Replies to post #14471 on Advanced Micro Devices Inc (AMD)

[Elmer Phud]

Petz -

Now, isn't it obvious, that if company A can make money selling a product at $110 and company B cannot, company A, in this case AMD, has the lower cost of production?

This has to win the prize for the most bizarre reasoning I've seen.

[smooth2o]

Petz:

Now, isn't it obvious, that if company A can make money selling a product at $110 and company B cannot, company A, in this case AMD, has the lower cost of production?

No. Not if Company B actually sells its product at $172 and company A can actually sell its product at $50. Then, your argument is not obvious at all.

Smooth

[wbmw]

Petz, Re: Since you pointed out an error in my calculations, let's redo them with the right data.

Your response is still littered with inconsistencies.

1. How about including motherboard revenue in the IAG calculation.

2. Intel has surely shipped more than 20M chipset components if they have 75% of the market. The ASP is also higher than $30 if you count mobile and server chipset sales.

3. There is still a disconnect between profitability at a given ASP and the cost of CPUs. Sure, Intel will be break-even in IAG with a lower CPU ASP, but it doesn't mean that the CPUs cost that much to make. AND THAT'S THE POINT OF THIS DISCUSSION.

You'd have to find out exactly how much the CPU component of IAG revenue costs Intel - not the combined CPU, chipset, and motherboard components. Then you'd have to find out how much revenue the CPU only component has given to Intel - not the combined CPU, chipset, and motherboard components, or any SWAG you can come up with.

CPU costs are silicon, packaging, and test. We know the silicon is cheap - probably around $20. Packaging probably adds another $15 and test is probably $5. If you are coming up with $110 costs for Intel CPUs, then you are probably doing something wrong.