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

To: Jim McMannis who wrote (59728)	7/11/1998 12:22:00 PM
From: woody	Read Replies (1) \| Respond to of 186894

Anyone have the "whisper numbers" on INTC. Will earnings be good enough to maintain momentum in the face of other company pre-announcements. I guess we'll all find out soon enough.

To: Jim McMannis who wrote (59728)	7/11/1998 1:34:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Jim - Re: "doesn't Intel have to yield twice the percentage of chips to get the same number of chips out of a wafer?" Intel has been yielding FAR MORE than twice AMD's K6 yields for a long time. That is why they have been chalking up >$1 Billion/quarter PROFIT for over a year and half, despite poor business conditions. Paul

To: Jim McMannis who wrote (59728)	7/11/1998 2:14:00 PM
From: Jeff Fox	Read Replies (2) \| Respond to of 186894

Jim, re:"doesn't Intel have to yield twice the percentage of chips to get the same number of chips out of a wafer?" I think Paul answered your question, but there are many, many other considerations affecting mftr. cost. Some are: Equipment Utilization - High tech gear is often "down" for routine maintinence, calibration, and repair. You can bet that Intel has the highest utilization numbers in the business. This is due to pure "economies of scale" (i.e multiple fabs and multiple lines in the fabs), Intel's advanced position on the learning curve, systems and control expertise, and high discipline in the fabs. Materials Cost - Intel is likely to get very good material/chemical pricing and is also very advanced in material cleaning/recycling. This leads to lower running cost. Line yields - This is perhaps an industry "dirty little secret", but all fabs do not count zero yield wafers in thier normal yield numbers. Wafers "zero" with breakage and gross misprocessing. Instead there is a separate statistic called line yield - the ratio of wafers with some yield to total wafers processed. Intel has very high line yields. For AMD who knows; they could be reporting "excellent yields" while throwing away up to half the wafers under the unreported line yield category. And finally two biggies, Assembly cost - As cost drop assembly cost become a higher proportion of total cost. There is another yield here as many devices may have assembly defects. This is a bad way to lose chips as the whole thing, die, chip, and labor, are all lost at this step. In the same manner as with fabs, Intel has close control of assembly process and plants, both Intel owned and contractor provided. AMD uses all contracted assembly and has no particular clout for assuring price and quality. Test - All processors are tested first at sort, then later in final form finished product. Testers are expensive and testing can run from seconds to minutes per chip. Test cost can be VERY significant. Again Intel does a stellar job at low cost testing at full speed. Jim - pls consider all the above in your costing models as any one of these factors can swamp out your simple yield estimate... Jeff