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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Petz who wrote (26903)	12/18/1997 7:26:00 PM
From: kash johal	Read Replies (4) \| Respond to of 1573908

FYI, the market price for 0.25 micron foundry wafers 8" from people like TSMC, UMC are in $2000 range. This includes the foundry's 50% gross margin and some accelerated depreciation. The problem as I see it is that the process technology is now so good that actual chip costs for PII/K6 die are coming down rapidly, wafer capacity is doubling in terms of units shippable in 98 vs 97 and the marketplace is due to see unit growth of 10-20% depending upon you're favorite analyst. One possible scenario is that Andy, Brain and Jerry will drive over to the old wagon wheel and reach a gentlemans agreement to keep prices up to $150++ and profits high while carteling the unit volumes to assure good profits. And everyone including investors live thru 98 happily. This kind of scenario is pretty rare. The other scenario is that each of these guys has at least one brand new 8" fab and is going to go hell for leather to get market share at any reasonable price. Also the wafer costs assume the fab is running at >80% utilization otherwise fixed costs kill you and wafer costs actually work out to 2-4 times the assumed $1000/wafer. Some examples of this type of scenario: DRAMS, HDD, Flash, and something called a 486 (for those of you with long memories). In 99 you have Merced a huge die and very profitable for Intel. So 99 will be great for Intel however i can't see why Intel could not go below $50 and AMD below $12 in 98( a 30% further correction). Best regards, Kash.