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

To: Aaron Cooperband who wrote (29381)	3/3/1998 6:21:00 PM
From: Petz	Read Replies (2) \| Respond to of 1573950

Aaron, on the the contrary, the IBM agreement lessens the necessity for AMD to borrow money. IBM is sure to charge enough to cover both their fab depreciation and their profit. On top of this, AMD will have to continue paying their own fab depreciation and expenses. It will be tough for AMD to cover double the costs while selling CPUs for sub $1000 PCs. It requires a lot less of AMD's cash to pay IBM $2000 to $2500 per wafer for K6 CPU's than it does to purchase additional lines of capital equipment for Fab 25. AMD said this about their expansion plans: ...the agreement with IBM should not be construed as a sign AMD would back off its own plans to invest $1.5 billion in its semiconductor manufacturing business. IMO, though, it may well stretch out the timing of this investment. BTW, the $2000 to $2500 numbers come from Intelopers on this thread. If a K6 wafer only has 75 good chips (less than 70% yield numbers being spouted about), they will have, at most, $750, in additional packaging costs and be able to sell the chips for $7500. Petz