Intel Corp (INTC)

[walbert]

Note that R&D is not depreciated but expensed in the year it is spent. Intel appears to be depreciating new fab capital in about 3 years or so. I expect 2014 depreciation guidance to be substantially higher at about $8.4B, which will be reflected in their GM guidance. They go from about $1.7B/quarter to $2.1B/quarter, or an increase of about 23% when moving to 14nm. We will see actual guidance on Thursday and see how close this is. If revenue stays about flat, an increase in depreciation of around 23% could impact gm by about 8% or so.
Alan

[Not true. We were told on Investor's Day that the density improvements would offset the increased costs and maintain the gross margin level.]