Economic Model Workshop, Philadelphia. Capital / Cost Module

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1 Economic Model Workshop, Philadelphia Capital / Cost Module Denis Fandel, Project Manager, MM&P 1 August 2001

2 Outline Capital Time Factors Equipment Market Building Capital Cost Time Factors Manufacturing Cost Cost / Wafer 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 2

3 P& C Model Roadmap Row # 7-71 Row # Row # Rules File: Row # 7-74 Row # SEMICO trends Technology / distributions Fab Capacity Utilization Fab Learning by Technology/ Downgraded Fabs Row # Row # Row # Row # Row # Wafer area demand by Area demand Fab demand New, Upgraded Fabs Converted, Transferred, Retired Fabs Row # Row # Row # Row # ITRS definitions Wafer demand Revenue by Fab Capacity Building and Equipment Capital by,, Fab type Row # Row # Row # Row # B &E Model: Row # Yield, density Transistor Shipments and Productivity Wafer Mfg Cost Throughput Learning and Depreciation Cost / Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 3

4 P& C Model Roadmap Row # 7-71 Row # Row # Rules File: Row # 7-74 Row # SEMICO trends Technology / distributions Fab Capacity Utilization Fab Learning by Technology/ Downgraded Fabs Row # Row # Row # Row # Row # Wafer area demand by Area demand Fab demand New, Upgraded Fabs Converted, Transferred, Retired Fabs Row # Row # Row # Row # ITRS definitions Wafer demand Revenue by Fab Capacity Building and Equipment Capital by,, Fab type Row # Row # Row # Row # B &E Model: Row # Yield, density Transistor Shipments and Productivity Wafer Mfg Cost Throughput Learning and Depreciation Cost / Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 4

5 Capital Time Factor Capital Node Factor: scaling factor recognizing the evolution of technology over time For example: 1997 = 250nm, 1998 = 210nm, 1999 = 180nm, 2000 = 150nm, 2001 = 130nm. Formula = (½) Rate of capital change between nodes 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 5

6 New Equipment Market New Equipment Market: total capital expenditures to equip all new fabs Formula = New Fabs * Capital / New Fab (Column D, non-blue are extrapolations) Column D (blue) = see Building and Equipment (base equipment $ * uplift factors) Column D (green) = base factor, (yellow) = wafer trend base factor 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 6

7 Upgrade Equipment Market Upgrade Equipment Market: total capital expenditures to equip upgrade fabs Formula = Upgrade Fabs * Capital / Upgraded Fab (Column D) Column D (blue) = (Add $ * Uplift Factors) - (Loss $ * Reutilization (Column A)) Column D (non-blue) = New (n+1) New (n) within each 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 7

8 Upgrade Equipment Market Summary Upgrade Equipment Market: summary of capital expenditures for all upgraded fabs Formula = Upgrade1 + Upgrade2 + Upgrade3 + Upgrade4 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 8

9 Equipment Market Summary Total Equipment Market: summary of capital expenditures to equip all new and upgraded fabs Formula = New Equipment Market + Upgrade Equipment Market 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 9

10 New Building Capital New Building Capital: total capital expenditures to construct all new fabs Formula = New Fabs * Capital / New Fab (Column D, non-blue are extrapolations) Column D (blue) = see Building and Equipment (base building $) Column D (green) = base factor, (yellow) = wafer trend base factor 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 10

11 Upgrade Building Capital Upgrade Building Capital: total capital expenditures to construct all upgraded fabs Formula = Upgrade Fabs * Capital / Average Upgraded Fab (Column D) Column D (blue) = Average (Upgrage1 $ + Upgrade2 $ + Upgrade3 $ + Upgrade4 $) Column D (non-blue) = Average (New (n+1) New (n)) +.) within each 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 11

12 Build Capital Summary Total Building Capital: summary of capital expenditures to construct all new and upgraded fabs Formula = New Building Capital + Upgrade Building Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 12

13 Total Capital Summary Total Capital: summary of capital expenditures to construct and equip all new and upgraded fabs Formula = Total Equipment Market + Total Building Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 13

14 P& C Model Roadmap Row # 7-71 Row # Row # Rules File: Row # 7-74 Row # SEMICO trends Technology / distributions Fab Capacity Utilization Fab Learning by Technology/ Downgraded Fabs Row # Row # Row # Row # Row # Wafer area demand by Area demand Fab demand New, Upgraded Fabs Converted, Transferred, Retired Fabs Row # Row # Row # Row # ITRS definitions Wafer demand Revenue by Fab Capacity Building and Equipment Capital by,, Fab type Row # Row # Row # Row # B &E Model: Row # Yield, density Transistor Shipments and Productivity Wafer Mfg Cost Throughput Learning and Depreciation Cost / Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 14

15 Cost Time Factors Throughput Learning new technology introduction new introduction Depreciation Factor equipment (straight 5 years ) building (straight 20 years) Wafer processing cost throughput learning depreciation factor 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 15

16 Fab Industry Learning 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 16

17 Throughput Learning Throughput Learning: overall percent impact of individual new and upgrade learning (See Rules) Formula: Total Fabs Needed / Total Fabs On-line 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 17

18 Depreciation Factor Depreciation Factor: percent of depreciation applicable to fixed cost Formula: (Equipment Capital (past 5 years) + Building Capital (past 20 years)) / Total Capital (all years) 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 18

19 P& C Model Roadmap Row # 7-71 Row # Row # Rules File: Row # 7-74 Row # SEMICO trends Technology / distributions Fab Capacity Utilization Fab Learning by Technology/ Downgraded Fabs Row # Row # Row # Row # Row # Wafer area demand by Area demand Fab demand New, Upgraded Fabs Converted, Transferred, Retired Fabs Row # Row # Row # Row # ITRS definitions Wafer demand Revenue by Fab Capacity Building and Equipment Capital by,, Fab type Row # Row # Row # Row # B &E Model: Row # Yield, density Transistor Shipments and Productivity Wafer Mfg Cost Throughput Learning and Depreciation Cost / Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 19

20 Fixed Processing Cost Fixed Cost: manufacturing cost associated with equipment and building assets Formula = Wafers* Depreciation Factor * (Cost / Wafer) (Column D, non-blue are extrapolations) Column D (blue) = see Building and Equipment (fixed cost $) Column D (green) = base factor, (yellow) = wafer trend base factor 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 20

21 Variable Processing Cost Variable Cost: manufacturing cost associated with labor, materials and other overhead Formula = (Wafers / Throughput Learning) * (Cost / Wafer) (Column D, non-blue are extrapolations) Column D (blue) = see Building and Equipment (variable cost $) Column D (green) = base factor, (yellow) = wafer trend base factor 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 21

22 Manufacturing Cost Summary COGS: summary of all manufacturing cost to execute the scenario Formula = Fixed Cost $ + Variable Cost $ 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 22

23 Wafer Overall Cost Wafer Cost: cost to process a wafer plus chip packaging and test Formula = COGS / Wafers Column D (blue) = Nominal Cost, see Building and Equipment Column D (non-blue) = Nominal Cost, Fixed Cost + Variable Cost 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 23

24 P& C Model Roadmap Row # 7-71 Row # Row # Rules File: Row # 7-74 Row # SEMICO trends Technology / distributions Fab Capacity Utilization Fab Learning by Technology/ Downgraded Fabs Row # Row # Row # Row # Row # Wafer area demand by Area demand Fab demand New, Upgraded Fabs Converted, Transferred, Retired Fabs Row # Row # Row # Row # ITRS definitions Wafer demand Revenue by Fab Capacity Building and Equipment Capital by,, Fab type Row # Row # Row # Row # B &E Model: Row # Yield, density Transistor Shipments and Productivity Wafer Mfg Cost Throughput Learning and Depreciation Cost / Capital 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 24

25 Wrap-Up / Follow-up Action Item 07/26/2001 6:14 PM j:\stndpres\template\intst.ppt - 25

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