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

To: Yousef who wrote (45411)	1/11/1999 1:27:00 AM
From: Petz	Read Replies (1) \| Respond to of 1583366

Yousef, re:<Depreciation for Land&Building (typically on longer depreciation schedules ... 10 yrs) are not included.> Depreciation of land and buildings doesn't amount to diddly-squat because the schedule (actually 10-30 yrs) is so long. The vast majority of depreciation in any semi company's P&L statement is related to semiconductor processing equipment. The $2,000/wafer cost is referred to as "wafer cost" for a reason -- it ONLY includes the direct cost of producing finished wafers. Depreciation is NOT included in wafer cost because depreciation does not go up or down depending on how many wafers a fab is processing. LABOR costs are directly proportional to the number of wafers processed. COST OF MATERIALS is directly proportional to the number of wafers processed. (My $500 number is probably obsolete from the Japanese fire/wafer shortage era.) BTW, I use $2,500/wafer to estimate the direct costs for AMD, since there are more processing steps in AMD's process, requiring more labor cost. Petz

To: Yousef who wrote (45411)	1/11/1999 3:07:00 AM
From: Craig Freeman	Read Replies (1) \| Respond to of 1583366

Yousef, re:. "Depreciation for Land&Building" Land is not a depreciable asset unless you expect it to be covered by water in the near future or otherwise "consumed". But Fab "buildings" suspended on springs and such are VERY expensive. Depreciation would significantly increase your cost per wafer computations. For example, AMD's Fab25 cost $1.5B to build and maxes out at 250,000 wafers per year. That adds $600 per wafer at 100% utilization over 10 years (an extremely optimistic scenario ... even for Intel). Craig