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To: Reginald Middleton who wrote (57266)	6/5/1998 11:37:00 AM
From: Paul Fiondella	Read Replies (1) \| Respond to of 186894

I don't want to turn this into a discussion of AMD But my understanding is that they built one large FAB to do .25 in Texas a few years ago and that they have outsourced chip production to IBM which already has the FABs and the process technology. So they have not overextended themselves on the FAB side. Correct me if I'm wrong. They are using other companies excess FAB capacity. The deal with IBM probably gives IBM a price break, and since increasing production is in both companies short term interests, its seems to me that they have sacrificed very little to gain market share, and are not simply trading losses (low chip price) for market share as others have implied. As to their cash flow on a long term basis. If they can carve out a market segment they will eventually be profitable in that segment and make money. Take a look at Chrysler which was basically broke but carved out the mini-van and four wheel drive segments for itself and became extremely profitable.