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

To: Time Traveler who wrote (34597)	7/16/1998 4:06:00 PM
From: Petz	Read Replies (1) \| Respond to of 1576627

Time Traveler, re:<CPU has much higher gross margin [than average of 49%]> A year ago, Intel's gross margin was 60%, now its 49%. If CPU's are 3/4 of Intel's revenue, then the theoretical highest gross margin for CPU's is 65%. (0% gross margin on 1/4 of sales, 65% gm on 3/4 of sales) It simply can't be that high unless networking, flash, chipsets, motherboards, etc are all loss-generating businesses. (Remember, gross margin has to cover overhead and R&D also.) From my earlier post 34596: If Intel sold 19M CPU's in the 2nd quarter and had revenues of $5.9B, lets assume 3/4 of that revenue was CPU's. That would imply an average selling price (ASP) of $233. It would be a stretch to estimate gross margin on CPU's as high as 60% What this means is that Intel does not build CPU's for $50, but for at least 0.4ASP = 0.4$233 = $93 $50 is a totally impossible estimate. Petz