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

To: combjelly who wrote (197456)	5/18/2006 10:26:41 AM
From: BUGGI-WO	Read Replies (2) \| Respond to of 275872

@Combjelly " Unfinished goods are valued at what it has cost t produce them to that point. It costs somewhere around $3k to process a wafer. Assuming a die size of around 150mm^2, that means each unpackaged, untested die is valued at something less than $7 each. For 200mm, it would be closer to $15. Once packaged and tested, the value in inventory is whatever it will sell for, which for AMD averages somewhere around $95. " Are you 100% sure? Would mean, that volume inventory at finished goods is near NON-Existing. BUGGI

To: combjelly who wrote (197456)	5/18/2006 11:16:10 AM
From: grimes	Read Replies (3) \| Respond to of 275872

CJ re: "Once packaged and tested, the value in inventory is whatever it will sell for, which for AMD averages somewhere around $95." I believe inventory is carried at lower of cost or realizable value - in particluar AMD's finished goodsinventory would be carried at fully burdened cost (that is would include variable manufacturing cost plus applied overheads.) Since these parts sell at very high margins (60 percent or thereabouts) the sales potential from finished goods inventory would be some multiple of its carrying value (i.e $ sales potential = $ finished goods inventory/(1 -(gross margin)/100). I believe finished goods inventory is carried at its expected selling price only if its expected selling price is less than it cost to produce it. The carrying value of work in process inventory is the accumulated cost to get it to its current point of completion. For example cost of wafers in process would include the cost of the wafers plus materials used during the various stages of production that have been completed. I am not sure whether work in process inventory would include applied overheads, such as Fab depreciation, direct and indirect labor etc - i suspect these costs are not included until parts move from WIP to finished goods. However finished wafers (which are still WIP inventory) are almost certainly carried at a small fraction of the sales they will eventually produce since dicing, packaging, testing and possibly a fair bit of direct and indirect overhead are not yet applied. If the cost of a finished but undiced/untested wafer that comprise its WIP value is (say) $ 5,000 and it will eventually result in 200 processors that can be sold for $ 100 each then the revenue value of this wafer will be $ 50,000, or 10x its value as work in process inventory. edit: I see Cravey managed to say the sam thing (I think) in about 10 words. Oh well.....

To: combjelly who wrote (197456)	5/18/2006 11:46:41 AM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 275872

I expect that the progression of work-in-process is orderly and not lumpy to the extent you assumed. The testable conclusion here is that in order to have higher revenue in q3, there will have to be significantly higher inventory in q2, both in finished goods form and WIP form. We'll wait and see where inventory is at end of q2. The obvious idea here is level of finished goods and WIP at end of a quarter is the supply constraint on how much can be sold next quarter. Nearly all of a quarter's revenue comes from wafers that were started in the previous quarter. By the way, I never said or implied AMD is in trouble due to inventory. I do think fab 36 is ramping slower than what some here expect (for instance niceguy saying fully ramped by year-end '06). I have no idea whether that is due to caution to avoid over-supply, or some technical reason.