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As I said elsewhere Intel is not the only company to change their depreciation period, I can pretty much guarantee they checked with their auditors before doing that.
I have no idea where your intentionally delayed depreciation comment comes from.
"Depreciation of an asset begins when it is available for use".
That is not consistent with my understanding and not consistent with my analysis of their financials. When they buy an asset it goes into assets in progress and stays there not depreciating until they put it on-line.
Intel is certainly not the only company to do this. Micron extended depreciation on their DRAM equipment to 7 years in 2016 and then to 7 years on their NAND equipment in 2020.
There are two ways to looks at this.
From a balance sheet perspective if you put $1B of equipment on line, the first year your write off $200M and have $800M left, the second year you write of $200M and have $600M left, etc. So in that sense by the end of the third year it is more depreciated...
Analyzing their reported financials I can tell when they start reporting the depreciation and they start reporting it around when they start reporting revenue. You can express all the opinions you want but that is what the numbers say they actually do for their production equipment.
I think it is the opposite, you don’t want to have depreciation expenses hitting your P&L dragging down profitability until you have offsetting revenue.
Intel D1 is really complex, there is mod 1, mod 2, and mod 3, different nodes in different phases of development/production in each. R&D costs and depreciation likely all hit the R&D line but when a mod starts running initial production then it would start being charged to cost of goods sold.
I can tell you for a fact that through Q1 of 2024 none of the 5nm equipment is fully depreciated. My costs match their financials within about 2% and I have everything still depreciating. When Q2 comes out I will check again.
I can tell when equipment starts to become fully depreciated from TSMC's financials and some analysis techniques I have. when they report their quarterly results I get a very strong signal if anything drops off for depreciation. Sometimes after the fact I find out they started depreciation a...
Another comment on this is there are tax rules and then what companies use for reporting, those are often not the same and they may keep two sets of books. So while Taiwan allows 3 year depreciation for taxes, TSMC uses 5 years for reporting and their public financial statements are based on this.
Depreciation starts on equipment when it enters production and then TSMC depreciates equipment for five years per their annual report.
The other thing is that TSMC brought up Fab 18 phase 1 and then ramped it up over time, and then phase 2 and ramp and then phase 3 and ramp. If you put 10k wpm...
TSMC uses five year depreciation for equipment as disclosed in their annual report. Depreciation doesn't start until equipment is in production, I am not confusing anything, 100% of TSMC's 5nm equipment is still depreciating!
The other thing to keep in mind is they started phase 1 and then...
None of the "N5 Fab 18a" equipment is depreciated yet, your "mostly depreciated" statement is wrong.
When equipment is still depreciating that makes it even more important to keep the fab full. Any price above variable cost helps absorb fixed cost so you drop prices to at least absorb some of...
Historically when utilization goes down the foundries drop prices to fill the fabs, and when utilization goes up prices go up. Since the Pandemic TSMC's attitudes seems to be raise prices every year no matter what. The 3nm ramp is spoken for but they have unused capacity at all nodes 5nm and...
What gap? I have done a ton of modeling of Intel over the years and confirmed/correlated results to published and private numbers. If a fab has a capacity of 100K wpm and is running 50K that is called utilization and it varies for all fabs, it is fully factored into my modeling. And while Intel...
He said Intel has ~200k wpm starts, if that is correct their Fab utilization isn't good because they have a lot more capacity than that and they are adding more all the time.
With respect to wafer cost the only yield that matters at all is line yield in the fab and everyone is in the high ninety percentiles. If you talk about die cost then die yield comes in and that is where Intel struggled at 14nm, and 10nm. Reportedly i4/i3 die yields are pretty good.
I have actual numbers for 18A pitches, I can't publish them but I can say that 18A high density cell transistors per mm2 are slightly higher than TSMC 5nm but lower than TSMC 3nm. To even catch up to TSMC 2nm, Intel 14A would need a big density jump and this is during a time when density jumps...
