To: kpf who wrote (219841 ) 12/9/2006 10:23:33 PM From: economaniack Read Replies (2) | Respond to kpf, sometimes I forget I am writing for a general audience and express things in terms familiar to economists but not layman. Efficient scale normally refers to the level at which minimum average cost has been achieved, and one generally assumes that can be scaled linearly by replicating the production process. Obviously there are fixed costs of design and process development which are amortized over the entire output of the firm and these are never entirely averaged out, so Intel has some scale advantage. On the other hand, at AMD's scale, (two fully functional megafabs) their production is large enough that manufacture costs (fabs, production and packaging) are most of the cost of a finished CPU, and the amortized development costs do not represent an insurmountable advantage for Intel. I certainly didn't mean that AMD had an actual advantage because of size and that Intel was too large, just that most scale economies were exhausted at AMD's current output, and Intel did not have substantially lower average costs on account of being 3 times larger.
