New Itanium chips cost just $744

On Tue, 09 Sep 2003 05:16:39 GMT, "Yousuf Khan"
wrote:
"CJT" wrote in message
...
Yousuf Khan wrote:

The new low-cost, low-power "Deerfield" Itanium 2 chips released today
are
the cheapest in the Itanium family ever. The 1.0Ghz costs $744, while
the
1.4Ghz costs $1172:


http://story.news.yahoo.com/news?tmp...08/tc_nf/22235

Yousuf Khan


What fraction do you suppose that is of what it costs Intel to make them?

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

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
hilla underscore 20 at yahoo dot ca

On Tue, 09 Sep 2003 06:06:43 GMT, CJT wrote:
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?

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
hilla underscore 20 at yahoo dot ca

Tony Hill wrote:

On Tue, 09 Sep 2003 05:16:39 GMT, "Yousuf Khan"
wrote:

"CJT" wrote in message
...

Yousuf Khan wrote:


The new low-cost, low-power "Deerfield" Itanium 2 chips released today

are

the cheapest in the Itanium family ever. The 1.0Ghz costs $744, while

the

1.4Ghz costs $1172:



http://story.news.yahoo.com/news?tmp...08/tc_nf/22235

Yousuf Khan



What fraction do you suppose that is of what it costs Intel to make them?

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


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
hilla underscore 20 at yahoo dot ca

Given the time value of money applied to the $5B, they may never break
even.

In article ,
says...
Yousuf Khan wrote:

The new low-cost, low-power "Deerfield" Itanium 2 chips released today are
the cheapest in the Itanium family ever. The 1.0Ghz costs $744, while the
1.4Ghz costs $1172:

http://story.news.yahoo.com/news?tmp...08/tc_nf/22235

Yousuf Khan


What fraction do you suppose that is of what it costs Intel to make them?

What's the price of barley in China?

--
Keith

In article ,
says...
Stacey wrote:

CJT wrote:


Yousuf Khan wrote:


The new low-cost, low-power "Deerfield" Itanium 2 chips released today
are the cheapest in the Itanium family ever. The 1.0Ghz costs $744, while
the 1.4Ghz costs $1172:



http://story.news.yahoo.com/news?tmp...08/tc_nf/22235

Yousuf Khan



What fraction do you suppose that is of what it costs Intel to make them?


Including R&D, the manufacturing line, the office help, insurance, power
bills etc or just what the bit of a silicon wafer costs?

Fully loaded.

My guess? $75. Why does the cost of production matter? There
is a business to run. With a market in the high hundreds, either
the Itanic floats or... ;-)

--
Keith

In article ,
says...

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?

"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

In article ,
says...
On Tue, 09 Sep 2003 06:06:43 GMT, CJT wrote:

snip

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?

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
products.

Indeed!

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.

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

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.

....so they can sell by the tens and hundreds. ;-)

--
Keith

On Tue, 9 Sep 2003 22:22:36 -0400, Keith R. Williams
wrote:

In article ,
says...
On Tue, 09 Sep 2003 06:06:43 GMT, CJT wrote:

snip

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?

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
products.

Indeed!

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.

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

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.

RM

Robert Myers wrote:
On Tue, 9 Sep 2003 22:22:36 -0400, Keith R. Williams
wrote:


In article ,
says...

On Tue, 09 Sep 2003 06:06:43 GMT, CJT wrote:

snip

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?

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
products.

Indeed!


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.

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


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.


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 wrote:

Robert Myers wrote:

On Tue, 9 Sep 2003 22:22:36 -0400, Keith R. Williams
wrote:


In article ,
says...

On Tue, 09 Sep 2003 06:06:43 GMT, CJT wrote:

snip

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?


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
products.


Indeed!


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.


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



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.


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.


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.