Replies to post #127384 on Intel Corp (INTC)

[alan81]

INTC capex and depreciation,
Here are some numbers to ponder:

 
 year capex  depreciation capital  depreciation time 
                                    capital/dep 
 2010 5.2       4.6        17.9      3.9 years 
 2011 10.8      6.0        23.6      3.3 years 
 2012 11.0      7.5        28.0      3.7 years 
 2013 10.8      6.8        31.0      4.6 years 

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

[herb will]

"If Intel's depreciation of recent R&D+CAPEX aren't reflected in depreciation, then they aren't reflected in Intel's COGS"

What I said was that Intel's capital spending is included in gross margins when they are matched against the sales of the products they produce and Intel gross margins have historically been consistently 60+%. Whether that continues remains to be seen but Intel is confident they will.