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

To: John Carragher who wrote (59285)	7/3/1998 8:10:00 PM
From: ed	Read Replies (1) \| Respond to of 186894

On time delivery means the pressure of inventory will be put on the component suppliers and Assemblers. It also means cost of doing business for Intel will be much higher than before. Now , Intel need to put the cost of high inventory into consideration. How can you delivery on time ? It means you have a very high inventory of components , when the orders come, you just ship the CPUs from inventory on time. So, from now on, INTEL got to be careful of releasing new products, because, the new products released will obsolete its inventory of old products easily, instead of obsolete the old systems of the boxmakers as before.

To: John Carragher who wrote (59285)	7/3/1998 8:46:00 PM
From: Francis Chow	Read Replies (2) \| Respond to of 186894

Then intel goes to just in time inventory and everyone wins... My point was that Intel cannot go to JIT inventory. Let's say it takes 8 weeks to go from silicon to finished chip (Paul am I right on this? What's the time for a normal run and what's the time for a rocket run?). That means Intel has to predict demand 2 months in advance. Either there will be shortages or Intel will have to carry some inventory - probably there will be both, because even if the average demand is correctly predicted, the spot demand could be higher (creating a shortage) or lower (creating excess inventory). In the old days when the boxmakers carried up to one month (or more) inventory Intel faced a less variable demand profile - it was the boxmaker's inventory which took care of market variability.

To: John Carragher who wrote (59285)	7/4/1998 1:13:00 AM
From: Herschel Rubin	Read Replies (2) \| Respond to of 186894

Francis & John, The discussion here seems to have yielded the answer to my initial question of why INTC can't predict demand better: There has been a fundamental change in INTC's business demand due to the boxmakers' increasing emphasis on quick turns business. The shift in the burden of holding inventory from the boxmakers to INTC, MU, SEG, etc, currently has EVERY ONE of the component makers reeling! If only I had the foresight to realize this earlier this year when CPQ and GTW decided to follow DELL's quick turns example. Anyhow, we can expect INTC will be (and is currently) undergoing adjustment in its business model to accommodate quick turns demand. Granted, as Francis said, it isn't as easy for the fabs to create more chips overnight as it is to throw a few components in a box with a power supply, so INTC may regrettingly have to keep more inventory sitting around depreciating. On a positive note, now that the boxmakers are doing more quick turns business and are transferring demand volatility DIRECTLY to the component makers, now the potential for UPSIDE VOLATILITY in semiconductors during a turnaround will definitely be accentuated. Those of us who've invested in the chip industry learned this rather painfully (I'm in CRPB, a supplier of test probe cards to INTC, which is down 41% undeservingly). Now that we're armed with the knowledge of future prospects for upside volatility on the component side, including semiconductors, perhaps we can do well. The channel inventory problem will work itself out sometime in our lifetime. Most likely between now and September when boxmakers need to gear up for the end-of-year buying season. What months are between now and September? July and August. Thanks for your earlier comments.