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To: niceguy767 who wrote (239036)	8/18/2007 11:58:50 AM
From: Ritz	Read Replies (2) \| Respond to of 275872

can anyone reconcile INTC's 5% gross margin improvement guidance to reality? They noted at the conference call that .45nm ramp up costs were expected to decline in Q3. That, and anecdotal evidence of strong Q6600, E6850 and E6750 demand and I can easily see better product mix and lower expenses resulting in a significantly higher gross margin.

To: niceguy767 who wrote (239036)	8/18/2007 12:57:35 PM
From: wbmw	Read Replies (2) \| Respond to of 275872

Re: Given continuing weak pricing, can anyone reconcile INTC's 5% gross margin improvement guidance to reality? About 3-4 percentage points comes from the 45nm ramp. Basically, they paid a lot of up-front costs in H1, and do not expect to have to pay those again in H2. The other percentage points probably come from product transitioning. For example, Intel's Pentium 2000 series chips are small Allendale cores that replace the previous Pentium D. That lowers costs in one of the most high volume product lines that Intel sells.