Why ATI Wins... [IMO]

[Janooo]

Originally posted by: chizow

Originally posted by: Janooo
The cost for NV does not change. It was $100+ in the beginning. When yields improve then it will go down.
Now when I think about that the cost can not be less then wafer/number of chips. It's 5K/100 chips, about $50 per chip at 100% yield. I doubt they will achieve 100% yield.
NV needs the shrink to lower the cost as soon as possible.

That's absurd to think NV's costs are static, you think those SUVs selling for 40% less than a year ago aren't being sold for a profit still? There's just much, much less profit going around and even at break even or a slight loss, its better than not selling anything.

Similarly with chip pricing, if NV approaches TSMC with 2 scenarios, $100 a chip based on $649 pricing or $60 a chip based on $449 pricing but selling 5x as many units, which do you think they're going to choose? The difference in cost to them is some glass.

People have been saying these monolithic chips from NV can't possibly be selling for a profit due to low yields and # per wafer, but that clearly has not been the case with G80 and with GT200 we're seeing just how low NV can go on pricing while still managing to break-even.

You seem to be confused.
TSMC does not care how much NV is going to ask for a chip when they sell it. TSMC wants to make money. They tell NV a wafer is $5K. TSMC has own bills to pay and they know that they need to get $5K to make some money. I am sure that both companies have a contract and it includes pricing. The price between TSMC and NV is set.
If one wafer contains 100 chips then at 100% yield the lowest cost of a chip is $50. It can not be lower. This is only manufacturing cost of one chip.
In the beginning the yields were about 40%. That's why the cost was $100+. We don't know the current yields so it's very difficult to say what is the cost at the moment. As you can see it's somewhere between $50-$100. It can not be less then $50 though.
Now, let's assume that R&D of GT200 chip cost $10M. If NV sells 1M of chips then they need to add $10 to a chip in order to break even. I just made up $10M but you get the picture. If they sell only 0.5M then the cost to break even would be $20 on top of manufacturing cost. If they sell 2M then the cost to break even is $5 on top of the manufacturing cost.
R&D and manufacturing are the biggest/most visible costs. The shrink and yields lower manufacturing cost per chip. Higher sales lower the R&D cost per chip.

Originally posted by: chizow
...
with GT200 we're seeing just how low NV can go on pricing while still managing to break-even.

They are far far far away from breaking even. There is no way they sold enough GT200's to break even in 5-6 weeks. The lower price means that NV will wait longer in order to break even. If they lowered the price to much then the break even point is not guaranteed.
I hope this helps.

 

[taltamir]

Originally posted by: dadach

Originally posted by: SolMiester


Isnt that what people do when they sell their home?, ask for the most 1st...duh...not pathetic, just trying to realise as much profit as possible,

so you do agree nvidia tried to screw their customers how much did the price actually drop percentagewise...does it relate in figures to selling of the houses?


as for other points discussed, one thing i think you forget is that when the price drops, it drops only in US market...all the other markets stay unaffected for the long time...here in croatia 4870 is almost 100 USD cheaper than GTX260, and im reading that you can buy both for the same price in the US...ok, croatia is a little extreme, so id be intersted to see how fast did the price dopped in other EU countries...

and btw GTX280 is 720 USD overhere :S

It is a chunk of silicon! the materials are worth only a few dollars.
the majority of the cost of producing the chip is to pay for TSMC's factory, depreciating equipment, and staff and R&D. (as well as TSMC's profits on the deal, they don't work for free).
Then nVidia / AMD needs to make a good enough margin to fund future research and development, pay their staff, pay for their offices, etc etc etc. And make a profit (Again, making it worthwhile to even BOTHER doing what they do).

Could they be diverting a larger portion of their net profit to R&D for future products? they could, but that makes no sense for a business out there to make money.
Could they be charging less, resulting with lower budget, getting less profit and performing less R&D? they could, but again that would make no sense.

Also, making extra money NOW can help them weather harsh times. nVidia is between a hammer and a hard place with both AMD and Intel closing up on them. They see their marketplace being torn away, make as much money as possible NOW can help them with possible future plans to counteract that. For example, they could merge with VIA and help lift up its CPU business. That would make the computer market a tri-opoly instead of a duopoly. Much nicer. But do you think they could do that without gouging a bit on prices now? If they don't, it would make more sense for them to just take the money and run. Sell all the company's assets and pay all the money in the bank to the current stock owners as dividends.