Intel Corp (INTC)

[Elmer Phud]

DewDiligence -

EM: are you including the cost of owning and running the fabrication plant that is used to make the chip, including the salaries and benefits of the personnel at the plant, electricity and other utilities, depreciation of the equipment and real estate, etc.?

To some extent I am. Non depreciation costs are included in the $2000 wafer cost I use plus some depreciation, but let's take a closed look at depreciation and assume none is included in the number I used. Yor numbers are about $75 higher than the ones I come up with. So at $75 a die, how many die would be necessary to pay off a fab and how long would that take? @$1.5Billion for a modern fab that would be about 20 million banias processors or roughly 6 months output for a small fab if we use the number of 150 GDPW. So your numbers have a fab fully depreciated in 6 months. All I can say is I don't think so.

I’m glad you posted because now I can see why you and wbmw are way too low on your estimates for Banias’ COGS and consequently way too high on your estimates for gross margin. Regards, Dew

I'm glad you posted too because it gives me a chance to dispell some of the misinformation posted here.

EP