices on a $140 chip. If they just a few dollars off of their ASP than it doesn't change the market much. If they slash their ASP than the cost savings probably won't mean much compared to the lost income. True with more fab capacity coming online and with 65nm ahead of AMD they could try to make up for the lost margins with volume, but Intel can only grow volume so much. The market is growing but its not exploding as far as I can tell. And Intel can hope to take market share (esp. if they lower prices) but can they take a huge chunk of AMD's market (it would have to be a huge chunk to make a difference to a company the size of Intel). Can they do this? Can they count on doing this? Tim