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

To: Petz who wrote (45429)	1/11/1999 2:10:00 AM
From: Elmer	Read Replies (2) \| Respond to of 1572298

Re: "OK, lets say depreciation was $1000 per wafer, labor was $400 per wafer and materials were $200 per wafer. Of Intel's $780M of depreciation, most is depreciation of semiconductor fab equipment, lets say, $500M. To cause $500M of depreciation, at $1,000 per wafer, Intel had to process 500,000 wafers. Intel produced 26M CPU's with 500,000 wafers. Thats 52 CPU's per wafer. Intel sucks. " John, I am not a finance person so I can't present the numbers to you, however I get my information from people I respect and have every reason to believe they do know what they are talking about. I'm sorry I can't convince you with facts, I don't have them to present and unlike others I will not try to defend what I can't prove. As confident as I am, I can't prove my claims. Believe what you want. EP

To: Petz who wrote (45429)	1/11/1999 2:29:00 PM
From: kash johal	Read Replies (3) \| Respond to of 1572298

Petz, Re: Depreciation Petz you are right and you are wrong. YOU ARE WRONG: The wafer cost of $2000 DOES include the depreciation for the wafer fabs that are producing those wafers. Fabless guys like me can BUY 0.25 micron wafers for $2000 and that INCLUDES PROFIT margin for folks like TSMC. YOU ARE RIGHT: The depreciation does not make sense when amortized over 200K wafers/quarter. INTELS DIRTY LITTLE SECRET: They are still DEPRECIATING their old FABS/EQUIPMENT that ARE NOT PRODUCING any more. This is a major problem because the old 0.5 and 0.35 micron Fabs still have 5 years to go to be fully depreciated. Their current market value is negligible. If these were valued at FMV Intel would be showing much lower profits. Regards, Kash

To: Petz who wrote (45429)	2/2/1999 11:56:00 AM
From: Saturn V	Respond to of 1572298

Intel Wafer Cost Estimates: You were attempting to estimate Intel's Wafer Cost for Celeron a few weeks ago. I met a friend who buys wafers for a design house and has been it this business for 10years. I asked him about wafer costs. His replies can be summarized as. "The most expensive wafers come from IBM for 0.25micron. In small quantities the cost is $2500, but in high volumes it drops to $1800. In Asia the costs are in the range $1600-$1900. However he can buy memory wafer incremental capacity for $1100-$1400.[ Incremental capacity wafers are delivered when ever capacity frees up and thus have unpredictable delivery time.They are cheap because they are not burdened with overhead costs. The unpredictable delivery is OK for a commodity products like memory.]The figures for 0.35micron are typically 40% lower." The above figures include significant profit and depreciation. Intel has much larger economies of scale and is much further along the learning curve.So I suspect that Intel's average cost for 0.25micron is $1100, and the incremental cost is $700.The Intel process is simpler than IBM, but more complex than the Asian foundries.] Use these figures for your "back of the envelope calculations".