Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mo Chips who wrote (47758)	2/13/1998 12:30:00 AM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Mo - Re: "now and forever is where I lie..." There - you just admitted it yourself! Thanks for PROVING me right - again. Paul

To: Mo Chips who wrote (47758)	2/13/1998 1:06:00 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 186894

Mo Chips, Consider this... 1. Intel plays the MHz game well. Their flagship chip runs at 233, 266, 300, 333MHz and they can deliver. They make high profit margins on these chips which cost about $90-100 to make at .35u Probably drop to $60-70 on .25 micron. The 333 for instance sells for about $755 retail. The others sell for about $150 less per speed grade. Nice fat profit margins. The cream off the top. Now let's talk lower Speed grades Pentium MMX-233s, cost Intel about $45 each. The sell for about $200 retail...10 to 15% less wholesale. They get upwards of a 90% yield at .35u. All AMD can yield right now is 233s. The 266s are dependent on the .25 micron process where yields are so bad they have to throw half a wafer in the trash bin...and that's the better of their two fabs and the one with little capacity. At that rate a K6 chip is likely costing them $70-$80. Meanwhile, they have decided to undercut intels prices by 25%. I've seen the K6-233 for $145 retail. So let's be conservative and say they are selling it for $130 (less to Compaq and IBM). 130-75=55...55/130=.42... .42 x 100=42% gross margin. Intel on the other hand...say selling 233MMXs for 180. 180-45=135 135/180=.75 .75 x 100= 75% profit margin. It gets worse for AMD at the lower speed levels where their chips sell for under $100. So you can see that even at the sweet spot of 233MHz AMD is getting creamed. And on top of that Intel gets the really big margins on the higher MHz Pentium IIs....AND on top of that, AMD can't even supply the demand they have created while Intel, which has superior FABs can. I think AMD and NSM have sufficient technology "chipwise" going forward to compete with Intels Pentium IIs quite well but the difference that HAS to be made up is in the FABs and the die sizes. Even if the die sizes are equal then Intel still wins on the yield. (no. good die per wafer)///Right now, plain and simple...Intel can produce mo chips at half the price.