ng, Thanks for your reply. To answer your last question first, I'm not short AMD, nor do I intend to be. My interest in AMD is to see whether it can continue to take market share from Intel, and whether AMD can maintain lower prices for their chips compared to similar performance Intel products. I'm assuming that is how AMD moved up to the present 20% MS.
>> If there is such a thing as a slam dunk, AMD's lawsuit is just that from my vantage point.
I'll take your word for that. I didn't even know the suit existed until I read it on this board. I think you mean that Intel will be compelled to raise its prices, which will enable AMD to raise its ASP, which will bring in more profits to AMD. Sounds like a duopolist dream come true.
But I want to discuss the boring item of cost. I read here that FAB 30 was fully depreciated, so products from it bring very high margin. I imagine that's how AMD can price its chips below intel's and still have a profit. So I'm trying to figure out if this same level of margin will continue when Fab30's products are transitioned to Fab36.
One puzzling thing in AMD's balance sheet is that, in q4, plant and equipment (PPE) dropped from $4.3B to $2.7B, even though AMD spent several hundred millions on fab 36. I know that AMD transferred assets to Spansion. The spansion investment is valued at $720m. So where did the remaining $800m go ? Depreciation was $277m, but I have to assume it was offset by capital expense. And where are the Fab36 costs shown ? They are not a separate line item on AMD's balance sheet, even though the spansion asset is shown as a line item.
amd.com 
My guess is that fab 36 will have high base costs, and products from it (if sold at current ASP) will have much lower gross margin than currently achieved from fab 30. But this only an uninformed guess, and I am hoping discussion here can improve it into an educated guess.
That is the question that I was hoping to discuss. I know it is much less interesting than hurling gigahertz and mips, but I think in the end (6 months ?) it will be the determiner of AMD's and Intel's share price.
For my disclosure, I bought intel shares after it dropped to 22, thinking it will fill the gap up to 25 or 26 when the dust clears.
Sarmad |
