NO, no, you misread what I wrote. I said "Less than 30% margin = going downhill according to silent_guy."
Yes, that's what I said and I stand by it. A 30% gross margin is terrible for a semiconductor business: the NRE costs are very large and the only way to recoupe that is either by selling gigantic volumes or by high margins, but preferably both. Have a look at AMD, Intel, Broadcom, Marvell and pretty much any other semiconductor company and you'll see that most of them have margins above 50%. Even the 40-45% of Nvidia is considered relatively low by industry standards. 30% is terrible. You're entirely free to disagree with me about this, of course, but you'll find yourself in lonely company. That's one thing.
He's the one that thinks ATI's margins are less than 30% and thus was not doing very well in the semiconductor business.
I don't only think that. I'm absolutely sure about it: ATI wrote it every 3 months in their SEC filings, as they're required to do by law. Not only that, until 6 months ago, they were also writing numbers in RED at the bottom of their income statement. And, surprise!, for semiconductor companies, income comes almost entirely from the volume of sales and the profit margin. Low margins -> losing money. Do you see the connection already?
(To be honest: margins were creeping up in the last quarter and they were now in the low 30% instead of below 30% as they were a year ago.)
... and thus was a good reason to sell to AMD. Go read his quotes. I don't care if ATI's margin were 5% or 2000%. I was saying I don't think ATI should have sold out and that they could still operate at low profits.(even IF 30% is low for some people)
Ah, you're confusing gross margins with profits. That explains a bunch. (Maybe you should first try to understand what you want to talk about before talking about it? There's wikipedia, you know.)
Their profits weren't low. They were
negative until recently.
Gross margin is the money received for sold goods divided by the cost of sold goods. The latter being (roughly) wafer costs, packaging costs, shipping costs etc. It does not include R&D costs, marketing and sales cost and what not. Since those fixed costs are so high, you need high margins to cover them before you can actually start making money.
I said ATI was doing what ^M^ was suggesting, the car company example he gave. They were doing low profit high-end, not low margin. As profit I meant their total high-end profit, not the markup of each individual board. I think you're getting excited over nothing.
And a final comment: high-end products are almost always the high margin products. The cost to produce a 1950XTX is only marginally higher than a 1950XT (or whatever name they have), but they can asks tens of dollars more for it. It's far less cutt-throat than the low end markets, where OEMs try to squeeze each and every dollar of a supplier.
And, once again, I don't believe at all that AMD will cut the high-end line... for the reasons I've mentioned before.
