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

To: combjelly who wrote (201285)	6/9/2006 1:35:31 AM
From: hammerfall_prophet	Respond to of 275872

Very welcome. I forgot to mention, in addition to the lost interest on tied up capital, there's also the even bigger cost of equipment depreciation. Fab equipment depreciates equally in time, whether it is being used or not, because its depreciation is due to obsolescence rather than wear. Thus, a fully ramped 2 billion fab costs upwards of 100 million a year just by being there; but very little more when fully utilized. CPU's are a delicate business to be in, btw; the consumption end is pretty inflexible too, with little variation of unit consumption as a function of price. Similar to the oil business, in this sense.