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New Itanium chips cost just $744

Discussion in 'Intel' started by Yousuf Khan, Sep 9, 2003.

  1. Yousuf Khan

    Yousuf Khan Guest

    Yousuf Khan, Sep 9, 2003
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  2. Yousuf Khan

    CJT Guest

    CJT, Sep 9, 2003
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  3. Yousuf Khan

    Stacey Guest

    Including R&D, the manufacturing line, the office help, insurance, power
    bills etc or just what the bit of a silicon wafer costs?
    Stacey, Sep 9, 2003
  4. Yousuf Khan

    Yousuf Khan Guest

    Considering the low volumes and the billions of dollars spent in developing
    it, I'd say Intel is probably losing money on it. :)

    Yousuf Khan
    Yousuf Khan, Sep 9, 2003
  5. Yousuf Khan

    Rob Stow Guest

    I remember reading something when the first Itaniums became available
    the claimed Intel would need to sell about 2 to 3 million chips
    in order to recover the R&D costs and the fab costs. The same article
    also mentioned that Intel only /expected/ to sell about 750,000. In
    other words, Intel didn't expect to make a profit out of Itanic -
    they just expected Itanic to be just a stepping stone to something
    else that /would/ bring in the big bucks.

    As well, I wonder how much of the R&D costs for Itanic are being
    recovered from other Intel products? Surely to god a lot of the
    research work done to create Itanic would be of benefit to other
    things Intel is/was working on ?
    Rob Stow, Sep 9, 2003
  6. Yousuf Khan

    CJT Guest

    Assuming they sell overseas, at what point (if any) does selling far
    below cost become "dumping" and perhaps cause problems with, e.g.,
    the WTO?
    CJT, Sep 9, 2003
  7. Yousuf Khan

    chrisv Guest

    Don't think you could make a case for that. I mean, they didn't
    intend on it being an unpopular, money-losing product. Plus, it's one
    thing when you lost your money on R&D (fixed costs), quite another
    when you are selling it for below what it costs to make them (varible
    chrisv, Sep 9, 2003
  8. Yousuf Khan

    Paul Tiseo Guest

    Also, only Intel makes the Itanium, so wouldn't that also get in the way
    of "dumping" charges? It isn't the same as, say, a Korean memory maker
    dumping RAM sticks on US soil thus making selling hard for US makers, I
    Paul Tiseo, Sep 9, 2003
  9. Yousuf Khan

    Robert Myers Guest

    If manufacturers were not permitted to introduce new products and sell
    them at a loss, we'd be stuck in a world with practically no new

    In order to show that Intel was "dumping" Itaniums, you'd have to show
    that someone was losing business because of it, and that would be a
    very tough sell. The only people who are going to buy Itaniums are
    people who, for one reason or another, need a chip like Itanium.

    At this point, I think Intel would be happy enough just to get the
    chips out there so people will write software for them and get used to
    using them.

    Robert Myers, Sep 9, 2003
  10. Yousuf Khan

    Tony Hill Guest

    Yup, Intel's only sold roughly 20,000 Itanium chips TOTAL since it's
    introduction, that's counting every different model they've released.
    Given a rough estimate of around $5 billion to develop, manufacturer,
    test and market the Itaniums (this is probably a low estimate),
    they're looking at a per-chip cost of somewhere on the order of
    $250,000 per chip :>

    Ok, that's perhaps a bit of a pessimistic view-point on things, but I
    think it's VERY safe to say that Intel has not come anywhere close to
    recouping their costs on the Itanium yet, and nor are they likely too
    unless sales volumes pick up real soon. Part of the problem is that
    essentially only one vendor is selling Itanium-based systems. Last
    quarter they only managed to sell 3,250 chips total, but HP made up
    roughly 98% of those sales.
    Tony Hill, Sep 10, 2003
  11. Yousuf Khan

    Tony Hill Guest

    Probably never. Anti-dumping laws are usually only for either
    government subsidized products or for products that sell for less
    overseas than they do on their home markets.

    Besides that, the US is essentially the only country in the world that
    charges anti-dumping tariffs. The laws are really just a form of
    government subsidies for industries that are having difficulty
    competing on their own.
    Tony Hill, Sep 10, 2003
  12. Yousuf Khan

    CJT Guest

    Given the time value of money applied to the $5B, they may never break
    CJT, Sep 10, 2003
  13. What's the price of barley in China?
    Keith R. Williams, Sep 10, 2003
  14. "Dumping" is a US law. US producers *cannot* be guilty of
    "dumping" (anti-trust, perhaps), even it it had anything to do
    with this case.
    Keith R. Williams, Sep 10, 2003
  15. 1) That's not dumping (A US manufacturer cannot "dump")
    2) Selling at a loss is not illegal
    3) even if someone else loses money
    4) Unless one goes a fowl of the anti-trust laws
    ....so they can sell by the tens and hundreds. ;-)
    Keith R. Williams, Sep 10, 2003
  16. Yousuf Khan

    Robert Myers Guest

    I'm not an expert on it, but I believe that the EC has protections
    against predatory pricing similar to those in the US. The US can't
    stop others from dumping, but it can take retaliatory action in the
    form of tariffs, and I assume the EC works the same way.

    In any case, I don't think anybody is going to go to court in the EC
    over Itanium.

    Intel has very deep pockets, it has its heels dug in, and it intends
    to force IA-64 onto the market one way or another. The chip they wind
    up selling in large quantities may bear very little resemblance to the
    original EPIC concept, but, barring the apocalypse, Intel intends to
    make IA-64 its predominant instruction set one way or another.

    Robert Myers, Sep 10, 2003
  17. Yousuf Khan

    Rob Stow Guest

    The Itanic pricing might just possibly be evidence that Intel is
    attempting to dump Itanics on the market. However, failing
    spectacularly at an attempt to dump a product is not likely to
    trigger punitive tarriffs from anyone :)
    Laughs - yes, tariffs - no.

    Note also that not all anti-dumping laws are based on the US model.
    In Canada, for example, our anti-dumping legislation can come into
    play if one imported product is dumped on the market at the expense
    of a competing imported product - even if there are no competing
    domestic products. I vaguely recall this coming into play about
    30 years ago when California sparkling wines were dumped on Canada
    at the expense of Champagne and other imported sparkling wines.
    Rob Stow, Sep 10, 2003
  18. Yousuf Khan

    CJT Guest

    It just seemed to me that selling at far below cost to capture sales is
    a market distortion that might attract some sort of attention.
    CJT, Sep 10, 2003
  19. Yousuf Khan

    Alex Johnson Guest

    Given that intel came out and said (last year) that they spent over a
    billion dollars (close to $2B) up to that point, I have to agree with
    you that your measurement is pessimistic. You are suggesting they spent
    more than $3B in a single year where they spent under $2B in the
    previous 8 years.

    Alex Johnson, Sep 10, 2003
  20. Yousuf Khan

    Hank Oredson Guest

    Every new processor is sold far below cost.
    Particularly the very first unit sold.


    ... Hank

    Hank: http://horedson.home.att.net
    W0RLI: http://w0rli.home.att.net
    Hank Oredson, Sep 10, 2003
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