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

To: Joey Smith who wrote (34455)	7/14/1998 12:47:00 PM
From: Maxwell	Read Replies (3) \| Respond to of 1585199

Joey: <<Maxwell, I agree with you that cost of Mendocino is the key. I'm betting the farm on Intel that costs will be low enough, so profit margins will rise, not fall, 2H98.>> I hope you know that it takes about 3 months to ramp the Mendocino. Also Intel margin will rise due to Xeon not Mendocino. Why? The reason is that Xeon is target for corporate and high end users and they have money to buy it. Mendocino would be a mistake if Intel wants to target low end users. Why? The die size is so big that even with good yield Intel can't get many dice per wafer compared to the PII. As a result it is a tough market to compete with the K6-2 or the K6-3 where the dice are 20%-60% smaller. The bottom line is that can Intel grow in revenue. In the investor eyes, cutting cost to improve margin is just not like increase in profit from revenue increase quarter to quarter. You know what I mean. Maxwell

To: Joey Smith who wrote (34455)	7/14/1998 12:48:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1585199

Joey, To: +Jim McMannis (34454 ) From: +Joey Smith Tuesday, Jul 14 1998 12:22PM ET Reply # of 34455 Maxwell, I agree with you that cost of Mendocino is the key. I'm betting the farm on Intel that costs will be low enough, so profit margins will rise, not fall, 2H98. I guess I'll know in a few hours. For what its worth, I've been hearing good things about yield, cost, etc. joey" I'm not Maxwell. If the Mendocino cannibalizes the Pentium II I don't know how ASPs can rise, the Xeon not withstanding. Of course they could name the Mendocino the Celeron II and keep sales down and profits up. <G> At 165mm2 there would only be approx. 140 possible good die in a wafer. At even 80% yield, that's 112 good die. At a $150 ASP??? that's $16.8k value per wafer. Compare that with the value/wafer for a Pentium II which is probably in the high $20ks. My numbers aren't exact but if the Mendocino cannibalizes the Pentium II like it could you can see what "could" happen to margins...