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Re: wbmw post# 2086

Friday, 10/25/2002 10:17:05 PM

Friday, October 25, 2002 10:17:05 PM

Post# of 151696
We are taking two different approaches to estimating the unit costs for Banias. You are doing it by trying to understand the manufacturing process, making guesses about die sizes, yields, etc.

My approach is to look at the financial statements of INTC, other semiconductor companies, and other companies who manufacture precision electronic components. I believe that my method is at least as accurate as yours – and perhaps even more accurate as my method involves fewer assumptions and hence fewer chances of introducing an error from a faulty assumption.

You can talk all you want about INTC’s leading-edge technology, but the fact remains that very few high-tech components sell at the kinds of gross margins implicit in the claims you make for Banias. Your contention that the $637 high-end Banias will have a COGS of only $60 – and hence a gross margin of 90.6% (577/637) -- strikes me as naïve. Regards, Dew




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