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

To: Jim McMannis who wrote (32747)	5/18/1998 2:14:00 AM
From: Yousef	Read Replies (1) \| Respond to of 1571964

Jim, Re: "AMD will NEVER EVER have process technology the equal of Intel and if even IBM does, AMD will have to pay IBM so much that what cost advantage is gained from the smaller die will give way to what IBM charges to fab or package the chips?" I don't think I ever said that AMD "will NEVER" have process technology the equal of Intel ... it is just that at .35um and .25um, Intel has been ahead by 1/2 to 1 generation (1 - 2 years) over AMD. I think Elmer did a good job answering your die cost question ... the fact is, Jim, Intel has better yields than AMD. This is due to the fact that Intel runs more silicon and thus "learns and improves" their processes faster. Also due to economies of scale, Intel gets better prices on equipment and chemicals ... thus, Intel has lower wafer costs and better yields. I would guess that these offset any die size advantage of AMD (right now). I also agree with you that Intel will continue to use their strategy of keeping 2 - 3 speed bins ahead of AMD and aggressively pricing parts on the mid - low end of performance ... seems to be working well. <ggg> BTW, why are you so interested in these sorts of technical fundamentals ... don't you just worry about the "tea leaves", Jim ?? Make It So, Yousef

To: Jim McMannis who wrote (32747)	5/18/1998 1:34:00 PM
From: Brian Hutcheson	Read Replies (1) \| Respond to of 1571964

Jim , re. your thoughts on AMD's cheaper production costs In this PC business environment with HP and others feeling the pressure on prices , AMD comes into its own . The success of IBM and Compaq with K6 sales is evident still e.g. a local newspaper last week had only K6 PCs advertised with the exception of a Cyrix PC . Future Shop (a Canadian superstore) seems to adverise mainly IBM or Compaq K6 PCs on the front page of their flyer , while Intel is tucked inside somewhere . The question is , can AMD make good profits in that environment ? If AMD can produce 2000 wafers per week with half being K6-2 at just 50% yield they will produce approx 2.6M K6 classic and 2.1M K6-2 If we assign an ASP of $110 for K6 classic and $150 for K6-2 (conservatively) then we arrive at $601M revenue for CPUs , that coupled with their usual revenue of $400 approx for the rest of their business would give $1B for a quarter . Their break even revenue is I believe around $650M-$700M , from the extra $300-$350M they should have great earnings possibly a $1 a share per quarter or more . Brian