R&D is not. The cost of the Fab and equipment are. >> I don't think so. gross margin includes cost of materials and labor.
You're both right. Much of the capital put into building the fab and purchasing the equipment is converted into depreciation, and applied to the cost of the wafers. The wafer costs are considered variable costs, and actually change depending on the loading of the fab. Gross margins are based on revenues minus variable costs, and that's why fab utilization affects GM's.
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