Advanced Micro Devices Inc (AMD)

[alan81]

My take on Itanium profitability...
If we try and "bound" the problem this is what I get:
Quarterly volume 25K->75K
ASP: $1K->$1.5K
Cost: $125/unit (Probably a bit high, but conservative)
--> quarterly gross margin of between $22M and $100M

A recently article put the Colorado development team at about 200 people I think... seems reasonable.
Fully loaded cost per person is probably around $40K/qtr.
This puts expenses between 200*40K=$8M and say 400*40 or $15M.
It appears to me that Itanium is at least break even at this time. There are a lot of other assumptions built in here:
(1) Intel is no longer paying developers to work on software
(2) You do not "burden" itanium with CAD tool development, Silicon process development, etc... but leave this burden entirely on the X86 product line... all shared costs go to X86.
(3) The development team size is as I have guessed... it could easily be double that, but that would still be smaller than the current revenue stream.
There are some things that Itanium has developed that will be used by the X86 team (CMP/SMP schemes, foxton, pellston?,...)

I am still not to sure about how the Itanium development IP protection was set-up via IDEA, but it appears to me that any Itanium IP is protected from the Intel patent cross license agreements. As such, even if there is a cost associated with Itanium, the IP protection it can provide may be worth that cost.
just some thoughts,
Alan